Exhibit 10.9
JUNIOR TIER MEZZANINE LOAN AND SECURITY AGREEMENT
Dated as of September 30, 2002
Between
BRE/PARK PLACE JUNIOR MEZZANINE L.L.C.
as Mezzanine Borrower
and
GERMAN AMERICAN CAPITAL CORPORATION
as Mezzanine Lender
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION......................................... 2
Section 1.1 Definitions......................................................... 2
Section 1.2 Principles of Construction.......................................... 21
II. GENERAL TERMS................................................................... 21
Section 2.1 Loan; Disbursement to Mezzanine Borrower............................ 21
Section 2.2 Interest; Loan Payments; Late Payment Charge........................ 22
Section 2.3 Prepayments......................................................... 23
Section 2.4 Regulatory Change; Taxes............................................ 25
Section 2.5 Conditions Precedent to Closing..................................... 27
III. CASH MANAGEMENT................................................................. 33
Section 3.1 Cash Management..................................................... 33
IV. REPRESENTATIONS AND WARRANTIES.................................................. 41
Section 4.1 Mezzanine Borrower Representations.................................. 41
Section 4.2 Survival of Representations......................................... 48
V. MEZZANINE BORROWER COVENANTS.................................................... 48
Section 5.1 Affirmative Covenants............................................... 48
Section 5.2 Negative Covenants.................................................. 60
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION.................................. 64
Section 6.1 Insurance Coverage Requirements..................................... 64
Section 6.2 Condemnation........................................................ 65
Section 6.3 Certificates........................................................ 66
VII. RESERVED........................................................................ 66
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS................................... 66
Section 8.1 Restrictions on Transfers........................................... 67
Section 8.2 Deliveries to Mezzanine Lender...................................... 67
Section 8.3 Permitted Transfers................................................. 67
IX. INTEREST RATE CAP AGREEMENT..................................................... 68
Section 9.1 Interest Rate Cap Agreement (Junior Tier Mezzanine)................. 68
Section 9.2 Pledge.............................................................. 69
Section 9.3 Covenants........................................................... 69
Section 9.4 Powers of Mezzanine Borrower Prior to an Event of Default........... 71
Section 9.5 Representations and Warranties...................................... 71
i
Section 9.6 Payments............................................................ 72
Section 9.7 Remedies............................................................ 72
Section 9.8 Sales of Interest Rate Cap Collateral............................... 74
Section 9.9 Public Sales Not Possible........................................... 75
Section 9.10 Receipt of Sale Proceeds........................................... 75
Section 9.11 Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine).... 75
X. RESERVED........................................................................ 75
XI. RESERVED........................................................................ 75
XII. ENVIRONMENTAL MATTERS........................................................... 75
Section 12.1 Representations.................................................... 75
Section 12.2 Covenants.......................................................... 76
Section 12.3 Environmental Reports.............................................. 76
Section 12.4 Environmental Indemnification...................................... 77
Section 12.5 Recourse Nature of Certain Indemnifications........................ 78
XIII. ASSIGNMENTS AND PARTICIPATIONS.................................................. 78
Section 13.1 Assignment and Acceptance.......................................... 78
Section 13.2 Effect of Assignment and Acceptance................................ 78
Section 13.3 Content............................................................ 79
Section 13.4 Register........................................................... 79
Section 13.5 Substitute Mezzanine Notes......................................... 80
Section 13.6 Participations..................................................... 80
Section 13.7 Disclosure of Information.......................................... 81
Section 13.8 Security Interest in Favor of Federal Reserve Bank................. 81
XIV. RESERVED........................................................................ 81
XV. RESERVED........................................................................ 81
XVI. RESERVED........................................................................ 81
XVII. DEFAULTS........................................................................ 81
Section 17.1 Event of Default................................................... 81
Section 17.2 Remedies........................................................... 87
Section 17.3 Remedies Cumulative; Waivers....................................... 88
Section 17.4 Costs of Collection................................................ 89
Section 17.5 Distribution of Collateral Proceeds................................ 89
XVIII. SPECIAL PROVISIONS.............................................................. 89
ii
Section 18.1 Exculpation........................................................ 90
XIX. MISCELLANEOUS................................................................... 92
Section 19.1 Survival........................................................... 92
Section 19.2 Mezzanine Lender's Discretion...................................... 92
Section 19.3 Governing Law...................................................... 92
Section 19.4 Modification, Waiver in Writing.................................... 94
Section 19.5 Delay Not a Waiver................................................. 94
Section 19.6 Notices............................................................ 94
Section 19.7 TRIAL BY JURY...................................................... 96
Section 19.8 Headings........................................................... 96
Section 19.9 Severability....................................................... 96
Section 19.10 Preferences....................................................... 96
Section 19.11 Waiver of Notice.................................................. 97
Section 19.12 Expenses; Indemnity............................................... 97
Section 19.13 Exhibits and Schedules Incorporated............................... 99
Section 19.14 Offsets, Counterclaims and Defenses............................... 99
Section 19.15 Liability of Assignees of Mezzanine Lender........................ 100
Section 19.16 No Joint Venture or Partnership; No Third Party Beneficiaries..... 100
Section 19.17 Publicity......................................................... 100
Section 19.18 Waiver of Marshalling of Assets................................... 101
Section 19.19 Waiver of Counterclaim and Other Actions.......................... 101
Section 19.20 Conflict; Construction of Documents; Reliance..................... 101
Section 19.21 Prior Agreements.................................................. 102
Section 19.22 Brokers........................................................... 102
Section 19.23 Counterparts...................................................... 102
SEE INDEX TO EXHIBITS AND SCHEDULES AT END OF DOCUMENT
iii
JUNIOR TIER MEZZANINE LOAN AND SECURITY AGREEMENT
THIS JUNIOR TIER MEZZANINE LOAN AND SECURITY AGREEMENT dated as of
September 30, 2002 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, this AGREEMENT), between BRE/PARK PLACE JUNIOR
MEZZANINE L.L.C., a Delaware limited liability company (MEZZANINE BORROWER)
having an address c/o Blackstone Real Estate Acquisitions III L.L.C., 345 Park
Avenue, New York, New York 10154, and GERMAN AMERICAN CAPITAL CORPORATION, a
Maryland corporation, having an address at 31 West 52nd Street, New York, New
York 10019 (together with its successors and assigns, MEZZANINE LENDER).
W I T N E S S E T H:
WHEREAS, On September 18, 2002, Mezzanine Lender made a mezzanine
loan to Senior Tier Mezzanine Borrower (as hereinafter defined) in the principal
amount of $41,000,000 (the EXISTING MEZZANINE LOAN), pursuant to that certain
Mezzanine Loan and Security Agreement, dated as of the date thereof (as the same
may be amended, restated and supplemented from time to time, the LOAN AGREEMENT
(SENIOR TIER MEZZANINE)), between Senior Tier Mezzanine Borrower and Mezzanine
Lender, which Existing Mezzanine Loan is evidenced by those two certain
Mezzanine Notes, dated as of the date thereof, ((i) one in the principal amount
of $26,500,000 (as the same may be amended, restated and supplemented from time
to time, the SENIOR TIER MEZZANINE NOTE), and (ii) one in the principal amount
of $14,500,000 (as the same may be amended, restated and supplemented from time
to time, the EXISTING JUNIOR TIER MEZZANINE NOTE)), made by Senior Tier
Mezzanine Borrower in favor of Mezzanine Lender and secured by the Loan
Documents (Senior Tier Mezzanine);
WHEREAS, Mezzanine Borrower, pursuant to the terms of that certain
Assumption and Release Agreement, dated as of the date hereof, by and among
Senior Tier Mezzanine Lender, Mezzanine Borrower and Mezzanine Lender, is the
present obligor of the Existing Junior Tier Mezzanine Note, which Existing
Junior Tier Mezzanine Note evidences an indebtedness of Mezzanine Borrower to
Mezzanine Lender in the outstanding principal amount of $14,500,000; and
WHEREAS, Mezzanine Lender is willing to (i) modify the Existing
Mezzanine Loan, and (ii) release Senior Tier Mezzanine Borrower from the
obligations evidenced by the Existing Junior Tier Mezzanine Note, subject to and
in accordance with the terms of this Agreement and the other Loan Documents
(Junior Tier Mezzanine) (as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan (Junior
Tier Mezzanine) by Mezzanine Lender and the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereto
hereby covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
ACCOUNT AGREEMENT (JUNIOR TIER MEZZANINE) shall mean the Account and
Control Agreement (Junior Tier Mezzanine), dated as of the date hereof, among
Mezzanine Lender, Mezzanine Borrower and Cash Management Bank (Junior Tier
Mezzanine).
ACCOUNT AGREEMENT (MORTGAGE) shall mean the Account and Control
Agreement, dated as of September 18, 2002, among Mortgage Lender, Mortgage
Borrower and Cash Management Bank (Mortgage).
ACCOUNT AGREEMENT (SENIOR TIER MEZZANINE) shall mean the Account and
Control Agreement (Mezzanine), dated as of September 18, 2002, among Senior Tier
Mezzanine Lender, Senior Tier Mezzanine Borrower and Cash Management Bank
(Senior Tier Mezzanine).
ACCOUNT COLLATERAL (JUNIOR TIER MEZZANINE) shall have the meaning
set forth in Section 3.1.2.
ACKNOWLEDGMENT shall mean the Acknowledgment, dated on or about the
date hereof made by Counterparty, or as applicable, Approved Counterparty in the
form of EXHIBIT A.
ADDITIONAL NON-CONSOLIDATION OPINION shall have the meaning set
forth in Section 4.1.20(b).
AFFILIATE shall mean, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with, or any general partner or managing member in,
such specified Person. An Affiliate of a Person includes, without limitation,
(i) any officer or director of such Person, (ii) any record or beneficial owner
of more than 10% of any class of ownership interests of such Person and (iii)
any Affiliate of the foregoing. For the purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities or other beneficial interest, by contract or
otherwise; and the terms "controlling" and "controlled" have the meanings
correlative to the foregoing.
AGREEMENT shall mean this Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
ALTA shall mean American Land Title Association, or any successor
thereto.
2
ANNUAL BUDGET shall have the meaning set forth in the Loan Agreement
(Mortgage).
APPROVED BANK shall have the meaning set forth in the Account
Agreement (Junior Tier Mezzanine).
APPROVED COUNTERPARTY shall mean a bank or other financial
institution which (i) as of the date hereof, has a minimum long-term unsecured
debt rating of at least "AA" or its equivalent by each of the Rating Agencies
(as hereinafter defined), or if any such bank or other financial institution is
not rated by all the Rating Agencies, then a minimum long-term rating of at
least "AA" or its equivalent by two of the Rating Agencies (one of which must be
S&P), it being understood that the "AA" benchmark rating and other benchmark
ratings in this Agreement are intended to be the ratings, or the equivalent of
ratings, issued by S&P and (ii) shall maintain until the expiration of the
applicable Interest Rate Cap Agreement (Junior Tier Mezzanine) a credit rating
of "AA-" by S&P and the equivalent by Moody's.
ASSIGNMENT AND ACCEPTANCE shall mean an assignment and acceptance
entered into by Mezzanine Lender and an assignee, and accepted by Mezzanine
Lender in accordance with Article XV and in substantially the form of EXHIBIT B
or such other form customarily used by Mezzanine Lender in connection with the
participation or syndication of mortgage or mezzanine loans at the time of such
assignment.
ASSIGNMENT OF LEASES shall have the meaning set forth in the Loan
Agreement (Mortgage).
BANKRUPTCY CODE shall mean Title 11, U.S.C.A., as amended from time
to time and any successor statute thereto.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York or in the state in which Servicer
is located are not open for business. When used with respect to an Interest
Determination Date, Business Day shall mean any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank market.
CAPITAL EXPENDITURES shall mean any amount incurred in respect of
capital items which in accordance with GAAP would not be included in Mortgage
Borrower's annual financial statements for an applicable period as an operating
expense of the Property and is not reasonably expected by Mortgage Borrower to
be a regularly recurring operating expense of the Property.
CASH shall mean the legal tender of the United States of America.
CASH AND CASH EQUIVALENTS shall mean any or a combination of the
following: (i) Cash, and (ii) U.S. Government Obligations.
3
CASH MANAGEMENT BANK shall have the meaning set forth in the Loan
Agreement (Mortgage).
CASH MANAGEMENT BANK (JUNIOR TIER MEZZANINE) shall mean Harris Trust
and Savings Bank or any successor Approved Bank acting as Cash Management Bank
(Junior Tier Mezzanine) under the Account Agreement (Junior Tier Mezzanine), or
another financial institution reasonably approved by the Mezzanine Lender.
CERTIFICATE shall have the meaning set forth in the Pledge (Junior
Tier Mezzanine).
CLOSING DATE shall mean the date hereof.
CODE shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
COLLATERAL shall mean collectively (i) all of Pledged Collateral and
all proceeds thereof, (ii) all Receipts, (iii) any stock certificates or other
certificates, membership interest certificates or instruments evidencing any of
the foregoing property described in clauses (i) and (ii) above, (iv) the
Interest Rate Cap Collateral (Junior Tier Mezzanine), (v) the Account Collateral
(Junior Tier Mezzanine) and (vi) all other rights appurtenant to the property
described in clauses (i) through (v) above.
COLLATERAL ACCOUNTS (JUNIOR TIER MEZZANINE) shall have the meaning
set forth in Section 3.1.1.
CONTROL shall mean (i) the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or otherwise
and (ii) the ownership, direct or indirect, of no less than 51% of the voting
securities of such Person, and the terms Controlled, Controlling and Common
Control shall have correlative meanings.
COUNTERPARTY shall mean, with respect to the Interest Rate Cap
Agreement (Junior Tier Mezzanine), SMBC Derivative Products Limited and with
respect to any Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine),
any substitute Approved Counterparty.
COUNTERPARTY OPINION shall have the meaning set forth in Section
9.3(g).
DEBT shall mean, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (excluding trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with GAAP, recorded as capital leases; (c) current
liabilities of such Person in respect
4
of unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for, or liabilities incurred on the account of, such Person;
(e) obligations or liabilities of such Person arising under letters of credit,
credit facilities or other acceptance facilities; (f) obligations of such Person
under any guarantees or other agreement to become secondarily liable for any
obligation of any other Person, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any Lien on any property of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
DEBT SERVICE (JUNIOR TIER MEZZANINE) shall mean, with respect to any
particular period of time, scheduled interest payments under the Mezzanine Note.
DEFAULT shall mean the occurrence of any event hereunder or under
any other Loan Document (Junior Tier Mezzanine) which, but for the giving of
notice or passage of time, or both, would be an Event of Default.
DEFAULT RATE shall have the meaning set forth in the Mezzanine Note.
DISTRIBUTIONS shall have the meaning set forth in the Pledge (Junior
Tier Mezzanine).
ELIGIBLE ACCOUNT has the meaning set forth in the Account Agreement
(Junior Tier Mezzanine).
ENFORCEMENT COSTS shall have the meaning set forth in Section 17.4.
ENVIRONMENTAL CERTIFICATE shall have the meaning set forth in
Section 12.2.1.
ENVIRONMENTAL CLAIM shall have the meaning set forth in the Loan
Agreement (Mortgage).
ENVIRONMENTAL EVENT shall have the meaning set forth in Section
12.2.1.
ENVIRONMENTAL INDEMNITY (JUNIOR TIER MEZZANINE) shall mean the
Environmental Indemnity, dated as of the date hereof, made by Mezzanine Borrower
in favor of Mezzanine Lender.
ENVIRONMENTAL INDEMNITY (MORTGAGE) shall mean the Environmental
Indemnity, dated as of September 18, 2002, made by Mortgage Borrower in favor of
Mortgage Lender.
ENVIRONMENTAL INDEMNITY (SENIOR TIER MEZZANINE) shall mean the
Environmental Indemnity, dated as of September 18, 2002, made by Senior Tier
Mezzanine Borrower in favor of Senior Tier Mezzanine Lender.
5
ENVIRONMENTAL LAWS shall have the meaning provided in the
Environmental Indemnity.
ENVIRONMENTAL REPORTS shall have the meaning set forth in Section
12.1.
ERISA shall have the meaning set forth in the Loan Agreement
(Mortgage).
EVENT OF DEFAULT shall have the meaning set forth in Section
17.1(a).
EXCESS CASH FLOW shall have the meaning set forth in the Loan
Agreement (Mortgage).
EXCESS PROCEEDS shall have the meaning set forth in Section
2.3.1(b).
EXCULPATED PARTIES shall have the meaning set forth in Section
18.1.1.
EXCUSABLE DELAY shall mean a delay solely due to acts of god,
governmental restrictions, stays, judgments, orders, decrees, enemy actions,
civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or
materials or other cases beyond the reasonable control of Mezzanine Borrower,
Senior Tier Mezzanine Borrower or Mortgage Borrower, but Mezzanine Borrower's,
Senior Tier Mezzanine Borrower's or Mortgage Borrower's lack of funds in and of
itself shall not be deemed a cause beyond the control of Mezzanine Borrower,
Senior Tier Mezzanine Borrower or Mortgage Borrower, as applicable.
EXISTING JUNIOR TIER MEZZANINE NOTE shall have the meaning set forth
in the Recitals hereto.
EXISTING MEZZANINE LOAN shall have the meaning set forth in the
Recitals hereto.
FISCAL YEAR shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan or
the portion of any such 12-month period falling within the term of the Loan in
the event that such a 12-month period occurs partially before or after, and
partially during, the term of the Loan.
FOREIGN LENDER shall mean any Lender that is organized under the
laws of a jurisdiction other than that in which the Mezzanine Borrower is
located. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
GAAP shall mean the 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 agencies with
similar functions of comparable stature and authority within the
6
accounting profession), or in such other statements by such entity as may be in
general use by significant segments of the U.S. accounting profession, to the
extent such principles are applicable to the facts and circumstances on the date
of determination.
GOVERNMENTAL AUTHORITY shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
GUARANTOR shall mean, collectively, Blackstone Real Partners III
L.P., Blackstone Real Estate Partners III T.E.1 L.P., Blackstone Real Estate
Partners III T.E.2 L.P., Blackstone Real Estate Partners III T.E.3 L.P.,
Blackstone Real Estate Holdings III L.P. and Blackstone Real Estate Partners III
F.F. L.P., each a Delaware limited partnership.
HAZARDOUS SUBSTANCE shall have the meaning provided for the term
"Hazardous Materials" in the Environmental Indemnity (Junior Tier Mezzanine).
HOLDING ACCOUNT shall mean the "Holding Account" and various
sub-accounts to the Holding Account established pursuant to the Loan Agreement
(Mortgage) as in effect on the date hereof.
IMPOSITIONS shall have the meaning set forth in the Loan Agreement
(Mortgage).
INCREASED COSTS shall have the meaning set forth in Section 2.4.1.
INDEBTEDNESS shall mean, at any given time, the Principal Amount,
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Mezzanine Lender pursuant hereto, under
the Mezzanine Note or in accordance with the other Loan Documents (Junior Tier
Mezzanine) and all other amounts, sums and expenses paid by or payable to
Mezzanine Lender hereunder or pursuant to the Mezzanine Note or the other Loan
Documents (Junior Tier Mezzanine).
INDEMNIFIED PARTIES shall have the meaning set forth in Section
19.12(b).
INDEPENDENT shall mean, when used with respect to any Person, a
Person who: (i) does not have any direct financial interest or any material
indirect financial interest in any Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower or in any of their Affiliates, (ii) is not
connected with Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage
Borrower or any of their Affiliates, as an officer, employee, promoter,
underwriter, trustee, partner, member, manager, creditor, director, supplier,
customer or person performing similar functions, and (iii) is not a member of
the immediate family of a Person defined in (i) or (ii) above.
INDEPENDENT ARCHITECT shall mean an architect, engineer or
construction consultant selected by Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower, as
7
applicable, which is Independent, licensed to practice in the State and has at
least five (5) years of architectural experience and which is selected by
Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower and
reasonably acceptable to Mezzanine Lender.
INDEPENDENT MANAGER, INDEPENDENT MEMBER OR INDEPENDENT DIRECTOR
shall mean a Person who is not and will not be while serving and has never been
(i) a member (other than an Independent Member), manager (other than an
Independent Manager), director (other than an Independent Director), employee,
attorney, or counsel of Mezzanine Borrower, Senior Tier Mezzanine Borrower or
Mortgage Borrower or their Affiliates, (ii) is not a customer, supplier or other
Person who derives more than 1% of its purchases or revenues from its activities
with Mezzanine Borrower, Senior Tier Mezzanine Borrower, Mortgage Borrower or
their Affiliates, or (iii) is not a member of the immediate family of any member
(other than an Independent Member), manager (other than an Independent Manager),
employee, attorney, customer, supplier or other Person referred to above or (iv)
a person Controlling or under the common Control of anyone listed in (i) through
(iii) above. A Person that otherwise satisfies the foregoing shall not be
disqualified from serving as an Independent Manager or Independent Member if
such individual is at the time of initial appointment, or at any time while
serving as an Independent Manager, Independent Member or Independent Director,
as applicable, of a Single Purpose Entity affiliated with Mezzanine Borrower.
INSURANCE REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
INSTRUCTION LETTER shall mean that certain direction letter, dated
as of the date hereof, from Senior Tier Mezzanine Borrower and Mezzanine
Borrower to Senior Tier Mezzanine Lender.
INTERCREDITOR AGREEMENT shall mean an intercreditor agreement by and
among Mezzanine Lender, Senior Tier Mezzanine Lender and Mortgage Lender.
INTEREST DETERMINATION DATE shall have the meaning set forth in the
Mezzanine Note.
INTEREST PERIOD shall have the meaning set forth in the Mezzanine
Note.
INTEREST RATE CAP AGREEMENT (JUNIOR TIER MEZZANINE) shall mean the
Confirmation and Agreement (together with the confirmation and schedules
relating thereto), dated on or about the date hereof, between the Counterparty
and Mezzanine Borrower, obtained by Mezzanine Borrower and collaterally assigned
to Mezzanine Lender pursuant to this Agreement. After delivery of a Replacement
Interest Rate Cap Agreement (Junior Tier Mezzanine) to Mezzanine Lender, the
term Interest Rate Cap Agreement (Junior Tier Mezzanine) shall be deemed to mean
such Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine). The
Interest Rate Cap Agreement (Junior Tier Mezzanine) shall contain each of the
following:
8
(a) NOTIONAL AMOUNT. The notional amount of the Interest Rate Cap
Agreement (Junior Tier Mezzanine) shall be equal to the Principal Amount;
(b) REMAINING TERM. The remaining term of the Interest Rate Cap
Agreement (Junior Tier Mezzanine) shall at all times extend through the end of
the Interest Period in which the Maturity Date occurs as extended from time to
time pursuant to this Agreement and the Loan Documents (Junior Tier Mezzanine);
(c) PARTIES. The Interest Rate Cap Agreement (Junior Tier
Mezzanine) shall be issued by the Counterparty to Mezzanine Borrower and shall
be pledged to Mezzanine Lender by Mezzanine Borrower in accordance with this
Agreement;
(d) PAYMENT STREAM. The Counterparty under the Interest Rate Cap
Agreement (Junior Tier Mezzanine) shall be obligated to make a stream of
payments, directly to the Mezzanine Account (whether or not an Event of Default
has occurred) from time to time equal to the product of (i) the notional amount
of such Interest Rate Cap Agreement (Junior Tier Mezzanine) multiplied by (ii)
the excess, if any, of the LIBOR over the Strike Price;
(e) ACKNOWLEDGMENT. The Counterparty under the Interest Rate Cap
Agreement (Junior Tier Mezzanine) shall execute and deliver the Acknowledgment;
and
(f). OTHER. The Interest Rate Cap Agreement shall impose no
material obligation on the beneficiary thereof (after payment of the acquisition
cost) and shall be in all material respects satisfactory in form and substance
to Mezzanine Lender.
INTEREST RATE CAP COLLATERAL shall have the meaning set forth in
Section 9.2.
LATE PAYMENT CHARGE shall have the meaning set forth in Section
2.2.3.
LEASE shall have the meaning set forth in the Loan Agreement
(Mortgage).
LEGAL REQUIREMENTS shall have the meaning set forth in the Loan
Agreement (Mortgage).
LIBOR shall have the meaning set forth in the Mezzanine Note.
LIBOR MARGIN shall mean the weighted average of the LIBOR Margins
set forth in the Mezzanine Note.
LIBOR RATE shall have the meaning set forth in the Mezzanine Note.
LICENSE DATE shall mean the date upon which Manager becomes licensed
as a real estate broker under the laws of the State of California.
9
LIEN shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance or charge
on or affecting Mortgage Borrower, Senior Tier Mezzanine Borrower, Mezzanine
Borrower, the Collateral, the Property, any portion thereof or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and the
filing of mechanic's, materialmen's and other similar liens and encumbrances.
LIQUIDATED DAMAGES AMOUNT shall have the meaning set forth in the
Mezzanine Note.
LOAN shall mean the loan in the amount of Fourteen Million Five
Hundred Thousand Dollars ($14,500,000) made by Mezzanine Lender to Mezzanine
Borrower pursuant to this Agreement.
LOAN (MORTGAGE) shall mean the loan in the amount of One Hundred
Twenty Three Million Dollars ($123,000,000) made by Mortgage Lender to Mortgage
Borrower pursuant to the Loan Agreement (Mortgage).
LOAN (SENIOR TIER MEZZANINE) shall mean the loan in the amount of
Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000) made by Senior
Tier Mezzanine Lender to Senior Tier Mezzanine Borrower pursuant to Loan
Agreement (Senior Tier Mezzanine).
LOAN AGREEMENT (MORTGAGE) shall mean the Loan and Security
Agreement, dated as of September 18, 2002, between Mortgage Borrower, as
borrower, and Mortgage Lender, as lender.
LOAN AGREEMENT (SENIOR TIER MEZZANINE) shall have the meaning set
forth in the Recitals hereto.
LOAN DOCUMENTS (JUNIOR TIER MEZZANINE) shall mean, collectively,
this Agreement, the Mezzanine Note, the Account Agreement (Junior Tier
Mezzanine), the Recourse Guaranty (Junior Tier Mezzanine), the Environmental
Indemnity (Junior Tier Mezzanine), the Manager's Consent (Junior Tier
Mezzanine), the Third-Party Manager's Consent (Junior Tier Mezzanine) and the
Pledge (Junior Tier Mezzanine) and any and all other agreements, instruments or
documents executed by Mezzanine Borrower (or another Person) evidencing,
securing or delivered in connection with the Loan and the transactions
contemplated thereby, including, without limitation, any certificates or
representations delivered by or on behalf of Mezzanine Borrower, any Affiliate
of Mezzanine Borrower, Manager, or any Affiliate of Manager.
LOAN DOCUMENTS (MORTGAGE) shall mean, collectively, the Loan
Agreement (Mortgage), the Mortgage Note, the Security Instrument, the Assignment
of Leases, the Environmental Indemnity (Mortgage), the Manager's Consent
(Mortgage), the Third-Party Manager's Consent (Mortgage) the Account Agreement
(Mortgage), the Recourse Guaranty (Mortgage) and all
10
other documents executed and/or delivered by Mortgage Borrower in connection
with the Loan (Mortgage) including any certifications or representations
delivered by or on behalf of Mortgage Borrower, any Affiliate of Mortgage
Borrower, the Manager, or any Affiliate of the Manager.
LOAN DOCUMENTS (SENIOR TIER MEZZANINE) shall mean, collectively,
Loan Agreement (Senior Tier Mezzanine), the Senior Tier Mezzanine Note, the
Account Agreement (Senior Tier Mezzanine), the Recourse Guaranty (Senior Tier
Mezzanine), the Environmental Indemnity (Senior Tier Mezzanine), the Manager's
Consent (Senior Tier Mezzanine), the Third-Party Manager's Consent (Senior Tier
Mezzanine) and the Pledge (Senior Tier Mezzanine) and any and all other
agreements, instruments or documents executed by Senior Tier Mezzanine Borrower
(or another Person) evidencing, securing or delivered in connection with the
Loan (Senior Tier Mezzanine) and the transactions contemplated thereby,
including, without limitation, any certificates or representations delivered by
or on behalf of Senior Tier Mezzanine Borrower, any Affiliate of Senior Tier
Mezzanine Borrower, Manager, or any Affiliate of Manager.
LOCKOUT PERIOD shall have the meaning set forth in the Mezzanine
Note.
MANAGEMENT AGREEMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
MANAGER shall mean BREA Property Management of California L.L.C., a
Delaware limited liability company or such other Qualified Manager as may become
manager of the Property in accordance with the provisions hereof.
MANAGER'S CONSENT (JUNIOR TIER MEZZANINE) shall mean that certain
Manager's Consent and Subordination of Management Agreement (Junior Tier
Mezzanine), dated as of the date hereof, among Mezzanine Lender, Mezzanine
Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
MANAGER'S CONSENT (MORTGAGE) shall mean that certain Manager's
Consent and Subordination of Management Agreement, dated as of September 18,
2002, among Mortgage Lender, Mortgage Borrower and Manager, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
MANAGER'S CONSENT (SENIOR TIER MEZZANINE) shall mean that certain
Manager's Consent and Subordination of Management Agreement (Mezzanine), dated
as of September 18, 2002, among Senior Tier Mezzanine Lender, Senior Tier
Mezzanine Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
MATERIAL ADVERSE EFFECT shall mean any event or condition that has a
material adverse effect on (i) the Property taken as a whole, (ii) the business,
profits, operations or financial condition of Mortgage Borrower, Senior Tier
Mezzanine Borrower or Mezzanine Borrower (iii) the ability of Mezzanine Borrower
to repay the principal and interest of the Loan as it becomes due or
11
to satisfy any of Mezzanine Borrower's obligations under the Loan Documents
(Junior Tier Mezzanine), (iv) the ability of Senior Tier Mezzanine Borrower to
repay the principal and interest of the Loan (Senior Tier Mezzanine) as it
becomes due or to satisfy any of Senior Tier Mezzanine Borrower's obligations
under the Loan Documents (Senior Tier Mezzanine), (v) the ability of Mortgage
Borrower to repay the principal and interest of the Loan (Mortgage) as it
becomes due or to satisfy any of Mortgage Borrower's obligations under the Loan
Documents (Mortgage), (vi) the validity or enforceability of any of the Loan
Documents (Junior Tier Mezzanine) against any party thereto, (vii) the validity
or enforceability of any of the Loan Documents (Senior Tier Mezzanine) against
any party thereto, (viii) the Collateral, taken as a whole or (ix) the priority
of the Liens in favor of Mezzanine Lender.
MATURITY DATE shall have the meaning set forth in the Mezzanine
Note.
MATURITY DATE PAYMENT shall have the meaning set forth in the
Mezzanine Note.
MAXIMUM LEGAL RATE shall mean the maximum non-usurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness evidenced by the
Mezzanine Note and as provided for herein or the other Loan Documents (Junior
Tier Mezzanine), under the laws of such state or states whose laws are held by
any court of competent jurisdiction to govern the interest rate provisions of
the Loan.
MEMBER POWER shall mean the member power executed by Mezzanine
Borrower and substantially in the form of EXHIBIT L.
MEZZANINE ACCOUNT shall have the meaning set forth in Section 3.1.1.
MEZZANINE BORROWER shall have the meaning set forth in the first
paragraph of this Agreement.
MEZZANINE BORROWER'S ACCOUNT shall mean the following account:
Account Name: BRE/PARK PLACE JUNIOR MEZZANINE L.L.C.
Operating Account
Account Number: 181-465-6
Bank Name: Harris Trust and Savings Bank
ABA Number: 071000288
MEZZANINE DEBT SERVICE RESERVE ACCOUNT shall have the meaning set
forth in Section 3.1.1(a).
MEZZANINE LENDER shall have the meaning set forth in the first
paragraph of this Agreement.
12
MEZZANINE NOTE shall mean that certain Amended and Restated
Mezzanine Note, dated September 30, 2002, in the principal amount of Fourteen
Million Five Hundred Thousand Dollars ($14,500,000), made by Mezzanine Borrower,
as maker, in favor of Junior Tier Mezzanine Lender, as payee, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
MONETARY DEFAULT shall mean a Default (i) that can be cured with the
payment of money or (ii) arising pursuant to Section 17.1(a)(vi) or (vii).
MORTGAGE BORROWER shall mean BRE/PARK PLACE L.L.C., a Delaware
limited liability company, together with its permitted successors and assigns.
MORTGAGE DEFAULT shall have the meaning ascribed to "Default" in the
Loan Agreement (Mortgage).
MORTGAGE EVENT OF DEFAULT shall have the meaning ascribed to "Event
of Default" in the Loan Agreement (Mortgage).
MORTGAGE LENDER shall mean GERMAN AMERICAN CAPITAL CORPORATION, a
Maryland corporation, together with its successors and assigns.
MORTGAGE NOTE shall have the meaning ascribed to "Note" in the Loan
Agreement (Mortgage).
NET EXCESS CASH FLOW shall have the meaning set forth in Section
3.1.6(a).
NET EXCESS CASH FLOW COMMENCEMENT DATE shall have the meaning set
forth in Section 3.1.6(a).
MOODY'S shall mean Moody's Investors Service, Inc.
NOTES shall mean, collectively, the Mortgage Note, the Senior Tier
Mezzanine Note and the Mezzanine Note.
OBLIGATIONS shall mean, collectively, the Obligations (Junior Tier
Mezzanine), Obligations (Senior Tier Mezzanine) and the Obligations (Mortgage).
OBLIGATIONS (JUNIOR TIER MEZZANINE) shall mean all indebtedness,
obligations and liabilities of Mezzanine Borrower and Guarantor to Mezzanine
Lender, under this Agreement or any of the other Loan Documents (Junior Tier
Mezzanine) or in respect of the Loan or the Mezzanine Note, or other instruments
at any time evidencing any of the foregoing, whether existing on the date of
this Agreement or arising or incurred hereafter, direct or indirect, joint or
several, absolute or
13
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
OBLIGATIONS (MORTGAGE) shall have the meaning ascribed to
"Obligations" in the Loan Agreement (Mortgage).
OBLIGATIONS (SENIOR TIER MEZZANINE) shall have the meaning ascribed
to "Obligations" in the Loan Agreement (Senior Tier Mezzanine).
NON-CONSOLIDATION OPINION shall have the meaning provided in Section
2.5.16.
OFFICER'S CERTIFICATE shall mean a certificate executed by an
authorized signatory of Mezzanine Borrower that is familiar with the financial
condition of Mezzanine Borrower, the Senior Tier Mezzanine Borrower, the
Mortgage Borrower and the operation of the Property.
OPERATING EXPENSES shall have the meaning set forth in the Loan
Agreement (Mortgage).
OPERATING INCOME shall have the meaning set forth in the Loan
Agreement (Mortgage).
OPINION OF COUNSEL shall mean an opinion of counsel of a law firm
selected by Mezzanine Borrower and reasonably acceptable to Mezzanine Lender.
OTHER CHARGES shall mean maintenance charges, impositions other than
Impositions, and any other charges, including, without limitation, vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Property, now or hereafter levied or assessed or imposed against the Property or
any part thereof by any Governmental Authority, other than those required to be
paid by a tenant pursuant to its respective Lease.
OTHER TAXES shall have the meaning set forth in Section 2.4.3.
PAYMENT DATE shall have the meaning set forth in the Mezzanine Note.
PERMITTED DEBT shall have the meaning set forth in the Loan
Agreement (Mortgage).
PERMITTED ENCUMBRANCES shall have the meaning set forth in the Loan
Agreement (Mortgage).
PERMITTED INVESTMENTS shall have the meaning set forth in the
Account Agreement (Junior Tier Mezzanine).
14
PERMITTED MORTGAGE LOAN AMENDMENT shall have the meaning set forth
in Section 5.1.19(b).
PERMITTED SENIOR TIER MEZZANINE LOAN AMENDMENT shall have the
meaning specified in Section 5.1.19(e).
PERSON shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
PHYSICAL CONDITIONS REPORT shall mean the structural engineering
report with respect to the Property (i) prepared by an Independent Architect,
(ii) addressed to Mezzanine Lender or with respect to which Mezzanine Lender
shall have received a reliance letter, (iii) prepared based on a scope of work
determined by Mortgage Lender in Mortgage Lender's reasonable discretion, and
(iv) in form and content acceptable to Mortgage Lender in Mortgage Lender's
reasonable discretion, together with any amendments or supplements thereto.
PLAN ASSETS shall have the meaning provided in Section 4.1.9(b).
PLEDGE (JUNIOR TIER MEZZANINE) shall mean that certain Pledge and
Security Agreement, dated as of the date hereof, from Mezzanine Borrower to
Mezzanine Lender pledging Mezzanine Borrower's 100% membership (including
limited liability company) interests of the Senior Tier Mezzanine Borrower.
PLEDGE (SENIOR TIER MEZZANINE) shall mean that certain Pledge and
Security Agreement, dated as of September 18, 2002, from Senior Tier Mezzanine
Borrower to Senior Tier Mezzanine Lender pledging Senior Tier Mezzanine
Borrower's 100% membership (including limited liability company) interests of
the Mortgage Borrower.
PLEDGED COLLATERAL shall have the meaning set forth in the Pledge
(Junior Tier Mezzanine).
PRINCIPAL AMOUNT shall have the meaning set forth in the Mezzanine
Note.
PROCEEDS shall have the meaning set forth in Loan Agreement
(Mortgage).
PROHIBITED MORTGAGE LOAN AMENDMENT shall have the meaning specified
in Section 5.1.19(b).
PROHIBITED SENIOR TIER MEZZANINE LOAN AMENDMENT shall have the
meaning specified in Section 5.1.19(e).
15
PROPERTY shall have the meaning set forth in the Loan Agreement
(Mortgage).
PROTECTIVE ADVANCES shall mean sums advanced by Mezzanine Lender for
the purposes of payment of items reasonably necessary to protect the Collateral.
PURCHASE AGREEMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
QUALIFIED MANAGER shall mean (i) Manager, (ii) Third-Party Manager,
(iii) an Affiliate of Mezzanine Borrower Controlled by or under Common Control
with one or more Guarantors, (iv) a reputable and experienced management
organization which together with its Affiliates manages (excluding the Property)
a minimum of 5,000,000 square feet of Class A office space (or mixed use
buildings having Class A office space as the predominant component) located in
major United States cities, provided that (in the case of this clause (iv) only)
Mezzanine Borrower shall have obtained the prior written consent of Mezzanine
Lender for such Person, which consent shall not be unreasonably withheld or
delayed or (v) any other manager as Mezzanine Lender shall approve in its sole
and absolute discretion.
RATING AGENCIES shall have the meaning set forth in the Loan
Agreement (Mortgage).
REAS shall have the meaning set forth in the Loan Agreement
(Mortgage).
RECEIPTS shall mean with respect to any Person, the declaration or
payment of any cash, cash flow, dividend or distribution on or in respect of any
member's or partner's interest, shares of any class of capital stock or other
beneficial interest of such Person; the purchase, redemption, exchange or other
retirement of any member's or partner's interest, shares of any class of capital
stock or other beneficial interest of such Person, directly or indirectly; the
return of capital by such Person to its members, shareholders or partners as
such; or any other distribution of any nature whatsoever on or in respect of any
member's or partner's interest, shares of any class of capital stock or other
beneficial interest of such Person.
RECOURSE GUARANTY (JUNIOR TIER MEZZANINE) shall mean that certain
Guaranty of Recourse Obligations of Mezzanine Borrower, dated as of the date
hereof, by Guarantor in favor of Mezzanine Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
RECOURSE GUARANTY (MORTGAGE) shall mean that certain Guaranty of
Recourse Obligations of Mortgage Borrower, dated as of September 18, 2002, by
Guarantor in favor of Mortgage Lender, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
RECOURSE GUARANTY (SENIOR TIER MEZZANINE) shall mean that certain
Guaranty of Recourse Obligations of Senior Tier Mezzanine Borrower, dated as of
September 18, 2002, by
16
Guarantor in favor of Senior Tier Mezzanine Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
REGISTER shall have the meaning set forth in Section 13.4.
REGULATORY CHANGE shall mean any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any written interpretations, directives or
requests applying to Mezzanine Lender, or any Person Controlling Mezzanine
Lender or to a class of banks or companies Controlling banks of or under any
federal, state or foreign laws or regulations (whether or not having the force
of law) by any court or Governmental Authority or monetary authority charged
with the interpretation or administration thereof.
REPLACEMENT INTEREST RATE CAP AGREEMENT (MEZZANINE) shall mean an
interest rate cap agreement from an Approved Counterparty with terms identical
to the Interest Rate Cap Agreement except that the same shall be effective as of
(i) in connection with a replacement following a downgrade, withdrawal or
qualification of the long-term unsecured debt rating of the Counterparty below
"AA-" by S&P or the equivalent thereof by Moody's, the date required in Section
9.3(c) or (ii) in connection with a replacement related to an extension of the
Maturity Date, the date required in Section 5(a)(ii) of the Mezzanine Note;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements, a Replacement Interest Rate Cap Agreement (Junior
Tier Mezzanine) shall be such interest rate cap agreement approved in writing by
Mezzanine Lender, and if the Loan or any portion thereof is included in a
Securitization, each of the Rating Agencies with respect thereto.
S&P shall mean Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies.
SECURITY INSTRUMENT shall have the meaning set forth in the Loan
Agreement (Mortgage).
SENIOR TIER MEZZANINE ACCOUNT shall have the meaning ascribed to
"Mezzanine Account" in the Loan Agreement (Senior Tier Mezzanine).
SENIOR TIER MEZZANINE BORROWER shall mean BRE/PARK PLACE MEZZANINE
L.L.C., a Delaware limited liability company, together with its permitted
successors and assigns.
SENIOR TIER MEZZANINE DEFAULT shall have the meaning ascribed to
"Default" in the Loan Agreement (Senior Tier Mezzanine).
SENIOR TIER MEZZANINE EVENT OF DEFAULT shall have the meaning
ascribed to "Event of Default" in the Loan Agreement (Senior Tier Mezzanine).
17
SENIOR TIER MEZZANINE LENDER shall mean German American Capital
Corporation, a Maryland corporation, together with its successors and assigns.
SENIOR TIER MEZZANINE NOTE shall have the meaning set forth in the
Recitals hereto.
SERVICER shall mean such Person designated in writing with an
address for such Person by Mezzanine Lender, in its sole discretion, to act as
Mezzanine Lender's agent hereunder with such powers as are specifically
delegated to the Servicer by Mezzanine Lender, whether pursuant to the terms of
this Agreement, the Account Agreement (Junior Tier Mezzanine) or otherwise,
together with such other powers as are reasonably incidental thereto.
SINGLE PURPOSE ENTITY shall mean a Person, other than an individual,
which (i) is formed or organized solely for the purpose of holding, developing,
using, operating and financing, directly, or, in the case of Mezzanine Borrower,
indirectly, an ownership interest in the Property, (ii) does not engage in any
business unrelated to the Property and the development, use, operation and
financing thereof, (iii) has not and will not have any assets other than those
related to its interest in the Property or the operation, management and
financing thereof or any indebtedness other than the Permitted Debt, (iv)
maintains its own separate books and records and its own accounts, in each case
which are separate and apart from the books and records and accounts of any
other Person, (v) holds itself out as being a Person, separate and apart from
any other Person, (vi) does not and will not commingle its funds or assets with
those of any other Person, (vii) conducts its own business in its own name,
(viii) maintains separate financial statements, (ix) pays its own liabilities
out of its own funds, (x) observes all partnership, corporate or limited
liability company formalities, as applicable, (xi) pays the salaries of its own
employees, if any, and maintains a sufficient number of employees, if any, in
light of its contemplated business operations, (xii) does not guarantee or
otherwise obligate itself with respect to the debts of any other Person or hold
out its credit as being available to satisfy the obligations of any other
Person, (xiii) does not acquire obligations or securities of its partners,
members or shareholders, (xiv) allocates fairly and reasonably shared expenses,
including, without limitation, any overhead for shared office space, if any,
(xv) does not and will not pledge its assets for the benefit of any other Person
or make any loans or advances to any other Person, (xvi) does and will continue
to use commercially reasonable efforts to correct any known misunderstanding
regarding its separate identity, (xvii) maintains adequate capital in light of
its contemplated business operations, and (xviii) has and will continue to have
a partnership or operating agreement, certificate of incorporation, articles of
organization or other organizational document which has been approved by
Mezzanine Lender which approval shall not be unreasonably withheld, conditioned
or delayed. In addition, if such Person is a partnership, (1) all general
partners of such Person shall be Single Purpose Entities; and (2) if such Person
has more than one general partner, then the organizational documents shall
provide that such Person shall continue (and not dissolve) for so long as a
solvent general partner exists. In addition, if such Person is a corporation,
then, at all times: (a) such Person shall have at least two (2) independent
directors (which independent directors must satisfy the criteria set forth in
the definition of "Independent Manager" herein) and (b) the board of directors
of such Person may not take any action requiring the unanimous affirmative vote
of 100% of the members of the board of directors unless all of the directors,
including the independent directors,
18
shall have participated in such vote. In addition, if such Person is a limited
liability company, (a) such Person shall have at least two (2) Independent
Managers or Independent Members, (b) if such Person is managed by a board of
managers, the board of managers of such Person may not take any action requiring
the unanimous affirmative vote of 100% of the members of the board of managers
unless all of the managers, including the Independent Managers, shall have
participated in such vote, (c) if such Person is not managed by a board of
managers, the members of such Person may not take any action requiring the
affirmative vote of 100% of the members of such Person unless all of the
members, including the Independent Members, shall have participated in such
vote, (d) each managing member shall be a Single Purpose Entity, (e) its
articles of organization, certificate of formation and/or operating agreement,
as applicable, shall provide that until all of the Indebtedness and Obligations
(Junior Tier Mezzanine) are paid in full such entity will not dissolve. In
addition, the organizational documents of such Person shall provide that such
Person (1) without the unanimous consent of all of the partners, directors or
members, as applicable, shall not with respect to itself or to any other Person
in which it has a direct or indirect legal or beneficial interest (a) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or other similar official for the benefit of the
creditors of such Person or all or any portion of such Person's properties, or
(b) take any action that may be reasonably likely to cause such Person to become
insolvent, (2) has and will maintain its books, records, resolutions and
agreements as official records, (3) has held and will hold its assets in its own
name, (4) has and will maintain its financial statements, accounting records and
other organizational documents, books and records separate and apart from any
other Person, and (5) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it.
SPECIAL TAXES shall mean any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, or any liabilities with
respect thereto, including those arising after the date hereof as result of the
adoption of or any change in law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding (i) in the case of
any Mezzanine Lender, such taxes (including income taxes, franchise taxes and
branch profit taxes) as are imposed on or measured by Mezzanine Lender's net
income by the United States of America or any Governmental Authority of the
jurisdiction under the laws under which such Mezzanine Lender is organized or
maintains its principal office or a lending office or (ii) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Mezzanine
Borrower under this Agreement), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Mezzanine Lender becomes
a party to this Agreement (or designates a new lending office).
STATE shall mean the State in which the Property or any part thereof
is located.
STRIKE PRICE shall mean 6.9375% per annum.
SUB-ACCOUNT(S) shall have the meaning set forth in Section 3.1.1.
SURVEY shall have the meaning set forth in the Loan Agreement
(Mortgage).
19
TAKING shall have the meaning set forth in the Loan Agreement
(Mortgage).
TENANT shall have the meaning set forth in the Loan Agreement
(Mortgage).
THIRD-PARTY MANAGER shall mean CB Richard Ellis, Inc.
THIRD-PARTY MANAGEMENT AGREEMENT shall mean that certain management
agreement between Mortgage Borrower and Third-Party Manager dated the date
hereof.
THIRD-PARTY MANAGER'S CONSENT (JUNIOR TIER MEZZANINE) shall mean
that certain Manager's Consent and Subordination of Management Agreement (Junior
Tier Mezzanine), dated as of the date hereof, among Mezzanine Lender, Mezzanine
Borrower and Third Party Manager, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
THIRD-PARTY MANAGER'S CONSENT (MORTGAGE) shall mean that certain
Manager's Consent and Subordination of Management Agreement, dated as of
September 18, 2002, among Mortgage Lender, Mortgage Borrower and Third-Party
Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
THIRD-PARTY MANAGER'S CONSENT (SENIOR TIER MEZZANINE) shall mean
that certain Manager's Consent and Subordination of Management Agreement
(Mezzanine), dated as of September 18, 2002, among Senior Tier Mezzanine Lender,
Senior Tier Mezzanine Borrower and Third Party Manager, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
TITLE COMPANY shall have the meaning set forth in the Loan Agreement
(Mortgage).
TITLE POLICY (MORTGAGE) shall have the meaning ascribed to "Title
Policy" in the Loan Agreement (Mortgage).
TITLE POLICY (SENIOR TIER MEZZANINE) shall have the meaning ascribed
to "Title Policy" in the Loan Agreement (Senior Tier Mezzanine).
TRANSFER shall mean, directly or indirectly (other than pursuant to
the Loan Documents (Mortgage), the Loan Documents (Senior Tier Mezzanine) and
the Loan Documents (Junior Tier Mezzanine)), to sell, assign, convey, mortgage,
transfer, pledge, hypothecate, encumber, grant a security interest in, exchange
or otherwise dispose of any beneficial interest or grant any option or warrant
with respect to, or where used as a noun, a direct or indirect sale, assignment,
conveyance, transfer, pledge or other disposition of any beneficial interest by
any means whatsoever whether voluntary, involuntary, by operation of law or
otherwise.
20
UCC OR UNIFORM COMMERCIAL CODE shall mean the Uniform Commercial
Code as in effect in the State.
U.S. GOVERNMENT OBLIGATIONS shall have the meaning set forth in the
Loan Agreement (Mortgage).
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP. When used herein, the term "financial statements" shall include the notes
and schedules thereto. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the definitions given them in this
Agreement when used in any other Loan Document (Junior Tier Mezzanine) or in any
certificate or other document made or delivered pursuant thereto. All uses of
the word "including" shall mean including, without limitation unless the context
shall indicate otherwise. Unless otherwise specified, the words hereof, herein
and hereunder and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
II. GENERAL TERMS
SECTION 2.1 LOAN; DISBURSEMENT TO MEZZANINE BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions
set forth herein, Mezzanine Lender hereby agrees to make and Mezzanine Borrower
hereby agrees to accept the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO MEZZANINE BORROWER. Mezzanine Borrower
may request and receive only one borrowing hereunder in respect of the Loan and
any amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed. Mezzanine Borrower acknowledges and agrees that the full proceeds of
the Loan have been disbursed by Mezzanine Lender to Mezzanine Borrower on the
Closing Date.
2.1.3 THE MEZZANINE NOTE, PLEDGE (JUNIOR TIER MEZZANINE) AND
LOAN DOCUMENTS (JUNIOR TIER MEZZANINE). The Loan shall be evidenced by the
Mezzanine Note and secured by the Pledge (Junior Tier Mezzanine), this
Agreement, the Member Power and the other Loan Documents (Junior Tier
Mezzanine).
21
2.1.4 USE OF PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan to (a) purchase the 100% equity interest in the Senior Tier
Mezzanine Borrower, (b) make deposits into the Sub-Accounts as required
hereunder and (c) distribute the balance, if any, to Mezzanine Borrower.
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
2.2.1 PAYMENT OF PRINCIPAL AND INTEREST.
(a) Except as set forth in Section 2.2.1(b), interest shall accrue
on the Principal Amount as set forth in the Mezzanine Note.
(b) Upon the occurrence and during the continuance of an Event of
Default and from and after the Maturity Date if the entire then outstanding
balance of the Principal Amount is not repaid on the Maturity Date, interest on
the outstanding principal balance of the Loan and, to the extent permitted by
law, overdue interest and other amounts due in respect of the Loan shall accrue
at the Default Rate calculated from the date such payment was due without regard
to any grace or cure periods contained herein. Interest at the Default Rate
shall be computed from the occurrence (but only during the continuance) of the
Event of Default until the actual receipt and collection of the Indebtedness (or
that portion thereof that is then due). To the extent permitted by applicable
law, interest at the Default Rate shall be added to the Indebtedness, shall
itself accrue interest at the same rate as the Loan and shall be secured by this
Agreement and the Pledge (Junior Tier Mezzanine). This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Indebtedness, nor as a waiver of any other right or remedy accruing to Mezzanine
Lender by reason of the occurrence of any Event of Default; and Mezzanine Lender
retains its rights under the Mezzanine Note to accelerate and to continue to
demand payment of the Indebtedness upon the happening (but only during the
continuance) of any Event of Default.
2.2.2 METHOD AND PLACE OF PAYMENT.
(a) On each Payment Date, Mezzanine Borrower shall pay to
Mezzanine Lender interest accruing pursuant to the Mezzanine Note for the entire
Interest Period during which said Payment Date shall occur.
(b) All amounts advanced by Mezzanine Lender pursuant to the
applicable provisions of the Loan Documents (Junior Tier Mezzanine), other than
the Principal Amount, together with any interest at the Default Rate or other
charges as provided therein, shall be due and payable hereunder as provided in
the Loan Documents (Junior Tier Mezzanine). In the event any such advance or
charge is not so repaid by Mezzanine Borrower, Mezzanine Lender may, at its
option, first apply any payments received under the Mezzanine Note to repay such
advances, together with any interest thereon, or other charges as provided in
the Loan Documents (Junior Tier Mezzanine), and the balance, if any, shall be
applied in payment of any installment of interest or principal then due and
payable.
22
(c) The Maturity Date Payment shall be due and payable in full on
the Maturity Date.
2.2.3 LATE PAYMENT CHARGE. If any principal, interest or any
other sums due under the Loan Documents (Junior Tier Mezzanine) (other than the
outstanding Principal Amount due and payable on the Maturity Date) is not paid
by Mezzanine Borrower on the date on which it is due, Mezzanine Borrower shall
pay to Mezzanine Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the Maximum Legal Rate (the LATE PAYMENT
CHARGE) in order to defray the expense incurred by Mezzanine Lender in handling
and processing such delinquent payment and to compensate Mezzanine Lender for
the loss of the use of such delinquent payment. Any such amount shall be secured
by this Agreement, the Pledge (Junior Tier Mezzanine) and the other Loan
Documents (Junior Tier Mezzanine) to the extent permitted by applicable law.
2.2.4 USURY SAVINGS. This Agreement and the Mezzanine Note are
subject to the express condition that at no time shall Mezzanine Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Mezzanine Lender to either civil or criminal liability
as a result of being in excess of the Maximum Legal Rate. If, by the terms of
this Agreement or the other Loan Documents (Junior Tier Mezzanine), Mezzanine
Borrower is at any time required or obligated to pay interest on the principal
balance due under the Mezzanine Note at a rate in excess of the Maximum Legal
Rate, then the LIBOR Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due under
the Note. All sums paid or agreed to be paid to Mezzanine Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
SECTION 2.3 PREPAYMENTS. No prepayments of the Indebtedness shall be
permitted prior to the Maturity Date except as set forth in Section 2.3.1 hereof
and Section 4 of the Mezzanine Note.
2.3.1 MANDATORY PREPAYMENT.
(a) Subject to Article VIII, Mezzanine Borrower shall repay the
Mezzanine Note, in full, together with the Liquidated Damages Amount (if
applicable), in accordance with Section 4(b) and Section 4(d) (if applicable) of
the Mezzanine Note upon the occurrence of any of the following events:
(i) if the Property is Transferred;
23
(ii) if all or any portion of the Mortgage Borrower's
interest in the Property is Transferred other than as permitted by Section 8.3
of the Loan Agreement (Mortgage);
(iii) if all or any portion of the Senior Tier Mezzanine
Borrower's interest in the Mortgage Borrower is Transferred other than as
permitted by Section 8.5 of the Loan Agreement (Mortgage);
(iv) if a Transfer or series of Transfers of any direct or
indirect ownership interests in the Senior Tier Mezzanine Borrower shall occur
which either individually or in the aggregate with all such Transfers violates
the requirements of Article VIII;
(v) if a Transfer or series of Transfers of any direct or
indirect ownership interest in the Mezzanine Borrower shall occur which either
individually or in the aggregate with all such Transfers violates the
requirements of Article VIII; or
(vi) if the Loan (Mortgage) is repaid or refinanced.
(b) If there shall occur a casualty or Taking in respect of the
Property and as a result thereof the Loan (Mortgage) is prepaid in whole or in
part, then, to the extent that there shall be excess proceeds or awards
available following the application of the proceeds or awards to reconstruct or
repair the Property or to the payment of all or any portion of the Loan
(Mortgage) pursuant to the terms of the Loan Documents (Mortgage) and the Loan
(Senior Tier Mezzanine) pursuant to the terms of the Loan Documents (Senior Tier
Mezzanine) (EXCESS PROCEEDS), Mezzanine Borrower shall repay the Mezzanine Note,
or a portion thereof, in the amount of such available Excess Proceeds in
accordance with Section 4(b) of the Mezzanine Note and no Liquidated Damages
Amount shall be due in connection therewith. All Excess Proceeds shall be
deposited directly into the Mezzanine Account.
2.3.2 PREPAYMENTS AFTER EVENT OF DEFAULT. If, following an
Event of Default, Mezzanine Lender shall accelerate the Indebtedness and
Mezzanine Borrower thereafter tenders payment of all or any part of the
Indebtedness, or if all or any portion of the Indebtedness is recovered by
Mezzanine Lender after such Event of Default, (a) such payment may be made only
on the next occurring Payment Date together with all unpaid interest thereon as
calculated through the end of the Interest Period during which such Payment Date
occurs (even if such period extends beyond such Payment Date and calculated as
if the Loan had not been repaid on such Payment Date), and all other fees and
sums payable hereunder or under the Loan Documents (Junior Tier Mezzanine),
including without limitation, interest that has accrued at the Default Rate and
any Late Payment Charges), (b) such payment shall be deemed a voluntary
prepayment by Mezzanine Borrower, and (c) Mezzanine Borrower shall pay, in
addition to the Indebtedness, in the event the payment occurs during the Lockout
Period, the Liquidated Damages Amount.
24
2.3.3 RELEASE OF PROPERTY. Mezzanine Lender shall, upon the
written request and at the expense of Mezzanine Borrower, upon payment in full
of the Principal Amount and interest on the Loan and all other amounts due and
payable under the Loan Documents (Junior Tier Mezzanine) in accordance with the
terms and provisions of the Mezzanine Note and this Agreement, release the Lien
of (i) this Agreement upon the Account Collateral (Junior Tier Mezzanine) and
the Interest Rate Cap Collateral and (ii) the Pledge (Junior Tier Mezzanine) on
the Collateral or assign it, in whole or in part, to a new lender. In such
event, Mezzanine Borrower shall submit to Mezzanine Lender, not less than ten
(10) Business Days prior to the date of such release or assignment, a release of
lien or assignment of lien, as applicable, for such Collateral for execution by
Mezzanine Lender. Such release or assignment, as applicable, shall be in a form
appropriate in each jurisdiction in which the Property is located and
satisfactory to Mezzanine Lender in its reasonable discretion. In addition,
Mezzanine Borrower shall provide all other documentation Junior Tier Mezzanine
Lender reasonably requires to be delivered by Mezzanine Borrower in connection
with such release or assignment, as applicable.
SECTION 2.4 REGULATORY CHANGE; TAXES.
2.4.1 INCREASED COSTS. If as a result of any Regulatory Change
or required compliance of Mezzanine Lender therewith, the basis of taxation of
payments to Mezzanine Lender or any company Controlling Mezzanine Lender of the
principal of or interest on the Loan is changed or Mezzanine Lender or the
company Controlling Mezzanine Lender shall be subject to (i) any tax, duty,
charge or withholding of any kind with respect to this Agreement (excluding
federal taxation of the overall net income of Mezzanine Lender or the company
Controlling Mezzanine Lender and taxes covered by Subsections 2.4.2, 2.4.3 and
2.4.4 below); or (ii) any reserve, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities, of Mezzanine Lender or any company Controlling Mezzanine
Lender is imposed, modified or deemed applicable; or (iii) any other condition
affecting loans to borrowers subject to LIBOR-based interest rates is imposed on
Mezzanine Lender or any company Controlling Mezzanine Lender and Mezzanine
Lender determines that, by reason thereof, the cost to Mezzanine Lender or any
company Controlling Mezzanine Lender of making, maintaining or extending the
Loan to Mezzanine Borrower is increased, or any amount receivable by Mezzanine
Lender or any company Controlling Mezzanine Lender hereunder in respect of any
portion of the Loan to Mezzanine Borrower is reduced, in each case by an amount
deemed by Mezzanine Lender in good faith to be material (such increases in cost
and reductions in amounts receivable being herein called INCREASED COSTS), then
Mezzanine Lender shall provide notice thereof to Mezzanine Borrower and
Mezzanine Borrower agrees that it will pay to Mezzanine Lender upon Mezzanine
Lender's written request such additional amount or amounts as will compensate
Mezzanine Lender or any company Controlling Mezzanine Lender for such Increased
Costs to the extent Mezzanine Lender determines that such Increased Costs are
allocable to the Loan. If Mezzanine Lender requests compensation under this
Section 2.4.1, Mezzanine Borrower may, by notice to Mezzanine Lender, require
that Mezzanine Lender furnish to Mezzanine Borrower a statement setting forth
the basis for requesting such compensation and the method for determining the
amount thereof.
25
2.4.2 SPECIAL TAXES. Mezzanine Borrower shall make all
payments hereunder free and clear of and without deduction for Special Taxes. If
Mezzanine Borrower shall be required by law to deduct any Special Taxes from or
in respect of any sum payable hereunder or under any other Loan Document (Junior
Tier Mezzanine) to Mezzanine Lender, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.4.2)
Mezzanine Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Mezzanine Borrower shall make such
deductions, and (iii) Mezzanine Borrower shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
2.4.3 OTHER TAXES. In addition, Mezzanine Borrower agrees to
pay any present or future stamp or documentary taxes or other excise or property
taxes, charges, or similar levies which arise from any payment made hereunder,
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents (Junior Tier Mezzanine), or the
Loan (hereinafter referred to as OTHER TAXES).
2.4.4 INDEMNITY. Mezzanine Borrower shall indemnify Mezzanine
Lender for the full amount of Special Taxes and Other Taxes (including any
Special Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.4.4) paid by Mezzanine Lender and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Special Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
after the date Mezzanine Lender makes written demand therefor. Mezzanine
Borrower shall not, however, be required to pay any additional amounts under
this Section 2.4 or otherwise indemnify Lender for Special Taxes, other Taxes or
Increased Costs to the extent such indemnification obligations result from a
Foreign Lender's failure to comply with Subsection 2.4.6 below.
2.4.5 CHANGE OF OFFICE. To the extent that changing the
jurisdiction of Mezzanine Lender's applicable office would have the effect of
minimizing Special Taxes, Other Taxes or Increased Costs, Mezzanine Lender shall
use reasonable efforts to make such a change, provided that same would not
otherwise be materially disadvantageous to Mezzanine Lender.
2.4.6 TAX EXEMPTIONS AND REDUCTIONS. Any Foreign Lender that
is entitled to an exemption from or reduced rate of withholding tax under the
law of the jurisdiction in which Mezzanine Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement, shall deliver to Mezzanine Borrower within 10 days after the Closing
Date (or in the case of an assignee, on or before the date such assignee becomes
a party to this Agreement) such properly completed and executed documentation
prescribed by applicable law or reasonably requested by Borrower as will permit
such payments to be made without withholding or at a reduced rate.
26
2.4.7 SURVIVAL. Without prejudice to the survival of any other
agreement of Mezzanine Borrower hereunder, the agreements and obligations of
Mezzanine Borrower contained in this Section 2.4 shall survive the payment in
full of principal and interest hereunder, and the termination of this Agreement.
SECTION 2.5 CONDITIONS PRECEDENT TO CLOSING.
The obligation of Mezzanine Lender to make the Loan hereunder is
subject to the fulfillment by, or on behalf of, Mezzanine Borrower or waiver by
Mezzanine Lender of the following conditions precedent no later than the Closing
Date; provided, however, that unless a condition precedent shall expressly
survive the Closing Date pursuant to a separate agreement, by funding the Loan,
Mezzanine Lender shall be deemed to have waived any such conditions not
theretofore fulfilled or satisfied:
2.5.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS.
(a) The representations and warranties of Mezzanine Borrower and
Guarantor contained in this Agreement and the other Loan Documents (Junior Tier
Mezzanine) shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of such date, and no
Default with respect to the payment of money or Event of Default shall have
occurred and be continuing; and Mezzanine Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document (Junior Tier Mezzanine) on its part to be observed
or performed; and
(b) The representations and warranties of Mortgage Borrower and
Guarantor contained in the Loan Agreement (Mortgage) and the other Loan
Documents (Mortgage) shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Mortgage Default with respect to payment of money or Mortgage Event of
Default shall have occurred and be continuing; and Mortgage Borrower and
Guarantor shall be in compliance in all material respects with all terms and
conditions set forth in the Loan Agreement (Mortgage) and in each other Loan
Document (Mortgage) on its part to be observed or performed.
(c) The representations and warranties of Senior Tier Mezzanine
Borrower and Guarantor contained in the Loan Agreement (Senior Tier Mezzanine)
and the other Loan Documents (Senior Tier Mezzanine) shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
if made on and as of such date, and no Senior Tier Mezzanine Default with
respect to payment of money or Senior Tier Mezzanine Event of Default shall have
occurred and be continuing; and Senior Tier Mezzanine Borrower and Guarantor
shall be in compliance in all material respects with all terms and conditions
set forth in the Loan Agreement (Senior Tier Mezzanine) and in each other Loan
Document (Senior Tier Mezzanine) on its part to be observed or performed.
27
2.5.2 DELIVERY OF LOAN DOCUMENTS (JUNIOR TIER MEZZANINE);
TITLE INSURANCE; REPORTS; LEASES.
(a) LOAN DOCUMENTS (JUNIOR TIER MEZZANINE). Mezzanine Lender shall
have received an original copy of this Agreement, the Mezzanine Note and all of
the other Loan Documents (Junior Tier Mezzanine), in each case, duly executed
(and to the extent required, acknowledged) and delivered on behalf of Mezzanine
Borrower and any other parties thereto;
(b) CERTIFICATE. Mezzanine Lender shall have received an original
of the Certificate together with a Member Power endorsed in blank;
(c) UCC FINANCING STATEMENTS. Mezzanine Lender shall have received
evidence that the UCC financing statements relating to the Pledge (Junior Tier
Mezzanine) and this Agreement have been delivered to Mezzanine Lender for filing
in the applicable jurisdictions;
(d) INTEREST RATE CAP AGREEMENT (JUNIOR TIER MEZZANINE). Mezzanine
Lender shall have received the original Interest Rate Cap Agreement (Junior Tier
Mezzanine) which shall be in form and substance satisfactory to Mezzanine Lender
in its sole discretion and an original counterpart of the Acknowledgment
executed and delivered by the Counterparty;
(e) ACCOUNT AGREEMENT (JUNIOR TIER MEZZANINE). Mezzanine Lender
shall have received the original of the (i) Account Agreement (Junior Tier
Mezzanine) executed by each of Cash Management Bank (Junior Tier Mezzanine) and
Mezzanine Borrower and (ii) Instruction Letter, executed by each of Senior Tier
Mezzanine Borrower and Mezzanine Borrower;
(f) TITLE INSURANCE.
(i) Mezzanine Lender shall have received a copy of the Title
Policy (Mortgage) (or a marked up and signed commitment having the force and
effect of a title policy, marked paid by an authorized representative of the
Title Company) issued by the Title Company with respect to the Loan (Mortgage)
dated as of September 18, 2002 in form and substance acceptable to Mezzanine
Lender. Mezzanine Lender also shall have received evidence that all premiums in
respect of the Title Policy (Mortgage) have been paid;
(ii) Mezzanine Lender shall have received a copy of the Title
Policy (Senior Tier Mezzanine) with a mezzanine loan endorsement in favor of
Senior Tier Mezzanine Lender, its successors and assigns, dated as of September
18, 2002. Mezzanine Lender also shall have received evidence that all premiums
in respect of the Title Policy (Senior Tier Mezzanine) and such endorsement have
been paid;
(iii) Mezzanine Lender shall have received an "Eagle 9" title
policy in favor of Mezzanine Lender, its successors and assigns, dated as of the
Closing Date. Mezzanine Lender
28
also shall have received evidence that all premiums in respect of the amendment
to the "Eagle 9" title policy have been paid;
(g) SURVEY. Mezzanine Lender shall have received a current Survey
for the Property, containing the survey certification required by the Loan
Agreement (Mortgage);
(h) INSURANCE. Mezzanine Lender shall have received valid
certificates of insurance for the policies of insurance required by the Loan
Agreement (Mortgage) naming Mezzanine Lender as an additional insured and
containing a cross liability/severability endorsement, satisfactory to Mezzanine
Lender in its sole discretion, and evidence of the payment of all insurance
premiums currently due and payable for the existing policy period;
(i) ENVIRONMENTAL REPORTS. Mezzanine Lender shall have received an
Environmental Report in respect of the Property satisfactory to Mezzanine
Lender;
(j) ZONING. Mezzanine Lender shall have received evidence
reasonably acceptable to Mezzanine Lender that the Property complies with
applicable zoning laws and regulations;
(k) ENCUMBRANCES. Mezzanine Borrower shall have taken or caused to
be taken such actions in such a manner so that Mezzanine Lender has a valid and
perfected first Lien as of the Closing Date on the Collateral and Mezzanine
Lender shall have received satisfactory evidence thereof;
(l) RESERVED.
(m) MANAGER'S CONSENT. Mezzanine Lender shall have received the
original of the Manager's Consent (Junior Tier Mezzanine) executed by each of
Mezzanine Borrower and Manager and the original of the Third-Party Manager's
Consent (Junior Tier Mezzanine) executed by each of Mezzanine Borrower and
Third-Party Manager;
(n) INDEPENDENT MANAGER CERTIFICATE. Mezzanine Lender shall have
received an executed Independent Manager certificate in the form attached as
EXHIBIT C from each Independent Manager;
(o) LEASES, REAS AND RENT ROLL. Mezzanine Lender shall have
received (i) copies of all Leases and REAs certified as requested by Mezzanine
Lender in accordance with the Loan Agreement (Mortgage); (ii) a current
certified rent roll of the Property; and (iii) copies of all Tenant estoppel
certificates and REA estoppel certificates delivered to Mortgage Lender;
29
(p) PLEDGOR ACKNOWLEDGMENT. Mezzanine Lender shall have received
an original of the Pledgor Acknowledgment in the form of EXHIBIT D executed by
each of Mortgage Borrower and Senior Tier Mezzanine Borrower and dated as of the
Closing Date;
(q) PURCHASE AGREEMENT. Mezzanine Lender shall have received a
certified copy of the Purchase Agreement and all amendments and modifications
thereto;
(r) RESERVED.
2.5.3 SATISFACTORY COLLATERAL. The Pledge (Junior Tier
Mezzanine) and the other Loan Documents (Junior Tier Mezzanine) shall constitute
a valid and perfected Lien on the Collateral for the full amount of the
Principal Amount, free and clear of all Liens other than encumbrances
specifically approved by Mezzanine Lender, in writing, in its sole discretion;
Mezzanine Lender shall have received such UCC, tax, lien and judgment searches
in respect of the Collateral as it shall have deemed necessary and the results
of such searches shall be acceptable to Mezzanine Lender in its sole discretion;
2.5.4 COLLATERAL ACCOUNTS. The Collateral Accounts (Junior
Tier Mezzanine) shall have been established with the Cash Management Bank
(Junior Tier Mezzanine);
2.5.5 LOAN (MORTGAGE). The Loan (Mortgage) shall have been
made (or shall be made concurrently) to the Mortgage Borrower in accordance with
the terms of the Loan Documents (Mortgage) and no Mortgage Event of Default
shall have occurred and be continuing under and as defined in the Loan Documents
(Mortgage);
2.5.6 BUDGETS. Mezzanine Borrower shall have delivered the
Annual Budget for the current Fiscal Year which Annual Budget shall be
reasonably acceptable to Mezzanine Lender and shall be certified by an Officer's
Certificate;
2.5.7 NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on such date either before or
after the execution of this Agreement;
2.5.8 CONSENT OF MORTGAGE LENDER. Mortgage Lender shall have
consented in writing to the transactions contemplated by this Agreement and the
other Loan Documents (Junior Tier Mezzanine);
2.5.9 INTENTIONALLY OMITTED.
2.5.10 INTERCREDITOR AGREEMENT. Mezzanine Lender, Senior Tier
Mezzanine Lender and Mortgage Lender shall have executed the Intercreditor
Agreement in form and substance satisfactory to Mezzanine Lender in its sole
discretion;
30
2.5.11 NO INJUNCTION. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued, and no litigation shall be pending or threatened, which in the good
faith judgment of Mezzanine Lender would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the
repayment of the Mezzanine Note or the consummation of the transaction
contemplated hereunder;
2.5.12 FINANCIAL INFORMATION. Mezzanine Lender shall have
received or had access to financial information relating to the Property, the
Mezzanine Borrower, the Senior Tier Mezzanine Borrower, the Mortgage Borrower,
the Manager and the Guarantor prepared in accordance with agreed upon procedures
satisfactory to Mezzanine Lender, certified to Mezzanine Lender as true and
correct by Mezzanine Borrower's managing member and otherwise in form and
substance satisfactory to Mezzanine Lender;
2.5.13 RESERVED.
2.5.14 RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall have been duly authorized, executed and delivered by all parties
thereto and Mezzanine Lender shall have received and approved certified copies
thereof;
2.5.15 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, Mezzanine Borrower shall deliver, or cause to be delivered, to
Mezzanine Lender copies certified by an Officer's Certificate, of all
organizational documentation related to Mortgage Borrower, Senior Tier Mezzanine
Borrower, Mezzanine Borrower, Guarantor and certain of its Affiliates as have
been requested by Mezzanine Lender and/or the formation, structure, existence,
good standing and/or qualification to do business of Mortgage Borrower, Senior
Tier Mezzanine Borrower, Mezzanine Borrower, Guarantor and such Affiliates, as
Mezzanine Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates as may be requested by Mezzanine Lender. Each of the
organizational documents of any Person that is a Single Purpose Entity shall
contain the language set forth in EXHIBIT E.
2.5.16 OPINIONS OF MEZZANINE BORROWER'S COUNSEL.
(a) Mezzanine Lender shall have received the Non-Consolidation
Opinion in the form of EXHIBIT F (THE NON-CONSOLIDATION OPINION);
(b) Mezzanine Lender shall have received the Opinion of Counsel in
the form attached hereto as EXHIBIT G;
(c) Mezzanine Lender shall have received from Counterparty the
Counterparty Opinion in the form of EXHIBIT H;
31
(d) Mezzanine Lender shall have received a date down of each of
the opinions required to be delivered to Senior Tier Mezzanine Lender pursuant
to Section 2.5.16 of the Loan Agreement (Senior Tier Mezzanine);
(e) Mezzanine Lender shall have received a date down of each of
the opinions required to be delivered to Mortgage Lender pursuant to Section
2.5.5 of the Loan Agreement (Mortgage);
2.5.17 COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents (Junior Tier Mezzanine)
and all documents incidental thereto shall be satisfactory in form and substance
to Mezzanine Lender, and Mezzanine Lender shall have received all such
counterpart originals or certified copies of such documents as Mezzanine Lender
may reasonably request;
2.5.18 MATERIAL ADVERSE EFFECT. The Operating Income and
Operating Expenses of the Property, the Leases, and all other features of the
transaction shall be as represented to Mezzanine Lender without material adverse
change. None of Mezzanine Borrower, Senior Tier Mezzanine Borrower, the Mortgage
Borrower, the Guarantor nor any of their constituent Persons (excluding for
purposes of this Section 2.5.18 any limited partners in any Guarantor) shall be
the subject of any bankruptcy, reorganization, or insolvency proceeding.
2.5.19 TAX LOT. Mezzanine Lender shall have received evidence
that the Property constitutes one (1) or more separate tax lots, which evidence
shall be reasonably satisfactory in form and substance to Mezzanine Lender;
2.5.20 PHYSICAL CONDITIONS REPORTS. Mezzanine Lender shall
have received a Physical Conditions Report with respect to the Property, which
report shall be satisfactory in form and substance to Mezzanine Lender;
2.5.21 APPRAISAL. Mezzanine Lender shall have received an
appraisal of the Property, which shall be satisfactory in form and substance to
Mezzanine Lender;
2.5.22 FURTHER DOCUMENTS. Mezzanine Lender or its counsel
shall have received such other and further approvals, opinions, documents and
information as Mezzanine Lender or its counsel may have reasonably requested
including the Loan Documents (Junior Tier Mezzanine) in form and substance
satisfactory to Mezzanine Lender and its counsel.
32
III. CASH MANAGEMENT
SECTION 3.1 CASH MANAGEMENT.
3.1.1 ESTABLISHMENT OF ACCOUNT. Mezzanine Borrower hereby
confirms that, simultaneously with the execution of this Agreement, pursuant to
the Account Agreement (Mezzanine), it has established with Cash Management Bank
(Junior Tier Mezzanine), in the name of Mezzanine Lender, as secured party, for
Mezzanine Borrower, one (1) segregated account, the mezzanine account (the
MEZZANINE ACCOUNT), which has been established as a securities account. The
Mezzanine Account and the funds deposited therein and securities and other
assets credited thereto shall serve as additional security for the Loan.
Pursuant to the Account Agreement (Junior Tier Mezzanine), Mezzanine Borrower
shall irrevocably instruct and authorize Cash Management Bank (Junior Tier
Mezzanine) to disregard any and all orders for withdrawal from the Mezzanine
Account made by, or at the direction of, Mezzanine Borrower. Mezzanine Borrower
agrees that, prior to the payment in full of the Indebtedness, the terms and
conditions of the Account Agreement (Junior Tier Mezzanine) shall not be amended
or modified without the prior written consent of Mezzanine Lender (which consent
Mezzanine Lender may grant or withhold in its sole discretion). In recognition
of Mezzanine Lender's security interest in the funds deposited into the
Mezzanine Account, Mezzanine Borrower shall identify the Mezzanine Account with
the name of Mezzanine Lender, as secured party. The Mezzanine Account shall be
named as follows: "BRE/PARK PLACE JUNIOR MEZZANINE L.L.C. f/b/o German American
Capital Corporation, as secured party, Junior Tier Mezzanine Account" (Account
Number 181- 465- 6). Mezzanine Borrower confirms that it has established with
Cash Management Bank (Junior Tier Mezzanine) the following sub-accounts of the
Mezzanine Account (each, a SUB-ACCOUNT and, collectively, the SUB-ACCOUNTS and
together with the Mezzanine Account, the COLLATERAL ACCOUNTS (JUNIOR TIER
MEZZANINE)), which (i) may be ledger or book entry sub-accounts and need not be
actual sub-accounts, (ii) shall each be linked to the Mezzanine Account, (iii)
shall each be a "Securities Account" pursuant to Article 8 of the UCC and (iv)
shall each be an Eligible Account to which certain funds shall be allocated and
from which disbursements shall be made pursuant to the terms of this Agreement:
(a) a sub-account for the retention of Account Collateral (Junior
Tier Mezzanine) in respect of Debt Service (Junior Tier Mezzanine) on the Loan
with the account number 181- 466 - 4 (the MEZZANINE DEBT SERVICE RESERVE
ACCOUNT).
3.1.2 PLEDGE OF ACCOUNT COLLATERAL (JUNIOR TIER MEZZANINE). To
secure the full and punctual payment and performance of the Obligations (Junior
Tier Mezzanine), Mezzanine Borrower hereby collaterally assigns, grants a
security interest in and pledges to Mezzanine Lender, to the extent not
prohibited by applicable law, a first priority continuing security interest in
and to the following property of Mezzanine Borrower, whether now owned or
existing or hereafter acquired or arising and regardless of where located (all
of the same, collectively, the ACCOUNT COLLATERAL (JUNIOR TIER MEZZANINE)):
33
(a) any and all Excess Cash Flow from time to time available in
the Holding Account and required, by the terms of the Loan Agreement (Senior
Tier Mezzanine) as now in effect or amended with the consent of Mezzanine
Lender, to be deposited by the Senior Tier Mezzanine Lender or the Cash
Management Bank (Senior Tier Mezzanine) into the Mezzanine Account;
(b) the Collateral Accounts (Mezzanine) and all cash, checks,
drafts, securities entitlements, certificates, instruments and other property,
including, without limitation, all deposits and/or wire transfers from time to
time deposited or held in, credited to or made to Collateral Accounts (Junior
Tier Mezzanine);
(c) any and all amounts invested in Permitted Investments;
(d) all interest, dividends, cash, instruments, securities
entitlements and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing
or purchased with funds from the Collateral Accounts (Junior Tier Mezzanine);
and
(e) to the extent not covered by clauses (a), (b), (c) or (d)
above, all proceeds (as defined under the UCC) of any or all of the foregoing.
In addition to the rights and remedies herein set forth, Mezzanine
Lender shall have all of the rights and remedies with respect to the Account
Collateral (Junior Tier Mezzanine) available to a secured party at law or in
equity, including, without limitation, the rights of a secured party under the
UCC, as if such rights and remedies were fully set forth herein.
This Agreement shall constitute a security agreement for purposes of
the UCC other applicable law.
3.1.3 MAINTENANCE OF MEZZANINE ACCOUNT.
(a) Mezzanine Borrower agrees that each of the Mezzanine Account
and the Sub- Accounts is and shall be maintained (i) as a "securities account"
(as such term is defined in Section 8-501(a) of the UCC), (ii) in such a manner
that Mezzanine Lender shall have control (within the meaning of Section
8-106(d)(2) of the UCC) over the Mezzanine Account and any Sub-Account thereof,
(iii) such that neither Mezzanine Borrower nor Manager shall have any right of
withdrawal from the Mezzanine Account or the Sub-Accounts and, except as
provided herein, no Account Collateral (Junior Tier Mezzanine) shall be released
to Mezzanine Borrower from the Mezzanine Account. Cash Management Bank (Junior
Tier Mezzanine) shall comply with the instructions of Mezzanine Lender directing
depository of funds in their Collection Account without further consent of
Mezzanine Borrower or any other Person, (iv) in such a manner that the Cash
Management Bank (Junior Tier Mezzanine) shall agree to treat all property
credited to the Mezzanine Account or the Sub-Accounts as "financial assets"
(within the meaning of Section 102(a)(9) of the UCC) and (v) such that all
securities or other property underlying any financial assets credited to any of
the Sub-
34
Accounts shall be registered in the name of Cash Management Bank
(Junior Tier Mezzanine), indorsed to Cash Management Bank (Junior Tier
Mezzanine) or in blank or credited to another securities account maintained in
the name of Cash Management Bank (Junior Tier Mezzanine) and in no case will any
financial asset credited to the Collateral Accounts (Junior Tier Mezzanine) be
registered in the name of Mezzanine Borrower, payable to the order of Mezzanine
Borrower or specially indorsed to Mezzanine Borrower except to the extent the
foregoing have been specially indorsed to Cash Management Bank (Junior Tier
Mezzanine) or in blank. Without limiting Mezzanine Borrower's obligations under
the immediately preceding sentence, Mezzanine Borrower shall only establish and
maintain the Mezzanine Account with a financial institution that has executed an
agreement substantially in the form of the Account Agreement (Junior Tier
Mezzanine) or in such other form acceptable to Mezzanine Lender in its sole
discretion. Cash Management Bank (Junior Tier Mezzanine) shall comply with "all
entitlement orders" (as defined in Section 8-102(a)(8) of the UCC) and
instructions originated by Mezzanine Lender without further consent by Mezzanine
Borrower or any other party.
3.1.4 ELIGIBLE ACCOUNTS. The Collateral Accounts (Junior Tier
Mezzanine) shall be Eligible Accounts. The Collateral Accounts (Junior Tier
Mezzanine) shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other banking or governmental authority, as may now or hereafter be in effect.
Income and interest accruing on the Collateral Accounts (Junior Tier Mezzanine)
or any investments held in such accounts shall be periodically added to the
principal amount of such account and shall be held, disbursed and applied in
accordance with the provisions of this Agreement and the Account Agreement
(Junior Tier Mezzanine). Mezzanine Borrower shall be the beneficial owner of the
Collateral Accounts (Junior Tier Mezzanine) for federal income tax purposes and
shall report all income on the Collateral Accounts (Junior Tier Mezzanine).
3.1.5 DEPOSITS INTO SUB-ACCOUNTS. On the date hereof,
Mezzanine Borrower has deposited the following amounts into the Sub-Accounts:
(i) $0 into the Mezzanine Debt Service Reserve Account.
3.1.6 MONTHLY FUNDING.
(a) Mezzanine Borrower hereby irrevocably authorizes Mezzanine
Lender to transfer (and, pursuant to the Account Agreement (Junior Tier
Mezzanine) shall irrevocably authorize Cash Management Bank (Junior Tier
Mezzanine) to execute any corresponding instructions of Mezzanine Lender), and
Mezzanine Lender shall transfer, from the Mezzanine Account by 11:00 a.m. New
York time commencing on the tenth (10th) calendar day of each calendar month
(and if such day is not a Business Day then on the immediately preceding
Business Day) and on each Business Day thereafter until the earlier of (i) the
ninth (9th) calendar day of the next succeeding calendar month (or, if such day
is not a Business Day, then the immediately preceding Business Day), or (ii) as
soon after the tenth (10th) calendar day of such month as there shall be
sufficient collected funds on deposit in the Mezzanine Account, and from time to
time (but no less
35
frequently than weekly thereafter) funds in an amount equal to the sum of any
Protective Advances which may have been advanced by (and not previously
reimbursed to) the Mezzanine Lender pursuant to the terms of the Loan Documents
(Junior Tier Mezzanine) to cure any Default or Event of Default, any Senior Tier
Mezzanine Default or Senior Tier Mezzanine Event of Default, any Mortgage
Default or Mortgage Event of Default, or to protect the Collateral together with
any interest payable on such amounts pursuant to the Loan Documents (Junior Tier
Mezzanine), plus (x) the unpaid Debt Service (Junior Tier Mezzanine) for the
next occurring Payment Date, plus (y) an amount equal to such payments for any
prior month(s), to the extent not previously paid, plus (z) an amount equal to
the amount sufficient to pay any other amounts due under the Loan Documents
(Junior Tier Mezzanine) (other than any Debt Service (Junior Tier Mezzanine)).
Mezzanine Borrower acknowledges that Mezzanine Lender shall not be required to
make such withdrawal and deposit until such time as Mezzanine Lender is able to
calculate the amount of the Debt Service (Junior Tier Mezzanine) for the next
occurring Payment Date. As used herein, the term NET EXCESS CASH FLOW means the
amount available in the Mezzanine Account after the transfers to the Mezzanine
Debt Service Reserve Account required under this Section 3.1.6 have been made
and the term NET EXCESS CASH FLOW COMMENCEMENT DATE shall mean the date such
amounts have been fully funded or reserved within the Mezzanine Account in any
given calendar month.
(b) If for any reason there will be insufficient amounts in the
Mezzanine Debt Service Reserve Account on any Payment Date to pay the Debt
Service (Junior Tier Mezzanine) due on such Payment Date, Mezzanine Borrower
shall immediately deposit into the Mezzanine Account an amount equal to the
shortfall of available funds in the Mezzanine Debt Service Reserve Account. Any
failure by Mezzanine Borrower to deposit the full amount required by the
preceding sentence shall constitute an Event of Default hereunder. If Mezzanine
Lender shall reasonably determine that there will be insufficient amounts in the
Mezzanine Account to pay any Protective Advances as and when the same are due
and payable, Mezzanine Lender shall provide written notice of same to Mezzanine
Borrower setting forth the basis for such determination. Within five (5)
Business Days of receipt of said notice, Mezzanine Borrower shall deposit into
the Mezzanine Account an amount equal to the shortfall of available funds in the
Mezzanine Account. Any failure by Mezzanine Borrower to deposit the full amount
required by the preceding sentence shall constitute an Event of Default
hereunder. Notwithstanding anything to the contrary contained in this Agreement
or in the other Loan Documents (Junior Tier Mezzanine), Mezzanine Borrower shall
not be deemed to be in default hereunder or thereunder in the event funds
sufficient for a required transfer are held in the Mezzanine Account or an
appropriate Sub-Account and Mezzanine Lender or Cash Management Bank (Junior
Tier Mezzanine) fails to timely make any transfer as contemplated by this
Agreement.
(c) Provided that (i) no Event of Default shall have occurred and
be continuing hereunder or under any of the other Loan Documents (Junior Tier
Mezzanine), (ii) no Mortgage Event of Default shall have occurred and be
continuing, (iii) no Senior Tier Mezzanine Event of Default shall have occurred
and be continuing, (iv) Mezzanine Borrower shall have delivered to Mezzanine
Lender an Officer's Certificate (in substantially the form annexed hereto as
EXHIBIT I) (which Mezzanine Borrower shall not be obligated to deliver more
frequently than once per calendar month) certifying that the signatories know of
no Event of Default, Mortgage Event of Default or
36
Senior Tier Mezzanine Event of Default (as applicable) that has occurred and is
then outstanding hereunder or under any of the other Loan Documents (Junior Tier
Mezzanine), or under any of the Loan Documents (Senior Tier Mezzanine), or under
any of the Loan Documents (Mortgage), and (v) Mezzanine Borrower shall have
deposited into the Mezzanine Account all funds then required to have been so
deposited, then Mezzanine Lender shall transfer the Net Excess Cash Flow from
the Mezzanine Account to Mezzanine Borrower's Account within two (2) Business
Days following the Net Excess Cash Flow Commencement Date for each month and on
a daily basis thereafter until the end of the applicable collection period.
Mezzanine Borrower shall, upon request by Mezzanine Lender prior to transferring
such Net Excess Cash Flow, cause the Mortgage Borrower to provide Mezzanine
Lender with evidence reasonably satisfactory to Mezzanine Lender that Mortgage
Borrower has paid all Operating Expenses for the month immediately preceding the
month in which such request is made by Mezzanine Lender. From and after the
transfer of such Net Excess Cash Flow to Mezzanine Borrower, Mezzanine Lender
shall have no further liability or responsibility with respect to the funds so
transferred or the investment thereof, such Net Excess Cash Flow shall be the
property of Mezzanine Borrower and may be further distributed by Mezzanine
Borrower and its Affiliates in accordance with their separate agreements.
3.1.7 CASH MANAGEMENT BANK.
(a) For the purposes of this Agreement, the Cash Management Bank
(Junior Tier Mezzanine) named herein shall be deemed to be an Approved Bank;
provided, however, that the term"Approved Bank" shall be applicable for all
other purposes and shall be applicable to any successor or assign of Cash
Management Bank (Junior Tier Mezzanine). Without cost to Mezzanine Borrower,
Mezzanine Lender shall have the right to replace the Cash Management Bank
(Junior Tier Mezzanine) with any other financial institution reasonably
satisfactory to Mezzanine Borrower, which will promptly execute and deliver to
Mezzanine Lender an Account Agreement (Junior Tier Mezzanine) (and Mezzanine
Borrower shall reasonably cooperate with Mezzanine Lender in connection with
such transfer) in the event that (i) the Cash Management Bank (Junior Tier
Mezzanine) fails, in any material respect, to comply with the Account Agreement
(Junior Tier Mezzanine) or (ii) in the event the Cash Management Bank (Junior
Tier Mezzanine) named herein is no longer the Cash Management Bank (Junior Tier
Mezzanine), or (iii) in the event any successor Cash Management Bank (Junior
Tier Mezzanine) is no longer an Approved Bank.
(b) During the term of the Loan, so long as no Event of Default
shall have occurred and is continuing, at its sole cost and expense, Mezzanine
Borrower shall have the right to replace the Cash Management Bank (Junior Tier
Mezzanine) with any other financial institution that is an Approved Bank
provided such institution shall execute and deliver to Mezzanine Lender the
Account Agreement (Junior Tier Mezzanine) (and Mezzanine Lender shall reasonably
cooperate with Mezzanine Borrower in connection with such transfer). Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Lender
shall have the right to replace Cash Management Bank (Junior Tier Mezzanine) at
any time, upon notice to Mezzanine Borrower.
37
3.1.8 MEZZANINE BORROWER'S ACCOUNT REPRESENTATIONS AND
COVENANTS. Mezzanine Borrower represents, warrants and covenants that:
(a) Pursuant to the Instruction Letter delivered by Mezzanine
Borrower to Senior Tier Mezzanine Borrower on the Closing Date, Mezzanine
Borrower directs Senior Tier Mezzanine Borrower to cause all Excess Cash Flow to
be deposited into the Mezzanine Account;
(b) Neither Mortgage Borrower, Senior Tier Mezzanine Borrower nor
Mezzanine Borrower nor any other Person will have any right, title or interest
in or to any Excess Cash Flow from and after the time at which the Senior Tier
Mezzanine Lender transfers such Excess Cash Flow to the Mezzanine Account under
the Loan Agreement (Senior Tier Mezzanine), except any rights Mezzanine Borrower
shall have to allocations of such funds following the disbursement to Mezzanine
Borrower of any Net Excess Cash Flow as provided in Section 3.1.6;
(c) as of the date hereof, there are no other accounts maintained
by Mortgage Borrower, Senior Tier Mezzanine Borrower, Mezzanine Borrower or any
other Person with respect to the collection of rents, revenues, proceeds or
other income from the Property or for the collection of Receipts, except for the
Collection Account (as defined in the Loan Agreement (Mortgage)), the Holding
Account (as defined in the Loan Agreement (Mortgage), the Senior Tier Mezzanine
Account and the Mezzanine Account (together with all Sub-Accounts related
thereto) and any accounts held by Mezzanine Borrower in which it is permitted to
receive transfers of Net Excess Cash Flow as provided in Section 3.1.6(c);
(d) All Distributions shall be deposited into the Mezzanine
Account as required by the Pledge (Junior Tier Mezzanine) and this Agreement or
any other Loan Document (Junior Tier Mezzanine), it being agreed that Mezzanine
Lender shall not have a security interest in any Distributions after the making
of such Distributions to Persons entitled thereto in accordance with the terms
of the Loan Documents (Junior Tier Mezzanine); and
(e) so long as any of the Obligations (Junior Tier Mezzanine)
shall be outstanding, neither Mortgage Borrower, Senior Tier Mezzanine Borrower,
Mezzanine Borrower nor any other Person shall open any accounts other than those
referenced above in this Section 3.1.8 with respect to the collection of rents,
revenues, proceeds or other income from the Property or for the collection of
Receipts.
3.1.9 ACCOUNT COLLATERAL (JUNIOR MEZZANINE) AND REMEDIES.
(a) Upon the occurrence and during the continuance of an Event of
Default, without additional notice from Mezzanine Lender to Mezzanine Borrower,
(i) Mezzanine Lender may, in addition to and not in limitation of Mezzanine
Lender's other rights, make any and all withdrawals from, and transfers between
and among, the Collateral Account (Junior Tier Mezzanine) as Mezzanine Lender
shall determine in its sole and absolute discretion to pay any Obligations,
Operating Expenses and/or capital expenditures for the Property; (ii) all Excess
Cash Flow shall be
38
delivered to and retained in the Mezzanine Account or applicable Sub-Accounts,
and (iii) all transfers to the Mezzanine Borrower's Account pursuant to Section
3.1.6 shall immediately cease, and (iv) Lender may liquidate and transfer any
amounts then invested in Permitted Investments to the Collateral Accounts
(Junior Tier Mezzanine) to which they relate or reinvest such amounts in other
Permitted Investments as Mezzanine Lender may reasonably determine is necessary
to perfect or protect any security interest granted or purported to be granted
hereby or to enable Mezzanine Lender to exercise and enforce Mezzanine Lender's
rights and remedies hereunder with respect to any Account Collateral (Junior
Tier Mezzanine) or to preserve the value of the Account Collateral (Junior Tier
Mezzanine).
(b) Upon the occurrence and during the continuance of an Event of
Default, Mezzanine Borrower hereby irrevocably constitutes and appoints
Mezzanine Lender as Mezzanine Borrower's true and lawful attorney-in-fact, with
full power of substitution, to execute, acknowledge and deliver any instruments
and to exercise and enforce every right, power, remedy, option and privilege of
Mezzanine Borrower with respect to the Account Collateral (Junior Tier
Mezzanine), and do in the name, place and stead of Mezzanine Borrower, all such
acts, things and deeds for and on behalf of and in the name of Mezzanine
Borrower, which Mezzanine Borrower could or might do or which Mezzanine Lender
may deem necessary or desirable to more fully vest in Mezzanine Lender the
rights and remedies provided for herein and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and coupled with an
interest. Upon the occurrence and during the continuance of an Event of Default,
Mezzanine Lender may perform or cause performance of any such agreement, and any
reasonable expenses of Mezzanine Lender incurred in connection therewith shall
be paid by Mezzanine Borrower as provided in Section 5.1.13.
(c) Mezzanine Borrower hereby expressly waives, to the fullest
extent permitted by law, presentment, demand, protest or any notice of any kind
in connection with this Agreement or the Account Collateral (Junior Tier
Mezzanine). Mezzanine Borrower acknowledges and agrees that ten (10 Junior Tier
) days' prior written notice of the time and place of any public sale of the
Account Collateral (Junior Tier Mezzanine) or any other intended disposition
thereof shall be reasonable and sufficient notice to Mezzanine Borrower within
the meaning of the UCC.
3.1.10 TRANSFERS AND OTHER LIENS. Mezzanine Borrower agrees
that it will not (i) sell or otherwise dispose of any of the Account Collateral
(Junior Tier Mezzanine) or (ii) create or permit to exist any Lien upon or with
respect to all or any of the Account Collateral (Junior Tier Mezzanine), except
for the Lien granted to Mezzanine Lender, under this Agreement.
3.1.11 REASONABLE CARE. Beyond the exercise of reasonable care
in the custody thereof, Mezzanine Lender shall have no duty as to any Account
Collateral (Junior Tier Mezzanine) in its possession or control as agent
therefor or bailee thereof or any income thereon or the preservation of rights
against any person or otherwise with respect thereto. Mezzanine Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the
Account Collateral (Junior Tier Mezzanine) in its possession if the Account
Collateral (Junior Tier Mezzanine) is accorded treatment substantially equal to
that which Mezzanine Lender accords its
39
own property, it being understood that Mezzanine Lender shall not be liable or
responsible for any loss or damage to any of the Account Collateral (Junior Tier
Mezzanine), or for any diminution in value thereof, by reason of the act or
omission of Mezzanine Lender, its Affiliates, agents, employees or bailees,
except to the extent that such loss or damage results from Mezzanine Lender's or
its Affiliate's, agent's, employee's or bailee's gross negligence or willful
misconduct. In no event shall Mezzanine Lender be liable either directly or
indirectly for losses or delays resulting from any event which may be the basis
of an Excusable Delay, computer malfunctions, interruption of communication
facilities, labor difficulties or other causes beyond Mezzanine Lender's
reasonable control or for indirect, special or consequential damages except to
the extent of Lender's or its Affiliate's, agent's, employee's or bailee's gross
negligence or willful misconduct. Notwithstanding the foregoing, Mezzanine
Borrower acknowledges and agrees that (i) Mezzanine Lender does not have custody
of the Account Collateral (Junior Tier Mezzanine), (ii) Cash Management Bank
(Junior Tier Mezzanine) has custody of the Account Collateral (Junior Tier
Mezzanine), (iii) Cash Management Bank (Junior Tier Mezzanine) was chosen by
Mezzanine Borrower and (iv) Mezzanine Lender has no obligation or duty to
supervise Cash Management Bank (Junior Tier Mezzanine) or to see to the safe
custody of the Account Collateral (Junior Tier Mezzanine).
3.1.12 MEZZANINE LENDER'S LIABILITY.
(a) Mezzanine Lender shall be responsible for the performance only
of such duties with respect to the Account Collateral (Junior Tier Mezzanine) as
are specifically set forth in this Section 3.1 or elsewhere in the Loan
Documents (Junior Tier Mezzanine), and no other duty shall be implied from any
provision hereof. Mezzanine Lender shall not be under any obligation or duty to
perform any act with respect to the Account Collateral (Junior Tier Mezzanine)
which would cause it to incur any expense or liability or to institute or defend
any suit in respect hereof, or to advance any of its own monies. Mezzanine
Borrower shall indemnify and hold Mezzanine Lender, its employees and officers
harmless from and against any loss, cost or damage (including, without
limitation, reasonable attorneys' fees and disbursements) incurred by Mezzanine
Lender in connection with the transactions contemplated hereby with respect to
the Account Collateral (Junior Tier Mezzanine) except as such may be caused by
the gross negligence or willful misconduct of Mezzanine Lender, its employees,
officers or agents, Affiliates or bailees.
(b) Mezzanine Lender shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
paper, document or signature believed by it in good faith to be genuine, and, in
so acting, it may be assumed that any person purporting to give any of the
foregoing in connection with the provisions hereof has been duly authorized to
do so. Mezzanine Lender may consult with counsel, and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by it hereunder and in good faith in accordance
therewith.
40
3.1.13 CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Account Collateral (Junior Tier
Mezzanine) and shall remain in full force and effect until payment in full of
the Indebtedness. Upon payment in full of the Indebtedness, this security
interest shall automatically terminate without further notice from any party and
Mezzanine Borrower shall be entitled to the return, upon its request, of such of
the Account Collateral (Junior Tier Mezzanine) as shall not have been sold or
otherwise applied pursuant to the terms hereof and Mezzanine Lender shall
execute such instruments and documents as may be reasonably requested by
Mezzanine Borrower to evidence such termination and the release of the Account
Collateral (Junior Tier Mezzanine).
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 MEZZANINE BORROWER REPRESENTATIONS.
Mezzanine Borrower represents and warrants as of the Closing
Date that:
4.1.1 ORGANIZATION. Each of Mezzanine Borrower, Senior Tier
Mezzanine Borrower, Manager, and Guarantor has been duly organized and is
validly existing and in good standing pursuant to the laws of the state of
Delaware with requisite power and authority to own its properties and to
transact the businesses in which it is now engaged. Each of Mezzanine Borrower,
Senior Tier Mezzanine Borrower, Manager, and Guarantor has duly qualified to do
business and is in good standing in each jurisdiction where it is required to be
so qualified in connection with its properties, businesses and operations. Each
of Mezzanine Borrower, Senior Tier Mezzanine Borrower, Manager and Guarantor
possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged (except that Manager has not yet obtained
a real estate brokerage license in California), and the sole business of
Mezzanine Borrower is being the sole member of the Senior Tier Mezzanine
Borrower in connection with management and operation of the Property. The
organizational structure of Mortgage Borrower, Senior Tier Mezzanine Borrower,
Guarantor and Mezzanine Borrower is accurately depicted by the schematic diagram
attached hereto as EXHIBIT J. Mezzanine Borrower shall not itself, and shall not
permit either Mortgage Borrower or Senior Tier Mezzanine Borrower to, change its
name, identity, corporate structure or jurisdiction of organization unless it
shall have given Mezzanine Lender 30 days prior written notice of any such
change and shall have taken all steps reasonably requested by Mezzanine Lender
to grant, perfect, protect and/or preserve the security interest granted
hereunder to Mezzanine Lender.
4.1.2 PROCEEDINGS. Each of Mezzanine Borrower, Manager and
Guarantor has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and the other Loan Documents (Junior Tier
Mezzanine) to which it is a party. This Agreement and the other Loan Documents
(Junior Tier Mezzanine) have been duly executed and delivered by, or on behalf
of, Mezzanine Borrower, Manager and Guarantor, as applicable, and constitute
legal, valid and binding obligations of Mezzanine Borrower, Manager and
Guarantor, enforceable against Mezzanine Borrower, Manager and Guarantor, as
applicable, in accordance with
41
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents (Junior Tier Mezzanine) by Mezzanine
Borrower, Manager and Guarantor, as applicable, will not result in a breach of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance (other than
pursuant to the Loan Documents (Junior Tier Mezzanine)) upon any of the property
or assets of Mezzanine Borrower, Manager or Guarantor pursuant to the terms of
any indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which such Person is a party or by which any of
such Person's property or assets is subject (unless consents from all applicable
parties thereto have been obtained), nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Mezzanine
Borrower, Manager, or Guarantor or any of Mezzanine Borrower's, Manager's or
Guarantor's properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any court or any such regulatory
authority or other governmental agency or body required for the execution,
delivery and performance by Mezzanine Borrower, Manager or Guarantor of this
Agreement or any other Loan Documents (Junior Tier Mezzanine) has been obtained
and is in full force and effect.
4.1.4 LITIGATION. Except as set forth on SCHEDULE I attached
hereto, there are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or, to the best of
Mezzanine Borrower's knowledge, threatened in writing against or affecting
Mezzanine Borrower, Manager, Guarantor, Mortgage Borrower, Senior Tier Mezzanine
Borrower or the Property. The actions, suits or proceedings identified on
SCHEDULE I, if determined against Mezzanine Borrower, Manager, Guarantor,
Mortgage Borrower, Senior Tier Mezzanine Borrower or the Property, would not
reasonably be likely to materially and adversely affect the condition (financial
or otherwise) or business of Mezzanine Borrower, Manager, Guarantor, Mortgage
Borrower, Senior Tier Mezzanine Borrower or the condition or operation of the
Property.
4.1.5 AGREEMENTS. Mezzanine Borrower is not a party to any
agreement or instrument or subject to any restriction which is reasonably likely
to materially and adversely affect Mezzanine Borrower or Mezzanine Borrower's
business, properties or assets, operations or condition, financial or otherwise.
Mezzanine Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Mezzanine Borrower or the Property is bound. Mezzanine Borrower has no material
financial obligation (contingent or otherwise) under any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
Mezzanine Borrower is a party or by which Mezzanine Borrower or the Property is
otherwise bound, other than (a) obligations incurred in the ordinary course of
the operation of the Property and (b) obligations under the Loan Documents
(Junior Tier Mezzanine).
42
4.1.6 TITLE TO PROPERTIES. Mezzanine Borrower owns all of the
assets reflected in the pro forma balance sheet of Mezzanine Borrower as of the
date of such pro forma balance sheet, subject to no rights of others, including
any mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances, except for the Permitted Encumbrances.
4.1.7 NO BANKRUPTCY FILING. None of Mezzanine Borrower,
Mortgage Borrower, Senior Tier Mezzanine Borrower, Manager or Guarantor is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
such entity's assets or property, and Mezzanine Borrower has no knowledge of any
Person contemplating the filing of any such petition against it or against
Mortgage Borrower, Senior Tier Mezzanine Borrower, Manager or Guarantor.
4.1.8 TAX STATUS. Each of Mezzanine Borrower, Mortgage
Borrower, Senior Tier Mezzanine Borrower, Guarantor and Manager (a) has made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, as the filing
periods may have been extended, (b) has paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (c) has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. Except as provided in the foregoing
sentence, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of such Person know
of no basis for any such claim.
4.1.9 NO PLAN ASSETS.
(a) Mezzanine Borrower does not maintain an employee benefit plan
as defined by Section 3(3) of ERISA, which is subject to Title IV of ERISA; and
(b) None of Mortgage Borrower, Senior Tier Mezzanine Borrower,
Guarantor or Mezzanine Borrower is an employee benefit plan, as defined in
Section 3(3) of ERISA. Subject to Title I of ERISA, none of the assets of
Mezzanine Borrower, Mortgage Borrower or Guarantor constitutes or will during
any period when the Loan remains outstanding constitute plan assets of one or
more such plans (within the meaning of 29 C.F.R. Section 2510.3-101 (PLAN
ASSETS) and none of Mortgage Borrower, Guarantor or Mezzanine Borrower are a
"governmental plan" within the meaning of Section 3(32) of ERISA) nor are
Mezzanine Borrower, Mortgage Borrower or Guarantor subject to state statutes and
fiduciary obligations that are similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code currently in effect which prohibit or otherwise
restrict the transactions contemplated by this Agreement.
43
4.1.10 COMPLIANCE. Mezzanine Borrower, Mortgage Borrower,
Senior Tier Mezzanine Borrower and the Property and the use thereof comply in
all material respects with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes. To the best of Mezzanine
Borrower's knowledge, none of Mezzanine Borrower, Senior Tier Mezzanine Borrower
or Mortgage Borrower is in default or in violation of any order, writ,
injunction, decree or demand of any Governmental Authority. To the best of
Mezzanine Borrower's knowledge, there has not been committed by Mezzanine
Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against the Property, the Collateral or any part
thereof or any monies paid in performance of Mezzanine Borrower's or Guarantor's
obligations under any of the Loan Documents (Junior Tier Mezzanine).
4.1.11 FINANCIAL INFORMATION. All financial data of Mezzanine
Borrower, Guarantor, Senior Tier Mezzanine Borrower and Mortgage Borrower,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Mezzanine Lender in respect of
the Property, (i) are true, complete and correct in all material respects, (ii)
fairly represent the financial condition of the Property and the Mezzanine
Borrower, Senior Tier Mezzanine Borrower, Guarantor and Mortgage Borrower as of
the date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein. None of
Mezzanine Borrower, Senior Tier Mezzanine Borrower, Guarantor or Mortgage
Borrower has any contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Mezzanine Borrower and likely to have
a Material Adverse Effect. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operations or
business of Mezzanine Borrower, Senior Tier Mezzanine Borrower, Guarantor or
Mortgage Borrower from that set forth in said financial statements.
4.1.12 ABSENCE OF U.C.C. FINANCING STATEMENTS, ETC. Except
with respect to the Permitted Encumbrances, the Loan Documents (Mortgage), the
Loan Documents (Senior Tier Mezzanine and the Loan Documents (Junior Tier
Mezzanine), there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
or security title in the interest in the Property or any of the Collateral.
4.1.13 FEDERAL RESERVE REGULATIONS. None of the proceeds of
the Loan will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, Regulation X or Regulation T or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry "margin stock" or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U or Regulation X. As of the Closing Date, Mezzanine Borrower does not own any
"margin stock."
44
4.1.14 SETOFF, ETC. The Collateral and the rights of Mezzanine
Lender with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses.
4.1.15 NOT A FOREIGN PERSON. None of Mezzanine Borrower,
Senior Tier Mezzanine Borrower, Guarantor, or Mortgage Borrower is a foreign
person within the meaning of Section. 1445(f)(3) of the Code.
4.1.16 ENFORCEABILITY. The Loan Documents (Junior Tier
Mezzanine) are not subject to any existing right of rescission, set-off,
counterclaim or defense by Mezzanine Borrower, or Guarantor, as applicable,
including the defense of usury, nor would the operation of any of the terms of
the Loan Documents (Junior Tier Mezzanine), or the exercise of any right
thereunder, render the Loan Documents (Junior Tier Mezzanine) unenforceable, and
neither Mezzanine Borrower nor Guarantor has asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.
4.1.17 INSURANCE. Mezzanine Borrower has obtained and has
delivered to Mezzanine Lender certified copies or originals of all insurance
Policies reflecting the insurance coverages, amounts and other requirements set
forth in this Agreement. Mezzanine Borrower has not, and to the best of
Mezzanine Borrower's knowledge, no Person has, done by act or omission anything
which would impair the coverage of any such Policy.
4.1.18 PHYSICAL CONDITION. To the best of Mezzanine Borrower's
knowledge and except as expressly disclosed in the Physical Conditions Report,
the Property, including, without limitation, all buildings, Improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects; to
the best of Mezzanine Borrower's knowledge and except as disclosed in the
Physical Conditions Report, there exists no structural or other material defects
or damages in the Property, whether latent or otherwise, and Mezzanine Borrower
has not received any written notice from any insurance company or bonding
company of any defects or inadequacies in the Property, or any part thereof,
which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
4.1.19 LEASES. The Property is not subject to any Leases other
than the Leases described in the certified rent roll delivered in connection
with the origination of the Loan and the Air Rights Lease. Such certified rent
roll is true, complete and correct in all material respects as of the date set
forth therein. No Person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases or the
REAs. The current Leases are in full force and effect and to Mezzanine
Borrower's knowledge, there are no material defaults thereunder by either party
(other than as expressly disclosed in the Loan Agreement (Mortgage), on the
certified rent roll delivered to Mezzanine Lender or the Tenant estoppel
certificates delivered to Mezzanine Lender in connection with the closing of the
Loan) and there are
45
no conditions that, with the passage of time or the giving of notice, or both,
would constitute material defaults thereunder. No Rent has been paid more than
one (1) month in advance of its due date, except as disclosed in the Tenant
estoppel certificates delivered to Mezzanine Lender in connection with the
closing of the Loan and as otherwise set forth in the Loan Agreement (Mortgage).
There has been no prior sale, transfer or assignment, hypothecation or pledge by
Mezzanine Borrower of any Lease or of the Rents received therein, which will be
outstanding following the funding of the Loan, other than those being assigned
to Mezzanine Lender concurrently herewith. Other than the right to purchase the
Air Rights Parcel as contained in the Air Rights Lease, no Tenant under any
Lease has a right or option pursuant to such Lease or otherwise to purchase all
or any part of the property of which the leased premises are a part.
4.1.20 SINGLE PURPOSE ENTITY/SEPARATENESS.
(a) Until the Indebtedness has been paid in full, Mezzanine
Borrower hereby represents, warrants and covenants that Mezzanine Borrower,
Senior Tier Mezzanine Borrower and Mortgage Borrower are, shall be, and shall
continue to be, a Single Purpose Entities.
(b) All of the assumptions made in the Non-Consolidation Opinion,
including, but not limited to, any exhibits attached thereto, are true and
correct in all material respects and any assumptions made in any subsequent
non-consolidation opinion delivered in connection with the Loan Documents
(Junior Tier Mezzanine) (an ADDITIONAL NON-CONSOLIDATION OPINION), including,
but not limited to, any exhibits attached thereto, will have been and shall be
true and correct in all respects. Mezzanine Borrower, Senior Tier Mezzanine
Borrower and Mortgage Borrower have complied and will comply in all material
respects with all of the assumptions made with respect to it in the
Non-Consolidation Opinion. Mezzanine Borrower, Senior Tier Mezzanine Borrower
and Mortgage Borrower have complied and will comply in all material respects
with all of the assumptions made with respect to it in any Additional
Non-Consolidation Opinion. Each entity other than Mezzanine Borrower, Senior
Tier Mezzanine Borrower and Mortgage Borrower with respect to which an
assumption shall be made in any Additional Non-Consolidation Opinion will have
complied and will comply in all material respects with all of the assumptions
made with respect to it in any Additional Non-Consolidation Opinion.
4.1.21 MANAGEMENT AGREEMENT. The Management Agreement is in
full force and effect and there is no default thereunder by any party thereto
and no event has occurred that, with the passage of time and/or the giving of
notice would constitute a default thereunder. The Manager is an Affiliate of
Mortgage Borrower, Senior Tier Mezzanine Borrower or Mezzanine Borrower.
4.1.22 SUBSIDIARIES. Mezzanine Borrower does not have any
subsidiaries other than the Senior Tier Mezzanine Borrower. Senior Tier
Mezzanine Borrower does not have any subsidiaries other than the Mortgage
Borrower.
46
4.1.23 SOLVENCY/FRAUDULENT CONVEYANCE. Mezzanine Borrower (a)
has not entered into the transaction contemplated by this Agreement or any Loan
Document (Junior Tier Mezzanine) with the actual intent to hinder, delay, or
defraud any creditor and (b) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents (Junior Tier Mezzanine).
After giving effect to the Loan, the fair saleable value of Mezzanine Borrower's
assets exceeds and will, immediately following the making of the Loan, exceed
Mezzanine Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Mezzanine Borrower's assets is and will, immediately following
the making of the Loan, be greater than Mezzanine Borrower's probable
liabilities, including the maximum amount of its contingent liabilities on its
Debts as such Debts become absolute and matured, Mezzanine Borrower's assets do
not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Mezzanine Borrower does not intend to, and does not believe
that it will, incur Debt and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such Debt and liabilities as they
mature (taking into account the timing and amounts of cash to be received by
Mezzanine Borrower and the amounts to be payable on or in respect of obligations
of Mezzanine Borrower).
4.1.24 INVESTMENT COMPANY ACT. Mezzanine Borrower is not (a)
an investment company or a company Controlled by an investment company, within
the meaning of the Investment Company Act of 1940, as amended; (b) a holding
company or a subsidiary company of a holding company or an affiliate of either a
holding company or a subsidiary company within the mean of the Public Utility
Holding Company Act of 1935, as amended; or (c) subject to any other federal or
state law or regulation which purports to restrict or regulate its ability to
borrow money.
4.1.25 INTEREST RATE AGREEMENT. A complete and correct copy of
the Interest Rate Cap Agreement (Junior Tier Mezzanine) is attached hereto as
EXHIBIT K. The Interest Rate Cap Agreement (Junior Tier Mezzanine) is in full
force and effect and enforceable against Mezzanine Borrower in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
generally affecting the enforcement of creditors' rights.
4.1.26 NO OTHER DEBT. Mezzanine Borrower has not borrowed or
received Debt that has not been heretofore repaid in full, other than the
Permitted Debt.
4.1.27 TAXPAYER IDENTIFICATION NUMBER. Mezzanine Borrower's
Federal taxpayer identification number is 38-3660402.
4.1.28 INTENTIONALLY DELETED.
47
4.1.29 REPRESENTATIONS AND WARRANTIES IN THE LOAN DOCUMENTS
(JUNIOR TIER MEZZANINE). Mezzanine Borrower hereby represents and warrants that
each of the representations and warranties contained in the Loan Documents
(Junior Tier Mezzanine) (which are hereby incorporated by reference as if fully
set forth herein) is true and correct in all material respects, as of the
Closing Date and to the best of its knowledge, after reasonable inquiry, there
is no Mortgage Event of Default thereunder.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS. Mezzanine Borrower agrees
that all of the representations and warranties of Mezzanine Borrower set forth
in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents
(Junior Tier Mezzanine) shall be deemed given and made as of the date of the
funding of the Loan and survive for so long as any amount remains owing to
Mezzanine Lender under this Agreement or any of the other Loan Documents (Junior
Tier Mezzanine) by Mezzanine Borrower or Guarantor unless a longer survival
period is expressly stated in a Loan Document (Junior Tier Mezzanine) with
respect to a specific representation or warranty, in which case, for such longer
period. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents (Junior Tier Mezzanine) by Mezzanine
Borrower shall be deemed to have been relied upon by Mezzanine Lender
notwithstanding any investigation heretofore or hereafter made by Mezzanine
Lender or on its behalf.
V. MEZZANINE BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
From the Closing Date and until payment and performance in full of
all obligations of Mezzanine Borrower under the Loan Documents (Junior Tier
Mezzanine), Mezzanine Borrower hereby covenants and agrees with Mezzanine Lender
that:
5.1.1 PERFORMANCE BY MEZZANINE BORROWER.
(a) Mezzanine Borrower shall in a timely manner observe, perform
and fulfill each and every covenant, term and provision of each Loan Document
(Junior Tier Mezzanine) executed and delivered by, or applicable to, Mezzanine
Borrower. Except to the extent permitted pursuant to any intercreditor agreement
between Mortgage Lender, Senior Tier Mezzanine Borrower and Mezzanine Lender,
Mezzanine Borrower shall not enter into or otherwise suffer or permit any
amendment, waiver, supplement, termination or other modification of any Loan
Document (Junior Tier Mezzanine) executed and delivered by Mezzanine Borrower
without the prior written consent of Mezzanine Lender.
(b) Every covenant, term and provision of each Loan Document
(Mortgage) executed and delivered by, or applicable to, Mortgage Borrower shall
be observed, performed and fulfilled in accordance with the Loan Documents
(Mortgage). Except to the extent permitted pursuant to any intercreditor
agreement between Mortgage Lender, Senior Tier Mezzanine Borrower and Mezzanine
Lender, no amendment, waiver, supplement, termination or other modification of
48
any Loan Document (Mortgage) (other than a Permitted Mortgage Loan Amendment)
shall be executed and delivered without the prior written consent of Mezzanine
Lender.
(c) Every covenant, term and provision of each Loan Document
(Senior Tier Mezzanine) executed and delivered by, or applicable to, Senior Tier
Mezzanine Borrower shall be observed, performed and fulfilled in accordance with
the Loan Documents (Senior Tier Mezzanine). Except to the extent permitted
pursuant to any intercreditor agreement between Mortgage Lender, Senior Tier
Mezzanine Borrower and Mezzanine Lender, no amendment, waiver, supplement,
termination or other modification of any Loan Document (Senior Tier Mezzanine)
shall be executed and delivered without the prior written consent of Mezzanine
Lender.
5.1.2 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS;
INSURANCE. Subject to Mortgage Borrower's right of contest pursuant to Section
7.3 of the Loan Agreement (Mortgage), Mezzanine Borrower shall at all times
comply in all material respects and cause the Mortgage Borrower, Senior Tier
Mezzanine Borrower and the Property to be in compliance in all material respects
with all Legal Requirements applicable to the Mezzanine Borrower, Mortgage
Borrower, Senior Tier Mezzanine Borrower and the Property and the uses permitted
upon the Property. Mezzanine Borrower shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, licenses, permits and franchises necessary to comply with all Legal
Requirements applicable to it and the Property. There shall never be committed
by Mezzanine Borrower, and Mezzanine Borrower shall not knowingly permit
Mortgage Borrower or any other Person in occupancy of or involved with the
operation or use of the Property to commit, any act or omission affording the
federal government or any state or local government the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Mezzanine Borrower's obligations under any of the Loan Documents (Junior Tier
Mezzanine). Mezzanine Borrower hereby covenants and agrees not to commit,
knowingly permit or suffer to exist any act or omission affording such right of
forfeiture. All franchises, trade names and other property used in the conduct
of the business of Mezzanine Borrower, Mortgage Borrower and/or the Property
shall be maintained, preserved and protected. The Property shall be maintained,
preserved and protected in good working order and repair. All reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto
as required by the Loan Agreement (Mortgage) shall be made and performed. The
Property shall be insured at all times to such extent and against such risks and
insurance shall be maintained as is required in this Agreement and the Loan
Agreement (Mortgage).
5.1.3 LITIGATION. Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender of any litigation or governmental proceedings pending
or threatened in writing against Mezzanine Borrower, Senior Tier Mezzanine
Borrower, Mortgage Borrower, the Collateral or the Property which, if determined
adversely to Mezzanine Borrower, Senior Tier Mezzanine Borrower, Mortgage
Borrower, the Collateral or the Property, would reasonably be likely to have a
Material Adverse Effect.
49
5.1.4 SINGLE PURPOSE ENTITY.
(a) Each of Mezzanine Borrower, Senior Tier Mezzanine Borrower and
Mortgage Borrower have been since the date of their formation, and shall remain
Single Purpose Entities.
(b) Each of Mezzanine Borrower, Senior Tier Mezzanine Borrower and
Mortgage Borrower shall continue to maintain its own deposit account or
accounts, separate from those of any Affiliate, with commercial banking
institutions. None of the funds of Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower will be diverted to any other Person or for other
than business uses of Mezzanine Borrower, Senior Tier Mezzanine Borrower or
Mortgage Borrower, as applicable, nor will such funds be commingled with the
funds of any other Affiliate; provided, however, so long as no Event of Default
has occurred and is continuing, this clause shall not prohibit any distributions
to or for the benefit of any of Mezzanine Borrower's partners or members or its
or their Affiliates.
(c) To the extent that Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower shares the same officers or other employees as any
of Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower or
Affiliates, the salaries of and the expenses related to providing benefits to
such officers and other employees shall be fairly allocated among such entities,
and each such entity shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.
(d) To the extent that Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower jointly contracts with any of Mezzanine Borrower,
Senior Tier Mezzanine Borrower or Mortgage Borrower or any of their Affiliates,
as applicable, to do business with vendors or service providers or to share
overhead expenses, the costs incurred in so doing shall be allocated fairly
among such entities, and each such entity shall bear its fair share of such
costs. To the extent that either Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower contracts or does business with vendors or service
providers where the goods and services provided are partially for the benefit of
any other Person, the costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services are provided, and
each such entity shall bear its fair share of such costs. All material
transactions between (or among) Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower and any of their respective Affiliates shall be
conducted on substantially the same terms (or on more favorable terms for
Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower, as
applicable) as would be conducted with third parties.
(e) To the extent that Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower or any of their Affiliates have offices in the
same location, there shall be a fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair share of such
expenses.
50
(f) Mezzanine Borrower shall conduct its affairs strictly in
accordance with its organizational documents, and observe all necessary,
appropriate and customary corporate, limited liability company or partnership
formalities, as applicable, including, but not limited to, obtaining any and all
members' consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts, including,
without limitation, payroll and intercompany transaction accounts.
(g) Mezzanine Borrower shall: (a) maintain books and records
separate from those of any other Person; (b) maintain its assets in such a
manner that it is not more costly or difficult to segregate, identify or
ascertain such assets; (c) hold regular meetings of its board of directors,
shareholders, partners or members, as the case may be, and observe all other
corporate, partnership or limited liability company, as the case may be,
formalities; (d) hold itself out to creditors and the public as a legal entity
separate and distinct from any other entity; (e) prepare separate tax returns
and financial statements, or if part of a consolidated group, then it will be
shown as a separate member of such group; (f) transact all business with
Affiliates on an arm's-length basis and pursuant to enforceable agreements; (g)
conduct business in its name and use separate stationery, invoices and checks;
(h) not commingle its assets or funds with those of any other Person; and (i)
not assume, guarantee or pay the debts or obligations of any other Person.
5.1.5 CONSENTS. If Mezzanine Borrower is a corporation, the
board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the independent directors, shall have
participated in such vote. If Mezzanine Borrower is a limited liability company,
(a) if such Person is managed by a board of managers, the board of managers of
such Person may not take any action requiring the unanimous affirmative vote of
100% of the members of the board of managers unless all of the managers,
including the Independent Managers, shall have participated in such vote, (b) if
such Person is not managed by a board of managers, the members of such Person
may not take any action requiring the affirmative vote of 100% of the members of
such Person unless all of the members, including the Independent Members, shall
have participated in such vote. An affirmative vote of 100% of the directors,
board of managers or members, as applicable, of Mezzanine Borrower shall be
required to (i) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings or to authorize Mezzanine Borrower to do so or, (ii) file
an involuntary bankruptcy petition against any Affiliate, Manager, or any
Affiliate of Manager. Furthermore, Mezzanine Borrower's formation documents
shall expressly state that for so long as the Loan is outstanding, none of
Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower shall be
permitted to (i) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Mezzanine Borrower's, Senior Tier Mezzanine Borrower's or
Mortgage Borrower assets other than in connection with the repayment of the Loan
or (ii) engage in any other business activity and such restrictions shall not be
modified or violated for so long as the Loan is outstanding.
51
5.1.6 ACCESS TO PROPERTY. Agents, representatives and
employees of Mezzanine Lender shall have the right to inspect the Property or
any part thereof during Business Days, upon reasonable advance notice, subject
in all instances to the REAs and the rights of Tenants, and provided that
neither Mezzanine Lender nor any such Persons shall unreasonably interfere with
the operation of business on the Property.
5.1.7 NOTICE OF DEFAULT. Mezzanine Borrower shall promptly
advise Mezzanine Lender (a) of any event or condition that has or is reasonably
likely to have a Material Adverse Effect and (b) of the occurrence of any
Default, Event of Default, Mortgage Default or Mortgage Event of Default of
which Mezzanine Borrower has knowledge.
5.1.8 COOPERATE IN LEGAL PROCEEDINGS. Mezzanine Borrower and
Senior Tier Mezzanine Borrower shall cooperate fully with Mezzanine Lender with
respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Mezzanine Lender hereunder
or under any of the other Loan Documents (Junior Tier Mezzanine) and, in
connection therewith, permit Mezzanine Lender, at its election, to participate
in any such proceedings which is reasonably likely to have a Material Adverse
Effect.
5.1.9 PERFORM LOAN DOCUMENTS (JUNIOR TIER MEZZANINE).
Mezzanine Borrower shall observe, perform and satisfy all the terms, provisions,
covenants and conditions of, and shall pay when due all costs, fees and expenses
to the extent required, under the Loan Documents (Junior Tier Mezzanine)
executed and delivered by, or applicable to, Mezzanine Borrower.
5.1.10 FURTHER ASSURANCES; SEPARATE NOTES.
(a) Mezzanine Borrower shall execute and acknowledge (or cause to
be executed and acknowledged) and deliver to Mezzanine Lender all documents, and
take all actions, reasonably required by Mezzanine Lender from time to time to
confirm the rights created or intended to be created under this Agreement and
the other Loan Documents (Junior Tier Mezzanine) and any security interest
created or purported to be created thereunder, to protect and further the
validity, priority and enforceability of this Agreement and the other Loan
Documents (Junior Tier Mezzanine), to subject to the Loan Documents (Junior Tier
Mezzanine) any property of Mezzanine Borrower intended by the terms of any one
or more of the Loan Documents (Junior Tier Mezzanine) to be encumbered by the
Loan Documents (Junior Tier Mezzanine), or otherwise carry out the purposes of
the Loan Documents (Junior Tier Mezzanine) and the transactions contemplated
thereunder. Mezzanine Borrower agrees that it shall, upon request, reasonably
cooperate with Mezzanine Lender in connection with any request by Mezzanine
Lender to sever the Mezzanine Note into two (2) or more separate substitute
notes in an aggregate principal amount equal to the then outstanding Principal
Amount and to reapportion the Loan among such separate substitute notes,
including, without limitation, by executing and delivering to Mezzanine Lender
new substitute notes to replace the Mezzanine Note, amendments to or
replacements of existing Loan Documents (Junior Tier Mezzanine) to reflect such
severance and/or Opinions of Counsel with respect to such substitute
52
notes, amendments and/or replacements, provided that Mezzanine Borrower shall
bear no costs or expenses in connection therewith (other than administrative
nominal costs and expenses of Mezzanine Borrower). Any such substitute notes,
amendments or replacements may have varying principal amounts, maturity dates
and economic terms, provided, however, that (i) the maturity date of any such
substitute note shall be the same as the scheduled Maturity Date of the
Mezzanine Note immediately prior to the issuance of such substitute notes, (ii)
the weighted average LIBOR Margin for the term of the substitute notes shall not
exceed the LIBOR Margin under the Mezzanine Note immediately prior to the
issuance of such substitute notes; (iii) the economics of the Loan, taken as a
whole, shall not change in a manner which is adverse to Mezzanine Borrower and
(iv) Mezzanine Borrower's rights and obligations under the Loan Documents
(Junior Tier Mezzanine) in effect immediately prior to the issuance of such
substitute notes, amendments or replacements shall not change in any manner
adverse to Mezzanine Borrower.
(b) Mezzanine Borrower further agrees that if, in connection with
the Securitization, it is determined by the Rating Agencies that a portion of
the Securitization would not receive an "investment grade" rating unless the
principal amount of the Loan (Mortgage) were to be decreased and, as a result,
the principal amount of the Loan (Mortgage) is decreased, then (i) the Mezzanine
Borrower shall take all actions provided for in the documentation for the Loan
as are reasonably necessary to effect the "resizing" of the Loan (Mortgage) and
the Loan, (ii) the Mezzanine Borrower shall exercise commercially reasonable
efforts to cause the Senior Tier Mezzanine Borrower and Mortgage Borrower to
comply with its agreements to effect a "resizing", and (iii) Mezzanine Lender
shall on the date of the "resizing" of the Loan (Mortgage) lend to the Mezzanine
Borrower (by way of a reallocation of the principal amount of the Loan
(Mortgage) and the Loan) such additional amount as shall be required by the Loan
(Mortgage) documentation in connection with the "resizing" provided that
Mezzanine Borrower, Senior Tier Mezzanine Borrower and Mortgage Borrower execute
and deliver any and all necessary amendments or modifications to the Loan
Documents (Mortgage), the Loan Documents (Senior Tier Mezzanine) and the Loan
Documents (Junior Tier Mezzanine). In addition, Mezzanine Borrower and Mezzanine
Lender agree that if, in connection with the Securitization, it is determined by
the Rating Agencies that, if the principal amount of the Mezzanine Loan were to
be decreased and, as a result the principal amount of the Loan (Mortgage) were
increased, more "investment grade" rated securities could be issued, then (i) if
"resizing" to decrease the size of the Loan and increase the size of the Loan
(Mortgage) is provided for in the Loan Documents (Junior Tier Mezzanine), each
of them shall take all actions provided for in the documentation for the Loan as
are reasonably necessary to effect the "resizing" of the Loan and the Loan
(Mortgage), (ii) Mezzanine Borrower shall exercise commercially reasonable
efforts to cause the Mortgage Borrower to comply with its agreements to effect a
"resizing" and (iii) Mezzanine Lender shall on the date of the "resizing" of the
Loan(Mortgage) lend to the Mezzanine Borrower (by way of a reallocation of the
principal amount of the Loan (Mortgage) and the Loan) such additional amount as
shall be required by the Loan documentation in connection with the "resizing",
provided that Mortgage Borrower, Senior Tier Mezzanine Borrower and Mezzanine
Borrower execute and deliver any and all necessary modifications to the Loan
Documents (Mortgage), the Loan Documents (Senior Tier Mezzanine) and Loan
Documents (Junior Tier Mezzanine). In connection with the foregoing, at
Mezzanine Lender's sole cost and expense,
53
Mezzanine Borrower agrees to execute and deliver such documents and other
agreements reasonably required by Mortgage Lender, Senior Tier Mezzanine Lender
and/or Mezzanine Lender to "re-size" the Loans, including, without limitation,
an amendment to this Agreement, the Note, the Security Instrument and the other
Loan Documents (Mortgage) and an endorsement to the Title Policy reflecting an
increase in the insured amount thereunder. Mezzanine Lender agrees to reimburse
Mezzanine Borrower for all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Mezzanine Borrower in
connection with any "resizing" of the Loan. Notwithstanding the foregoing,
Mezzanine Lender agrees that any "resizing" of the Loan (Mortgage) and the Loan
shall not change the economics of the Loan (Mortgage) and the Loan each taken as
a whole in a manner which is adverse to Mezzanine Borrower or otherwise alter
the rights and obligations of Mezzanine Borrower under the Loan Documents
(Junior Tier Mezzanine) or Mortgage Borrower under the Loan Documents (Mortgage)
in a manner adverse to Mezzanine Borrower or Mortgage Borrower, as applicable.
(c) In addition, Mezzanine Borrower shall, at Mezzanine Borrower's
sole cost and expense:
(i) furnish to Mezzanine Lender, to the extent not otherwise
already furnished to Mezzanine Lender and reasonably acceptable to Mezzanine
Lender, all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Mortgage
Borrower pursuant to the terms of the Loan Documents (Mortgage);
(ii) execute and deliver, from time to time, such further
instruments as may be reasonably requested by Mezzanine Lender to confirm the
lien of the Pledge (Junior Tier Mezzanine) and this Agreement on any Collateral;
(iii) execute and deliver to Mezzanine Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Mezzanine Borrower under the
Loan Documents (Junior Tier Mezzanine), as Mezzanine Lender may reasonably
require; and
(d) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the carrying out of the terms and
conditions of this Agreement and the other Loan Documents (Junior Tier
Mezzanine), as Mezzanine Lender shall reasonably require from time to time.
54
5.1.11 BUSINESS AND OPERATIONS. Mezzanine Borrower and Senior
Tier Mezzanine Borrower shall continue to engage in the businesses presently
conducted by each of them as and to the extent the same are necessary for the
ownership, maintenance, management and operation of the Property and the
Collateral, as applicable. Each of Senior Tier Mezzanine Borrower and Mortgage
Borrower shall continue to qualify to do business and will remain in good
standing under the laws of the State of California and the State of Delaware.
5.1.12 TITLE TO THE COLLATERAL. Mezzanine Borrower will
warrant and defend (a) the title to the Collateral and every part thereof and
(b) the validity and priority of the Lien of the Pledge (Junior Tier Mezzanine)
and this Agreement on the Collateral, in each case against the claims of all
Persons whomsoever. Mezzanine Borrower shall reimburse Mezzanine Lender for any
losses, costs, damages or expenses (including reasonable attorneys' fees and
court costs) incurred by Mezzanine Lender if an interest in the Collateral is
claimed by another Person.
5.1.13 COSTS OF ENFORCEMENT. In the event (a) that this
Agreement or the Pledge (Junior Tier Mezzanine) is foreclosed in whole or in
part or that this Agreement or the Pledge (Junior Tier Mezzanine) is put into
the hands of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any security agreement prior to or subsequent to this Agreement
or the Pledge (Junior Tier Mezzanine) in which proceeding Mezzanine Lender is
made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other
similar proceeding in respect of Mezzanine Borrower or any of its constituent
Persons or an assignment by Mezzanine Borrower or any of its constituent Persons
for the benefit of its creditors, Mezzanine Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Mezzanine Lender or
Mezzanine Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.
5.1.14 ESTOPPEL STATEMENT.
(a) Mezzanine Borrower and Mezzanine Lender shall each from time
to time, upon thirty (30) days' prior written request from the other, execute,
acknowledge and deliver to the requesting party, an Officer's Certificate (or in
the case of Mezzanine Lender a certificate signed by an authorized officer),
stating that (i) this Agreement and the other Loan Documents (Junior Tier
Mezzanine) and the Loan Documents (Senior Tier Mezzanine) are unmodified and in
full force and effect (or, if there have been modifications, that this Agreement
and the other Loan Documents (Junior Tier Mezzanine) or, as applicable, Loan
Documents (Senior Tier Mezzanine) are in full force and effect as modified and
setting forth such modifications); (ii) the amount of accrued and unpaid
interest and the outstanding principal amount of the Mezzanine Note and the
Senior Tier Mezzanine Note; and (iii) such other information with respect to the
Mezzanine Borrower, Senior Tier Mezzanine Borrower, Guarantor, Mortgage
Borrower, the Property, the Loan and the Loan (Senior Tier Mezzanine as the
requesting party shall reasonably request. The estoppel certificate shall also
state either that to requesting party's knowledge no Event of Default or Senior
Tier Mezzanine Event of Default exists hereunder or thereunder or, if any Event
of Default or Senior Tier Mezzanine Event
55
of Default shall exist hereunder or thereunder, specify such Event of Default or
Senior Tier Mezzanine Event of Default and, in the case of Mezzanine Borrower's
estoppel, the steps being taken to cure such Event of Default or Senior Tier
Mezzanine Event of Default.
(b) Mezzanine Borrower shall request and make commercially
reasonable efforts to deliver to Mezzanine Lender within twenty (20) Business
Days of receipt of Mezzanine Lender's written request, tenant estoppel
certificates from each commercial tenant leasing space at the Property in form
and substance required under the Loan Agreement (Mortgage), provided that,
except after the occurrence and during the continuance of an Event of Default,
Mezzanine Borrower shall not be required to request or make commercially
reasonable efforts to deliver such certificates with respect to any particular
Tenant more frequently than one time in any calendar year.
Notwithstanding the foregoing, nothing contained in this Section
5.1.14 shall require Mezzanine Borrower to issue or threaten to issue any notice
of default to any Tenant in connection with obtaining such certificates or
otherwise interfere with or disturb the use and occupancy of the Property by any
Tenant.
5.1.15 LOAN PROCEEDS. Mezzanine Borrower shall use the
proceeds of the Loan received by it on the Closing Date only for the purposes
set forth in Section 2.1.4.
5.1.16 NO JOINT ASSESSMENT. Mezzanine Borrower shall not
suffer, permit or initiate the joint assessment of the Property (a) with any
other real property constituting a tax lot separate from the Property, and (b)
which constitutes real property with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of the Property.
5.1.17 NO FURTHER ENCUMBRANCES. Mezzanine Borrower shall do,
or cause to be done, all things necessary to keep and protect the Property and
the Collateral and all portions thereof unencumbered from any Liens, easements
or agreements granting rights in or restricting the use or development of the
Property, except for (a) with respect to the Property, Permitted Encumbrances,
(b) Liens created or permitted pursuant to the Loan Documents (Junior Tier
Mezzanine), Loan Documents (Senior Tier Mezzanine) or the Loan Documents
(Mortgage), (c) Liens for Impositions prior to the imposition of any interest,
charges or expenses for the non-payment thereof, (d) Liens permitted pursuant to
Leases, and (e) any Transfers permitted by Section 8.3 herein.
5.1.18 LEASES AND REAS. Copies of any notice received by
Senior Tier Mezzanine Borrower or Mezzanine Borrower with respect to the REAs
and the Leases claiming any default in the performance or observance of any of
the material terms, covenants or conditions of any of the REAs or the Leases by
either Mortgage Borrower or Senior Tier Mezzanine Borrower shall be promptly
delivered to Mezzanine Lender.
56
5.1.19 LOAN (SENIOR TIER MEZZANINE) COVENANTS.
(a) Mezzanine Borrower hereby covenants that it shall fully keep,
perform and comply with (or cause to be kept, performed and complied with) each
of the covenants set forth in the Loan Agreement (Senior Tier Mezzanine) which
are hereby incorporated by reference as if fully set forth herein,
notwithstanding any waiver or future amendment of such covenants by Senior Tier
Mezzanine Lender (other than a Permitted Senior Tier Mezzanine Loan Amendment).
Mezzanine Borrower acknowledges that the obligation to comply with such
covenants is separate from, and may be enforced independently from, the
obligations of the Senior Tier Mezzanine Borrower under the Loan Documents
(Senior Tier Mezzanine).
(b) No modification or amendment (by operation of law or
otherwise) of the Loan Documents (Mortgage) in effect as of the Closing Date
that would be a Prohibited Mortgage Loan Amendment (as hereinafter defined)
shall be made or entered into, except for those amendments or modifications
(PERMITTED MORTGAGE LOAN AMENDMENTS) that are (i) required under the Loan
Documents (Mortgage) or that Mortgage Borrower is required to consent to
thereunder pursuant to the express terms of the Loan Documents (Mortgage), (ii)
which do not constitute a Prohibited Mortgage Loan Amendment, or (iii) are
otherwise consented to by Mezzanine Lender. As used herein, a PROHIBITED
MORTGAGE LOAN AMENDMENT shall mean an amendment or modification to the Loan
Documents (Mortgage) that (A) is reasonably likely to have a Material Adverse
Effect, or (B) which (1) increases the principal amount of the Loan (Mortgage)
(exclusive of protective advances), (2) increases the interest rate payable
under the Loan (Mortgage), (3) provides for the payment of any additional
interest, additional fees, increases the amount of or adds additional reserve
payments or increases the amount of or adds additional escrows, or otherwise
increases the amount payable under the Loan (Mortgage), (4) increases the
frequency or payment amount of the periodic installments under the Loan
(Mortgage), (5) modifies the recourse carveout obligations under the Loan
Documents (Mortgage) in a manner which increases or expands recourse liability,
(6) modifies the due-on-sale, due-on-encumbrance, or collateral release
provisions of the Loan Documents (Mortgage), (7) modifies the provisions
governing replacement of the Independent Managers under the Loan Documents
(Mortgage) in a manner materially adverse to Mezzanine Lender, (8) adds material
additional obligations, liabilities or indemnities on the part of Mortgage
Borrower, Guarantor, Manager or Mezzanine Borrower, (9) shortens any default
cure periods or adds any additional defaults under the Loan Documents
(Mortgage), (10) extends the maturity date of the Loan (Mortgage) beyond the
initially scheduled maturity date (except (i) in connection with any work-out or
other surrender, compromise, release, renewal, or indulgence relating to the
Loan (Mortgage) and (ii) in connection with any extension provided for in the
Loan Documents (Mortgage)), (11) modifies any provisions related to the
Management Agreement, (12) waives or modifies any provisions related to the use
of proceeds under the Loan Documents (Mortgage), (13) modifies any provisions of
the Loan Documents (Mortgage) related to the funding of escrows or cash
management or any provision of the Account Agreement (Mortgage) or (14)
decreases or materially modifies any insurance requirements under the Loan
Documents (Mortgage). Any amendment or modification to the Loan Documents
(Mortgage) in violation of this Section 5.1.19 shall be ineffective as between
Mezzanine Borrower and Mezzanine Lender, and, if not cured by Mezzanine
57
Borrower within thirty (30) days after written notice from Mezzanine Lender
shall constitute an Event of Default hereunder, unless Mezzanine Lender consents
thereto in writing in its sole discretion.
(c) In the event the Loan (Mortgage), the Loan (Senior Tier
Mezzanine) or both of said loans shall at any time be repaid, or the Liens
securing the Loan (Mortgage), the Loan (Senior Tier Mezzanine) (or both of said
Liens) shall at any time be released in full, then unless and until the
Mezzanine Note shall have been repaid in full and all obligations of Mezzanine
Borrower to Mezzanine Lender hereunder and under the other Loan Documents
(Junior Tier Mezzanine) shall have been satisfied, then Mezzanine Borrower and
Manager shall nevertheless comply or cause Senior Tier Mezzanine Borrower to
comply and cause the Mortgage Borrower to comply with each of the terms and
provisions of the Loan Documents (Mortgage) (other than payment of principal,
interest and premium (if any)) and the Loan Documents (Senior Tier Mezzanine)
(other than payment of principal, interest and premium (if any)) (as applicable)
and the Loan Documents (Mortgage) and the Loan Documents (Senior Tier Mezzanine)
shall nevertheless be deemed to remain in full force and effect as between
Mezzanine Borrower and Mezzanine Lender with Mezzanine Lender being deemed in
such context to possess exclusively all of the rights and remedies of the
Mortgage Lender and the Senior Tier Mezzanine Lender (as applicable) thereunder
including without limitation, all rights of consent and approval, rights to
receive and control the disposition of casualty insurance proceeds and
condemnation awards, and the right to collect rents through a lockbox and make
waterfall distributions (but expressly excluding any rights and remedies
relating to payment of the indebtedness under the Loan Documents (Mortgage) and
evidenced by the Mortgage Note and the Loan Documents (Senior Tier Mezzanine)
and evidenced by the Senior Tier Mezzanine Note and Mezzanine Borrower shall
nevertheless comply or cause the Senior Tier Mezzanine Borrower to comply or
cause the Mortgage Borrower to comply with each of the terms and provisions of
the Loan Documents (Mortgage) (and any Permitted Mortgage Loan Amendments or
amendment or modification consented to in writing by Mezzanine Lender) (other
than the payment of principal, interest and premium, if any) and the Loan
Documents (Mezzanine). All documents reasonably requested by Mezzanine Lender
for the implementation or furtherance of the foregoing shall be executed and
delivered to Mezzanine Lender, provided that the same shall be at Mezzanine
Lender's sole cost and expense. Mezzanine Borrower shall deliver to Mezzanine
Lender copies of any and all modifications to the Loan Documents (Mortgage) and
the Loan Documents (Senior Tier Mezzanine) within five (5) Business Days after
execution thereof.
(d) All financial information delivered or required to be
delivered to Mortgage Lender pursuant to the terms of the Loan Documents
(Mortgage) or the Senior Tier Mezzanine Lender pursuant to the terms of the Loan
Documents (Senior Tier Mezzanine) shall be contemporaneously delivered to
Mezzanine Lender.
(e) No modification or amendment (by operation of law or
otherwise) of the Loan Documents (Senior Tier Mezzanine) in effect as of the
Closing Date that would be a Prohibited Senior Tier Mezzanine Loan Amendment (as
hereinafter defined) shall be made or entered into, except for those amendments
or modifications (PERMITTED SENIOR TIER MEZZANINE LOAN
58
AMENDMENTS) that are (i) required under the Loan Documents (Senior Tier
Mezzanine) or that Senior Tier Mezzanine Borrower is required to consent to
thereunder pursuant to the express terms of the Loan Documents (Senior Tier
Mezzanine), (ii) which do not constitute a Prohibited Senior Tier Mezzanine Loan
Amendment, or (iii) are otherwise consented to by Mezzanine Lender. As used
herein, a PROHIBITED SENIOR TIER MEZZANINE LOAN AMENDMENT shall mean an
amendment or modification to the Loan Documents (Senior Tier Mezzanine) that (A)
is reasonably likely to have a Material Adverse Effect, or (B) which (1)
increases the principal amount of the Loan (Senior Tier Mezzanine) (exclusive of
protective advances), (2) increases the interest rate payable under the Loan
(Senior Tier Mezzanine), (3) provides for the payment of any additional
interest, additional fees, increases the amount of or adds additional reserve
payments or increases the amount of or adds additional escrows, or otherwise
increases the amount payable under the Loan (Senior Tier Mezzanine), (4)
increases the frequency or payment amount of the periodic installments under the
Loan (Senior Tier Mezzanine), (5) modifies the recourse carveout obligations
under the Loan Documents (Senior Tier Mezzanine) in a manner which increases or
expands recourse liability, (6) modifies the due-on-sale, due-on-encumbrance, or
collateral release provisions of the Loan Documents (Senior Tier Mezzanine), (7)
modifies the provisions governing replacement of the Independent Managers under
the Loan Documents (Senior Tier Mezzanine) in a manner materially adverse to
Mezzanine Lender, (8) adds material additional obligations, liabilities or
indemnities on the part of Mortgage Borrower, Senior Tier Mezzanine Borrower,
Guarantor, Manager or Mezzanine Borrower, (9) shortens any default cure periods
or adds any additional defaults under the Loan Documents (Senior Tier
Mezzanine), (10) extends the maturity date of the Loan (Senior Tier Mezzanine)
beyond the initially scheduled maturity date (except (i) in connection with any
work-out or other surrender, compromise, release, renewal, or indulgence
relating to the Loan (Senior Tier Mezzanine) and (ii) in connection with any
extension provided for in the Loan Documents (Senior Tier Mezzanine)), (11)
modifies any provisions related to the Management Agreement, (12) waives or
modifies any provisions related to the use of proceeds under the Loan Documents
(Senior Tier Mezzanine), or (13) modifies any provisions of the Loan Documents
(Senior Tier Mezzanine) related to the funding of escrows or cash management or
any provision of the Account Agreement (Senior Tier Mezzanine). Any amendment or
modification to the Loan Documents (Senior Tier Mezzanine) in violation of this
Section 5.1.19 shall be ineffective as between Mezzanine Borrower and Mezzanine
Lender, and, if not cured by Mezzanine Borrower within thirty (30) days after
written notice from Mezzanine Lender shall constitute an Event of Default
hereunder, unless Mezzanine Lender consents thereto in writing in its sole
discretion.
5.1.20 PLAN ASSETS, ETC. Mezzanine Borrower will do,
or cause to be done, all things necessary to ensure that it will not be deemed
to hold "plan assets" (within the meaning of U.S. Department of Labor Regulation
Section 2510.3-101) at any time during the term the Loan is outstanding.
59
5.1.21 IMPOSITIONS. All Impositions, claims for
labor, material or supplies that if unpaid or unbonded might by law become a
lien or charge upon any of its property (including the Property) shall be timely
paid and the Property shall be kept free from any Lien (other than the lien of
the Loan Documents (Mortgage) and the Permitted Encumbrances). All Liens imposed
upon the Property or any portion thereof shall be promptly, fully and
unconditionally discharged within thirty (30) days after receipt of written
notice (whether from Mezzanine Lender, the lienholder or any other Person) of
the filing thereof; subject in each case to Mortgage Borrower's right to contest
the same as permitted in but subject to the conditions set forth in the Loan
Agreement (Mortgage) so long as no Event of Default has occurred. In the event
that Mortgage Borrower elects to commence any contest or similar proceeding with
respect to any such Imposition, Lien or other claim described herein, Mezzanine
Borrower shall provide prompt written notice thereof to Mezzanine Lender
together with such evidence as Mezzanine Lender may reasonably require showing
Mortgage Borrower's satisfaction of the requirements set forth in Section 7.3 of
the Loan Agreement (Mortgage) to Mortgage Borrower conducting such contest.
Notwithstanding the foregoing, any contested Imposition, Lien or claim shall be
paid, and the payment thereof shall not be deferred, if Mezzanine Lender,
Mezzanine Borrower or Mortgage Borrower may be subject to civil or criminal
damages as a result thereof. If such action or proceeding is terminated or
discontinued adversely to Mortgage Borrower, then reasonable evidence of payment
of such contested Imposition or Lien shall be promptly delivered to Mezzanine
Lender.
5.1.22 ARTICLE 8 "OPT IN" LANGUAGE. Mezzanine
Borrower shall cause Senior Tier Mezzanine Borrower to cause each organizational
document of Mortgage Borrower to include the language set forth on EXHIBIT M and
such language shall remain in each organizational document for so long as the
Obligations are outstanding.
SECTION 5.2 NEGATIVE COVENANTS.
From the Closing Date until payment and performance in full of
all obligations of Mezzanine Borrower under the Loan Documents (Junior Tier
Mezzanine) or the earlier release of the Lien of this Agreement or the Pledge
(Junior Tier Mezzanine) in accordance with the terms of this Agreement and the
other Loan Documents (Junior Tier Mezzanine), Mezzanine Borrower covenants and
agrees with Mezzanine Lender that Mezzanine Borrower will not do, directly or
indirectly, any of the following without Mezzanine Lender's prior written
consent:
5.2.1 DEBT. Without the prior written consent of
Mezzanine Lender, such consent to be made in Mezzanine Lender's sole
determination, incur, create, assume or be liable with respect to any additional
Debt (including, but not limited to, any secondary or junior financing, or any
preferred equity investment, but excluding Permitted Debt), or create or permit
to be created or to remain, any Lien on, or conditional sale or other title
retention agreement with respect to the Collateral or any part thereof or income
therefrom, other than the Loan Documents (Junior Tier Mezzanine) and ordinary
course trade payables and equipment leases expressly permitted by the Loan
Agreement (Mortgage). Mezzanine Borrower shall not cause or permit the Senior
Tier Mezzanine Borrower which in turn shall not cause or permit the Mortgage
Borrower to (i) incur,
60
create, assume or be liable with respect to any additional Debt (including, but
not limited to, any secondary or junior financing or preferred equity
investment, but excluding Permitted Debt) other than the Loan (Mortgage) (and
ordinary course trade payables and equipment leases expressly permitted by the
Loan Agreement (Mortgage)) or the Loan (Senior Tier Mezzanine), regardless of
whether same has been repaid in whole or in part, or (ii) create or permit to be
created or to remain, any Lien on, or conditional sale or other title retention
agreement, with respect to the Property other than the Loan (Mortgage) (it being
acknowledged and agreed that any refinancing of such Debt in connection with an
assignment and restatement of the Loan Documents (Mortgage) or the Loan
Documents (Senior Tier Mezzanine) shall be in violation of this Section 5.2.1).
5.2.2 ENCUMBRANCES. Other than in connection with and
as expressly permitted under the Loan Documents (Junior Tier Mezzanine), the
Loan Documents (Senior Tier Mezzanine) and the Loan Documents (Mortgage), none
of Mezzanine Borrower, Senior Tier Mezzanine Borrower, Mortgage Borrower or
Guarantor will (a) create or incur or suffer to be created or incurred or to
exist any lien, security title, encumbrance, mortgage, pledge, negative pledge,
charge, restriction or other security interest of any kind upon any of its
property or assets of any character whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of its property or assets
or the income or profits therefrom for the purpose of subjecting the same to the
payment of Debt or performance of any other obligation in priority to payment of
its general creditors; (c) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; (d) suffer to exist for a
period of more than 30 days after the same shall have been incurred any Debt or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles, chattel paper or instruments, with or without
recourse; or (f) incur or maintain any obligation to any holder of Debt which
prohibits the creation or maintenance of any lien securing the Obligations
(Junior Tier Mezzanine).
5.2.3 ENGAGE IN DIFFERENT BUSINESS. Engage, directly
or indirectly, in any business other than that of entering into this Agreement
and the other Loan Documents (Junior Tier Mezzanine) to which Mezzanine Borrower
is a party and the use, ownership, management, leasing, renovation, financing,
development, operation and maintenance of the Property and activities related
thereto;
5.2.4 MAKE ADVANCES. Make advances or make loans to
any Person, or hold any investments, except as expressly permitted pursuant to
the terms of this Agreement or any other Loan Document (Junior Tier Mezzanine);
61
5.2.5 PARTITION. Permit Senior Tier Mezzanine
Borrower to permit Mortgage Borrower to partition the Property;
5.2.6 COMMINGLE. Commingle its assets with the assets
of any of its Affiliates;
5.2.7 GUARANTEE OBLIGATIONS. Guarantee any
obligations of any Person;
5.2.8 TRANSFER ASSETS. Transfer any asset other than
in the ordinary course of business or Transfer any interest in the Senior Tier
Mezzanine Borrower except as may be permitted hereby or in the other Loan
Documents (Junior Tier Mezzanine);
5.2.9 AMEND ORGANIZATIONAL DOCUMENTS. Amend or modify
any of its organizational documents without Mezzanine Lender's consent (which
consent shall not be unreasonably withheld, conditioned or delayed), other than
to reflect any change in capital accounts, contribution, distributions,
allocations or other provisions that do not and could not reasonably be
anticipated to have a Material Adverse Effect and provided that Mezzanine
Borrower, Senior Tier Mezzanine Borrower and Mortgage Borrower each remain a
Single Purpose Entity;
5.2.10 DISSOLVE. Dissolve, wind-up, terminate,
liquidate, merge with or consolidate into another Person, except as expressly
permitted pursuant to this Agreement;
5.2.11 BANKRUPTCY. (i) file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect
to itself, (ii) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Mezzanine Borrower's assets other than in connection with
the repayment of the Loan or (iii) file or solicit the filing of an involuntary
bankruptcy petition against Mezzanine Borrower, Senior Tier Mezzanine Borrower,
Mortgage Borrower, or any Affiliate of such Persons, without obtaining the prior
consent of each of the members of Mezzanine Borrower, including, without
limitation, the Independent Managers;
5.2.12 ERISA. Engage in any activity that would cause
Mezzanine Borrower's assets to constitute Plan Assets;
5.2.13 DISTRIBUTIONS. From and after the occurrence
and during the continuance of an Event of Default, make any distributions to or
for the benefit of any of its partners or members or its or their Affiliates;
5.2.14 MANAGER.
(a) Mezzanine Borrower shall not, without the prior
written consent of Mezzanine Lender, which consent shall not be unreasonably
withheld or delayed, permit Senior Tier Mezzanine Borrower to permit Mortgage
Borrower to: (i) materially modify, change, supplement, alter or amend the
Management Agreement or waive or release any of its right and remedies under the
62
Management Agreement that would reasonably be likely to have a Material Adverse
Effect or (ii) replace the Manager with other than a Qualified Manager;
(b) Mezzanine Lender shall be notified in writing,
together with a copy of the proposed management agreement, of any entity
proposed to be designated as a Qualified Manager of the Property not less than
thirty (30) days before such Qualified Manager, begins to manage the Property;
(c) If (a) an Event of Default has occurred and is
continuing or (b) the Manager shall become insolvent, Mezzanine Borrower shall,
at the request of Mezzanine Lender and provided Mortgage Lender consents,
terminate the Management Agreement and replace the Manager with a Qualified
Manager in accordance with this Section 5.2.14 and shall deliver (1) an
acceptable Non-Consolidation Opinion covering such replacement Manager if such
Person (i) is not covered by the Non-Consolidation Opinion or an Additional
Non-Consolidation Opinion, and (ii) is an Affiliate of Mezzanine Borrower and
(2) an Assignment of Management Agreement executed by the Mortgage Borrower and
the Qualified Manager;
(d) Upon the retention of a Qualified Manager, Mezzanine
Lender shall have the right to approve (which approval shall not be unreasonably
withheld or delayed) any new management agreement with such Qualified Manager;
and
(e) In no event shall the Manager's obligations under the
Management Agreement which require a real estate brokerage license under the
State of California commence unless and until Mezzanine Lender has received
evidence that (i) the License Date has occurred and (ii) the Third- Party
Management Agreement has been validly terminated.
5.2.15 RESERVED.
5.2.16 MODIFY REAS. Without the prior consent of
Mezzanine Lender, which shall not be unreasonably withheld, delayed or
conditioned and provided such consent request shall be in writing and
conspicuously state that failure by Mezzanine Lender to disapprove in writing to
such consent request within ten (10) Business Days shall be deemed consent on
behalf of the Mezzanine Lender, execute modifications to the REAs; provided,
however, failure by Mezzanine Lender to disapprove in writing to Mezzanine
Borrower's consent request pursuant to this Section 5.2.16 within ten (10)
Business Days shall be deemed consent on behalf of Mezzanine Lender;
5.2.17 MODIFY ACCOUNT AGREEMENT (JUNIOR TIER
MEZZANINE). Without the prior consent of Mezzanine Lender, which shall not be
unreasonably withheld, delayed or conditioned, Mezzanine Borrower will not
execute any modification to the Account Agreement (Junior Tier Mezzanine);
63
5.2.18 ZONING RECLASSIFICATION. Without the prior
written consent of Mezzanine Lender, initiate or permit the Senior Tier
Mezzanine Borrower to consent to (a) any zoning reclassification of any portion
of the Property, (b) seek any variance under any existing zoning ordinance that
could result in the use of the Property becoming a non-conforming use under any
zoning ordinance or any other applicable land use law, rule or regulation, or
(c) allowing any portion of the Property to be used in any manner that could
result in the use of the Property becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation;
5.2.19 CHANGE OF PRINCIPAL PLACE OF BUSINESS. Change
its principal place of business and chief executive office set forth on the
first page of this Agreement without first giving Mezzanine Lender thirty (30)
days' prior written notice (but in any event, within the period required
pursuant to the UCC) and there shall have been taken such action, reasonably
satisfactory to Mezzanine Lender, as may be necessary to maintain fully the
effect, perfection and priority of the security interest of Mezzanine Lender
hereunder in the Account Collateral (Junior Tier Mezzanine) and the Interest
Rate Cap Collateral at all times;
5.2.20 DEBT CANCELLATION. Cancel or otherwise forgive
or release any material claim or debt owed to it by any Person, except for
adequate consideration or in the ordinary course of its business;
5.2.21 MISAPPLICATION OF FUNDS. (i) Distribute any
revenue from the Property or any Proceeds in violation of the provisions of this
Agreement, (ii) fail to remit amounts to the Mezzanine Account, as required by
Section 3.1 or (iii) misappropriate any security deposit or portion thereof or
misapply the proceeds of the Loan; or
5.2.22 SINGLE-PURPOSE ENTITY. Fail to be a
Single-Purpose Entity or take or suffer any action or inaction the result of
which would cause it, the Senior Tier Mezzanine Borrower or Mortgage Borrower to
cease to be a Single-Purpose Entity.
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 6.1 INSURANCE COVERAGE REQUIREMENTS.
(a) Each of the insurance policies required by the Loan
Documents (Mortgage) shall be procured and maintained. Each commercial general
liability or umbrella liability policy with respect to the Property shall name
Mezzanine Lender as an additional insured and shall contain a cross
liability/severability endorsement in form and substance acceptable to Mezzanine
Lender.
(b) In the event of any loss or damage to the Property,
Mezzanine Borrower shall give prompt written notice to the insurance carrier and
Mezzanine Lender. Mezzanine Lender acknowledges that Mortgage Borrower's rights
to any insurance proceeds are subject to the terms of the Loan Agreement
(Mortgage). No claims under any insurance policies maintained pursuant
64
to this Agreement or the Loan Documents (Junior Tier Mezzanine) shall be
settled, adjusted or compromised without the prior written consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or conditioned;
provided, that proof of loss may be made, adjusted and compromised under
casualty insurance policies for claims in an amount less than $5,000,000 so long
as no Event of Default has occurred. Any proceeds of such claim which are not
used to reconstruct or repair the Property, or applied to the balance of the
loan evidenced by the Loan Documents (Mortgage), shall be deposited into the
accounts established pursuant to the Loan Agreement (Mortgage) to the extent
required thereby, or if such deposit is not required thereunder, then such
proceeds shall be applied to the balance of the loan evidenced by the Loan
Documents (Senior Tier Mezzanine) and shall be deposited into the accounts
established pursuant to the Loan Agreement (Senior Tier Mezzanine) to the extent
required thereby, or if such deposit is not required thereunder, then such
proceeds shall be paid to Mezzanine Lender and applied to the payment of the
Obligations (Mezzanine) whether or not then due.
(c) In the event that Mortgage Borrower is permitted
pursuant to the terms of the Loan Agreement (Mortgage) to reconstruct, restore
or repair the Property following a casualty to any portion of the Property, the
Property shall be promptly and diligently repaired and restored in the manner
and within the time periods required by the Loan Agreement (Mortgage), the
Leases and any other agreements affecting the Property. In the event that
Mortgage Borrower is permitted pursuant to terms of the Loan Agreement
(Mortgage) to elect to not reconstruct, restore or repair the Property following
a casualty to any portion of the Property, the Property shall not be
reconstructed, restored or repaired without the prior written consent of
Mezzanine Lender, not to be unreasonably withheld, delayed or conditioned.
(d) Mezzanine Borrower shall comply with all Insurance
Requirements and shall not bring or keep or permit to be brought or kept any
article upon any of the Property or cause or permit any condition to exist
thereon which would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required to be maintained by Mortgage Borrower on
or with respect to any part of the Property pursuant to Section 6.1 of the Loan
Agreement (Mortgage).
SECTION 6.2 CONDEMNATION. In the event that all or any portion
of the Property shall be damaged or taken through condemnation (which term shall
include any damage or taking by any governmental authority, quasi-governmental
authority, any party having the power of condemnation, or any transfer by
private sale in lieu thereof), or any such condemnation shall be threatened in
writing, Mezzanine Borrower shall give prompt written notice to Mezzanine
Lender. Mezzanine Lender acknowledges that Mortgage Borrower's rights to any
condemnation award is subject to the terms of the Loan Agreement (Mortgage).
Notwithstanding the foregoing, Mezzanine Borrower may not and shall not permit
Senior Tier Mezzanine Borrower to permit Mortgage Borrower to settle or
compromise any claim, action or proceeding relating to such damage or
condemnation without the prior written consent of Mezzanine Lender, which shall
not be unreasonably withheld, delayed or conditioned; provided, further, that
Mortgage Borrower may settle, adjust and compromise any such claim, action or
proceeding which is of an amount less than $5,000,000 so long as no Default or
Event of Default has occurred. Any Excess Proceeds shall be
65
paid to Mezzanine Lender and applied to the payment of the Obligations (Junior
Tier Mezzanine) whether or not then due pursuant to Section 2.3.1(b). In the
event that Mortgage Borrower is permitted pursuant to the terms of the Loan
Agreement (Mortgage) to reconstruct, restore or repair the Property following a
condemnation of any portion of the Property, the Property shall be promptly and
diligently repaired and restored in the manner and within the time periods
required by the Loan Agreement (Mortgage), the Leases and any other agreements
affecting the Property. In the event that Mortgage Borrower is permitted
pursuant to the terms of the Loan Agreement (Mortgage) to elect not to
reconstruct, restore or repair the Property following a condemnation of any
portion of the Property, the Property shall not be reconstructed, restored or
repaired without the prior written consent of Mezzanine Lender, not to be
unreasonably withheld, delayed or conditioned.
SECTION 6.3 CERTIFICATES. Concurrently with the renewal of the
insurance policies required hereunder, a certificate from Mezzanine Borrower's
and Mortgage Borrower's insurance agent stating that the insurance policies are
maintained with insurers who comply with the terms of Section 6.1.9 of the Loan
Agreement (Mortgage), setting forth a schedule describing all premiums required
to be paid by Mezzanine Borrower or Mortgage Borrower, as applicable, and
stating that either Mezzanine Borrower or Mortgage Borrower, as applicable, has
paid such premiums shall be delivered to Mezzanine Lender. Certificates of
insurance with respect to all replacement policies shall be delivered to
Mezzanine Lender not less than fifteen (15) Business Days prior to the
expiration date of any of the insurance policies required to be maintained
hereunder which certificates shall bear notations evidencing payment of
applicable premiums. Originals (or certified copies) of such replacement
insurance policies shall be delivered to Mezzanine Lender within thirty (30)
days after the effective date thereof (including the insurance certificates
delivered pursuant to Section 2.5.2(h)). If Mezzanine Borrower fails to (i)
maintain or to deliver to Mezzanine Lender the certificates of insurance
required by this Agreement or (ii) maintain and deliver originals (or certified
copies) such insurance policies within thirty (30) days after the effective date
thereof, upon five (5) Business Days' prior notice to Mezzanine Borrower,
Mezzanine Lender may procure such insurance, and all costs thereof (and interest
thereon at the Default Rate) shall be added to the Indebtedness. Mezzanine
Lender shall not, by the fact of approving, disapproving, accepting, preventing,
obtaining or failing to obtain any insurance, incur any liability for or with
respect to the amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or payment or defense of
lawsuits, and Mezzanine Borrower hereby expressly assumes full responsibility
therefor and all liability, if any, with respect thereto.
VII. RESERVED.
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS.
66
SECTION 8.1 RESTRICTIONS ON TRANSFERS. Unless such action is
permitted by the provisions of this Article VIII, Article VIII of the Loan
Agreement (Mortgage) or Article VIII of the Loan Agreement (Senior Tier
Mezzanine), Mezzanine Borrower shall not, and shall not permit any other Person
to, except with the prior written consent of Mezzanine Lender in each instance,
directly or indirectly: (i) Transfer all or any part of the Property, or the
Collateral or any part thereof, or any income or profits from the Property or
the Collateral, or any other accounts, contract rights, general intangibles,
instruments, chattel paper or other assets or claims, whether now owned or
hereafter acquired except Excess Cash Flow released to Mezzanine Borrower; or
(ii) except as may be further permitted by Article V, create or suffer to be
created or to exist any lien, encumbrance, security interest, mortgage, pledge,
restriction, attachment or other charge of any kind upon, or any levy, seizure,
attachment or foreclosure of, the Property or the Collateral or any part
thereof, or any part thereof or interest therein, or any income or profit
therefrom, or any other accounts, contract rights, general intangibles,
instruments, chattel paper or other assets or claims, whether now owned or
hereafter acquired, except for Permitted Encumbrances. For the purposes of this
Section, the Transfer of all or any portion of the direct or indirect ownership
interests in Mortgage Borrower, Senior Tier Mezzanine Borrower or Mezzanine
Borrower at any level or tier, including, without limitation, the interest of
(a) Mezzanine Borrower in Senior Tier Mezzanine Borrower or (b) Senior Tier
Mezzanine Borrower in Mortgage Borrower or (c) Guarantor in Mezzanine Borrower,
or the creation or addition of a new member or other owner of any interest in
Mortgage Borrower, Senior Tier Mezzanine Borrower, as the case may be, shall be
deemed to be a Transfer of an interest in the Property.
SECTION 8.2 DELIVERIES TO MEZZANINE LENDER. Not less than
thirty (30) days prior to the closing of any transaction subject to the
provisions of this Article VIII (other than a Transfer pursuant to Section
8.3(b)), Mezzanine Borrower shall deliver to Mezzanine Lender an Officer's
Certificate describing the proposed transaction and stating that such
transaction is permitted by this Article VIII, together with any appraisal or
other documents upon which such Officer's Certificate is based. In addition,
Mezzanine Borrower shall provide Mezzanine Lender with copies of executed
transfer instruments or other similar closing documents within ten (10) Business
Days after such closing.
SECTION 8.3 PERMITTED TRANSFERS.
(a) A Transfer (but not a pledge or encumbrance) of a
direct or indirect beneficial interest in Mezzanine Borrower shall be permitted
without Mezzanine Lender's consent (unless noted otherwise below) provided each
of the following conditions is satisfied:
(i) Mezzanine Lender receives thirty (30) days prior
written notice thereof,
(ii) immediately prior to such Transfer, no Event of
Default shall have occurred and be continuing,
(iii) no more than 49% of the direct or indirect ownership
interests in Mezzanine Borrower is being Transferred (in the aggregate
of all such Transfers) unless a Nonconsolidation Opinion and Mezzanine
Lender's prior written consent is obtained,
67
(iv) no such Transfer or Transfers shall, either
individually or in the aggregate of all Transfers result in a Person or
a group of Affiliates acquiring, directly or indirectly, more than a
49% interest in Mezzanine Borrower or shall result in any Transfer of
the managing member interest in Mezzanine Borrower or any direct or
indirect Transfer of any beneficial ownership of the managing member of
Mezzanine Borrower unless a Nonconsolidation Opinion and Mezzanine
Lender's prior written consent is obtained,
(v) Mezzanine Borrower continues to be a Single Purpose
Entity after such Transfer,
(vi) no such Transfer or Transfers shall result in a
change in the Control of Mezzanine Borrower or its managing member,
unless a Nonconsolidation Opinion and Mezzanine Lender's prior written
consent is obtained,
(vii) a Qualified Manager acceptable to Mezzanine Lender
shall manage the Property, provided that Manager unless previously
removed, shall be deemed acceptable; and
(viii) Mezzanine Borrower pays to Mezzanine Lender, on the
date of such Transfer, all of Mezzanine Lender's costs and expenses,
including without limitation, reasonable attorney's fees and
disbursements, incurred or to be incurred by Mezzanine Lender in
connection with such Transfer.
(b) Notwithstanding anything to the contrary contained in
this Article VIII, the Transfer (including any pledge or encumbrance), in one or
a series of transactions of indirect equity interests in the Mezzanine Borrower
shall not be deemed a Transfer if, after giving effect to such transfers,
Guarantor shall beneficially own not less than an unencumbered fifty one percent
(51%) of the direct and indirect equity interests in the Mezzanine Borrower,
Senior Tier Mezzanine Borrower and the Mortgage Borrower, and Guarantor shall
control the Mezzanine Borrower, Senior Tier Mezzanine Borrower and the Mortgage
Borrower.
(c) The determination of whether Mezzanine Borrower has
satisfied the conditions for Transfer set forth in this Section 8.3 shall be
made by Mezzanine Lender in its reasonable discretion.
IX. INTEREST RATE CAP AGREEMENT.
SECTION 9.1 INTEREST RATE CAP AGREEMENT (JUNIOR TIER
MEZZANINE). Prior to or contemporaneously with the Closing Date, Mezzanine
Borrower shall have obtained, and thereafter maintain in effect, the Interest
Rate Cap Agreement (Junior Tier Mezzanine), which shall be coterminous with the
Loan and have a notional amount which shall not at any time be less than the
Principal Amount. The Interest Rate Cap Agreement (Junior Tier Mezzanine) shall
have a strike rate no greater than the Strike Price. The notional amount of the
Interest Rate Cap Agreement (Junior Tier Mezzanine) may be reduced from time to
time in amounts equal to any mandatory prepayment of the principal of the Loan
in accordance with Section 5(b) of the Mezzanine Note.
68
SECTION 9.2 PLEDGE. As security for the full and punctual
payment and performance of the Obligations (Junior Tier Mezzanine) when due
(whether upon stated maturity, by acceleration, early termination or otherwise),
Mezzanine Borrower, as pledgor, hereby pledges, assigns, hypothecates, transfers
and delivers to Mezzanine Lender and hereby grants to Mezzanine Lender a
continuing first priority lien on and security interest in, to and under all of
the following whether now owned or hereafter acquired and whether now existing
or hereafter arising (the INTEREST RATE CAP COLLATERAL): all of the right, title
and interest of Mezzanine Borrower in and to (i) the Interest Rate Cap Agreement
(Junior Tier Mezzanine); (ii) all payments due or to become due to Mezzanine
Borrower in respect of the Interest Rate Cap Agreement (Junior Tier Mezzanine)
or arising out of the Interest Rate Cap Agreement (Junior Tier Mezzanine),
whether as contractual obligations, damages or otherwise; and (iii) all of
Mezzanine Borrower's claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under or arising out of the
Interest Rate Cap Agreement (Junior Tier Mezzanine), in each case including all
accessions and additions to, substitutions for and replacements, products and
proceeds of any of the foregoing.
SECTION 9.3 COVENANTS.
(a) Mezzanine Borrower shall comply with all of its
obligations under the terms and provisions of the Interest Rate Cap Agreement
(Junior Tier Mezzanine). All amounts paid by the Counterparty under the Interest
Rate Cap Agreement (Junior Tier Mezzanine) to Mezzanine Borrower or Mezzanine
Lender shall be deposited immediately into the Mezzanine Account pursuant to
Section 3.1. Subject to terms hereof, provided no Event of Default has occurred
and is continuing, Mezzanine Borrower shall be entitled to exercise all rights,
powers and privileges of Mezzanine Borrower under, and to control the
prosecution of all claims with respect to, the Interest Rate Cap Agreement
(Junior Tier Mezzanine) and the other Interest Rate Cap Collateral. Mezzanine
Borrower shall take all actions reasonably requested by Mezzanine Lender to
enforce Mezzanine Lender's rights under the Interest Rate Cap Agreement (Junior
Tier Mezzanine) in the event of a default by the Counterparty and shall not
waive, amend or otherwise modify any of its rights thereunder.
(b) Mezzanine Borrower will defend Mezzanine Lender's
right, title and interest in and to the Interest Rate Cap Collateral pledged by
Mezzanine Borrower pursuant hereto or in which it has granted a security
interest pursuant hereto against the claims and demands of all other Persons.
(c) In the event of any downgrade, withdrawal or
qualification of the rating of the Counterparty below AA- by S&P and Aa3 by
Moody's, Mezzanine Borrower shall replace the Interest Rate Cap Agreement
(Junior Tier Mezzanine) with a Replacement Interest Rate Cap Agreement (Junior
Tier Mezzanine) not later than ten (10) Business Days following receipt of
notice from Lender or Servicer of such downgrade, withdrawal or qualification.
(d) In the event that Mezzanine Borrower fails to
purchase and deliver to Mezzanine Lender the Interest Rate Cap Agreement (Junior
Tier Mezzanine) as and when required hereunder, Mezzanine Lender may purchase
the Interest Rate Cap Agreement (Junior Tier
69
Mezzanine) and the cost incurred by Mezzanine Lender in purchasing the Interest
Rate Cap Agreement (Junior Tier Mezzanine) shall be paid by Mezzanine Borrower
to Mezzanine Lender with interest thereon at the Default Rate from the date such
cost was incurred by Mezzanine Lender until such cost is paid by Mezzanine
Borrower to Mezzanine Lender.
(e) Mezzanine Borrower will not sell, assign, or
otherwise dispose of, or mortgage, pledge or grant a security interest in, any
of the Interest Rate Cap Collateral or any interest therein, and any sale,
assignment, mortgage, pledge or security interest whatsoever made in violation
of this covenant shall be a nullity and of no force and effect, and upon demand
of Mezzanine Lender, shall forthwith be cancelled or satisfied by an appropriate
instrument in writing.
(f) Mezzanine Borrower will not (i) without the prior
written consent of Mezzanine Lender (which consent shall not be unreasonably
withheld, conditioned or delayed), materially modify, amend or supplement the
terms of the Interest Rate Cap Agreement (Junior Tier Mezzanine), (ii) without
the prior written consent of Mezzanine Lender, except in accordance with the
terms of the Interest Rate Cap Agreement (Junior Tier Mezzanine), cause the
termination of the Interest Rate Cap Agreement (Junior Tier Mezzanine) prior to
its stated maturity date, (iii) without the prior written consent of Mezzanine
Lender (which consent shall not be unreasonably withheld, conditioned or
delayed), except as aforesaid, waive or release any obligation of the
Counterparty (or any successor or substitute party to the Interest Rate Cap
Agreement (Junior Tier Mezzanine)) under the Interest Rate Cap Agreement (Junior
Tier Mezzanine), (iv) without the prior written consent of Mezzanine Lender
(which consent shall not be unreasonably withheld, conditioned or delayed),
consent or agree to any act or omission to act on the part of the Counterparty
(or any successor or substitute party to the Interest Rate Cap Agreement (Junior
Tier Mezzanine)), which, without such consent or agreement, would constitute a
default under the Interest Rate Cap Agreement (Junior Tier Mezzanine), (v) fail
to exercise promptly and diligently each and every material right which it may
have under the Interest Rate Cap Agreement (Junior Tier Mezzanine), (vi) take or
intentionally omit to take any action or intentionally suffer or permit any
action to be omitted or taken, the taking or omission of which would result in
any right of offset against sums payable under the Interest Rate Cap Agreement
(Junior Tier Mezzanine) or any defense by the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (Junior Tier Mezzanine)), to
payment, and (vii) fail to give prompt notice to Mezzanine Lender of any notice
of default given by or to Mezzanine Borrower under or with respect to the
Interest Rate Cap Agreement (Junior Tier Mezzanine), together with a complete
copy of such notice.
(g) In connection with an Interest Rate Cap Agreement
(Junior Tier Mezzanine), Mezzanine Borrower shall obtain and deliver to
Mezzanine Lender an Opinion of Counsel from counsel (which counsel may be
in-house counsel for the Counterparty) for the Counterparty upon which Mezzanine
Lender and its successors and assigns may rely (the COUNTERPARTY OPINION) which
shall provide the opinions provided in EXHIBIT H attached hereto.
70
SECTION 9.4 POWERS OF MEZZANINE BORROWER PRIOR TO AN EVENT OF
DEFAULT. Subject to the provisions of Section 9.3(a), provided no Event of
Default has occurred and is continuing, Mezzanine Borrower shall be entitled to
exercise all rights, powers and privileges of Mezzanine Borrower under, and to
control the prosecution of all claims with respect to, the Interest Rate Cap
Agreement (Junior Tier Mezzanine) and the other Interest Rate Cap Collateral.
SECTION 9.5 REPRESENTATIONS AND WARRANTIES. Mezzanine Borrower
hereby represents and warrants to, Mezzanine Lender as of the date hereof as
follows:
(a) The Interest Rate Cap Agreement (Junior Tier
Mezzanine) constitutes the legal, valid and binding obligation of Mezzanine
Borrower, enforceable against Mezzanine Borrower in accordance with its terms.
(b) The Interest Rate Cap Collateral is free and clear of
all claims or security interests of every nature whatsoever, except such as are
created pursuant to this Agreement and the other Loan Documents (Junior Tier
Mezzanine), and Mezzanine Borrower has the right to pledge and grant a security
interest in the same as herein provided without the consent of any other Person
other than any such consent that has been obtained and is in full force and
effect.
(c) The Interest Rate Cap Collateral has been duly and
validly pledged hereunder. All consents and approvals required to be obtained by
Borrower for the consummation of the transactions contemplated by this Agreement
have been obtained.
(d) Giving effect to the aforesaid grant and assignment
to Mezzanine Lender, Mezzanine Lender has, as of the date of this Agreement, and
as to Interest Rate Cap Collateral acquired from time to time after such date,
shall have, a valid, and upon proper filing, perfected and continuing first
priority lien upon and security interest in the Interest Rate Cap Collateral;
provided that no representation or warranty is made with respect to the
perfected status of the security interest of Mezzanine Lender in the proceeds of
Interest Rate Cap Collateral consisting of "cash proceeds" or "non-cash
proceeds" as defined in the UCC except if, and to the extent, the provisions of
Section 9-306 of the UCC shall be complied with.
(e) Except for financing statements filed or to be filed
in favor of Mezzanine Lender as secured party, there are no financing statements
under the UCC covering any or all of the Interest Rate Cap Collateral and
Mezzanine Borrower will not, without the prior written consent of Mezzanine
Lender, until payment in full of all of the Obligations (Mezzanine), execute and
file in any public office, any enforceable financing statement or statements
covering any or all of the Interest Rate Cap Collateral, except financing
statements filed or to be filed in favor of Mezzanine Lender as secured party.
71
SECTION 9.6 PAYMENTS. If Mezzanine Borrower at any time shall
be entitled to receive any payments with respect to the Interest Rate Cap
Agreement (Junior Tier Mezzanine), such amounts shall, immediately upon becoming
payable to Mezzanine Borrower, be deposited by Counterparty into the Mezzanine
Account.
SECTION 9.7 REMEDIES. Subject to the provisions of the
Interest Rate Cap Agreement (Junior Tier Mezzanine), if an Event of Default
shall occur and then be continuing:
(a) Mezzanine Lender, without obligation to resort to any
other security, right or remedy granted under any other agreement or instrument,
shall have the right to, in addition to all rights, powers and remedies of a
secured party pursuant to the UCC, at any time and from time to time, sell,
resell, assign and deliver, in its sole discretion, any or all of the Interest
Rate Cap Collateral (in one or more parcels and at the same or different times)
and all right, title and interest, claim and demand therein and right of
redemption thereof, at public or private sale, for cash, upon credit or for
future delivery, and in connection therewith Mezzanine Lender may grant options
and may impose reasonable conditions such as requiring any purchaser to
represent that any "securities" constituting any part of the Interest Rate Cap
Collateral are being purchased for investment only, Mezzanine Borrower hereby
waiving and releasing any and all equity or right of redemption to the fullest
extent permitted by the UCC or applicable law. If all or any of the Interest
Rate Cap Collateral is sold by Mezzanine Lender upon credit or for future
delivery, Mezzanine Lender shall not be liable for the failure of the purchaser
to purchase or pay for the same and, in the event of any such failure, Mezzanine
Lender may resell such Interest Rate Cap Collateral. It is expressly agreed that
Mezzanine Lender may exercise its rights with respect to less than all of the
Interest Rate Cap Collateral, leaving unexercised its rights with respect to the
remainder of the Interest Rate Cap Collateral, provided, however, that such
partial exercise shall in no way restrict or jeopardize Mezzanine Lender's right
to exercise its rights with respect to all or any other portion of the Interest
Rate Cap Collateral at a later time or times.
(b) Mezzanine Lender may exercise, either by itself or by
its nominee or designee, in the name of Mezzanine Borrower, all of Mezzanine
Lender's rights, powers and remedies in respect of the Interest Rate Cap
Collateral, hereunder and under law.
(c) Mezzanine Borrower hereby irrevocably, in the name of
Mezzanine Borrower or otherwise, authorizes and empowers Mezzanine Lender and
assigns and transfers unto Mezzanine Lender, and constitutes and appoints
Mezzanine Lender its true and lawful attorney-in-fact, and as its agent,
irrevocably, with full power of substitution for Mezzanine Borrower and in the
name of Mezzanine Borrower, (i) to exercise and enforce every right, power,
remedy, authority, option and privilege of Mezzanine Borrower under the Interest
Rate Cap Agreement (Junior Tier Mezzanine), including any power to subordinate
or modify the Interest Rate Cap Agreement (Junior Tier Mezzanine) (but not,
unless an Event of Default exists and is continuing, the right to terminate or
cancel the Interest Rate Cap Agreement (Junior Tier Mezzanine)), or to give any
notices, or to take any action resulting in such subordination, termination,
cancellation or modification and (ii) in order to more fully vest in Mezzanine
Lender the rights and remedies provided for herein, to exercise all
72
of the rights, remedies and powers granted to Mezzanine Lender in this
Agreement, and Mezzanine Borrower further authorizes and empowers Mezzanine
Lender, as Mezzanine Borrower's attorney-in- fact, and as its agent,
irrevocably, with full power of substitution for Mezzanine Borrower and in the
name of Mezzanine Borrower, to give any authorization, to furnish any
information, to make any demands, to execute any instruments and to take any and
all other action on behalf of and in the name of Mezzanine Borrower which in the
opinion of Mezzanine Lender may be necessary or appropriate to be given,
furnished, made, exercised or taken under the Interest Rate Cap Agreement
(Junior Tier Mezzanine), in order to comply therewith, to perform the conditions
thereof or to prevent or remedy any default by Mezzanine Borrower thereunder or
to enforce any of the rights of Mezzanine Borrower thereunder. These
powers-of-attorney are irrevocable and coupled with an interest, and any similar
or dissimilar powers heretofore given by Mezzanine Borrower in respect of the
Interest Rate Cap Collateral to any other Person are hereby revoked.
(d) Mezzanine Lender may, without notice to, or assent
by, Mezzanine Borrower or any other Person (to the extent permitted by law), but
without affecting any of the Obligations (Junior Tier Mezzanine), in the name of
Mezzanine Borrower or in the name of Mezzanine Lender, notify the Counterparty,
or if applicable, any other party to the Interest Rate Cap Agreement (Junior
Tier Mezzanine), to make payment and performance directly to Mezzanine Lender;
extend the time of payment and performance of, compromise or settle for cash,
credit or otherwise, and upon any terms and conditions, any obligations owing to
Mezzanine Borrower, or claims of Mezzanine Borrower, under the Interest Rate Cap
Agreement (Junior Tier Mezzanine); file any claims, commence, maintain or
discontinue any actions, suits or other proceedings deemed by Mezzanine Lender
necessary or advisable for the purpose of collecting upon or enforcing the
Interest Rate Cap Agreement (Junior Tier Mezzanine); and execute any instrument
and do all other things deemed necessary and proper by Mezzanine Lender to
protect and preserve and realize upon the Interest Rate Cap Collateral and the
other rights contemplated hereby.
(e) Pursuant to the powers-of-attorney provided for
above, Mezzanine Lender may take any action and exercise and execute any
instrument which it may deem necessary or advisable to accomplish the purposes
hereof; provided, however, that Mezzanine Lender shall not be permitted to take
any action pursuant to said power-of-attorney that would conflict with any
limitation on Mezzanine Lender's rights with respect to the Interest Rate Cap
Collateral. Without limiting the generality of the foregoing, Mezzanine Lender,
after the occurrence of an Event of Default, shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to Mezzanine Borrower representing: (i) any payment of
obligations owed pursuant to the Interest Rate Cap Agreement (Junior Tier
Mezzanine), (ii) interest accruing on any of the Interest Rate Cap Collateral or
(iii) any other payment or distribution payable in respect of the Interest Rate
Cap Collateral or any part thereof, and for and in the name, place and stead of
Mezzanine Borrower, to execute endorsements, assignments or other instruments of
conveyance or transfer in respect of any property which is or may become a part
of the Interest Rate Cap Collateral hereunder.
73
(f) Mezzanine Lender may exercise all of the rights and
remedies of a secured party under the UCC.
(g) Without limiting any other provision of this
Agreement or any of Mezzanine Borrower's rights hereunder, and without waiving
or releasing Mezzanine Borrower from any obligation or default hereunder,
Mezzanine Lender shall have the right, but not the obligation, to perform any
act or take any appropriate action, as it, in its reasonable judgment, may deem
necessary to cure such Event of Default or cause any term, covenant, condition
or obligation required under this Agreement or the Interest Rate Cap Agreement
(Junior Tier Mezzanine) to be performed or observed by Mezzanine Borrower to be
promptly performed or observed on behalf of Mezzanine Borrower or to protect the
security of this Agreement. All amounts advanced by, or on behalf of, Mezzanine
Lender in exercising its rights under this Section 9.7(g) (including, but not
limited to, reasonable legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the Default Rate from the date of
each such advance, shall be payable by Mezzanine Borrower to Mezzanine Lender
upon demand and shall be secured by this Agreement.
SECTION 9.8 SALES OF INTEREST RATE CAP COLLATERAL. No demand,
advertisement or notice, all of which are, to the fullest extent permitted by
law, hereby expressly waived by Mezzanine Borrower, shall be required in
connection with any sale or other disposition of all or any part of the Interest
Rate Cap Collateral, except that Mezzanine Lender shall give Mezzanine Borrower
at least thirty (30) Business Days' prior written notice of the time and place
of any public sale or of the time and the place where any private sale or other
disposition is to be made, which notice Mezzanine Borrower hereby agrees is
reasonable, all other demands, advertisements and notices being hereby waived.
To the extent permitted by law, Mezzanine Lender shall not be obligated to make
any sale of the Interest Rate Cap Collateral if it shall determine not to do so,
regardless of the fact that notice of sale may have been given, and Mezzanine
Lender may without notice or publication adjourn any public or private sale, and
such sale may, without further notice, be made at the time and place to which
the same was so adjourned. Upon each private sale of the Interest Rate Cap
Collateral of a type customarily sold in a recognized market and upon each
public sale, unless prohibited by any applicable statute which cannot be waived,
Mezzanine Lender (or its nominee or designee) may purchase any or all of the
Interest Rate Cap Collateral being sold, free and discharged from any trusts,
claims, equity or right of redemption of Mezzanine Borrower, all of which are
hereby waived and released to the extent permitted by law, and may make payment
therefor by credit against any of the Obligations (Mezzanine) in lieu of cash or
any other obligations. In the case of all sales of the Interest Rate Cap
Collateral, public or private, Mezzanine Borrower will pay all reasonable costs
and expenses of every kind for sale or delivery, including brokers' and
attorneys' fees and disbursements and any tax imposed thereon. However, the
proceeds of sale of Interest Rate Cap Collateral shall be available to cover
such costs and expenses, and, after deducting such costs and expenses from the
proceeds of sale, Mezzanine Lender shall apply any residue to the payment of the
Obligations (Mezzanine) in the order of priority as set forth in Section 17.5.
74
SECTION 9.9 PUBLIC SALES NOT POSSIBLE. Mezzanine Borrower
acknowledges that the terms of the Interest Rate Cap Agreement (Junior Tier
Mezzanine) may prohibit public sales, that the Interest Rate Cap Collateral may
not be of the type appropriately sold at public sales, and that such sales may
be prohibited by law. In light of these considerations, Mezzanine Borrower
agrees that private sales of the Interest Rate Cap Collateral shall not be
deemed to have been made in a commercially unreasonably manner by mere virtue of
having been made privately.
SECTION 9.10 RECEIPT OF SALE PROCEEDS. Upon any sale of the
Interest Rate Cap Collateral by Mezzanine Lender hereunder (whether by virtue of
the power of sale herein granted, pursuant to judicial process or otherwise),
the receipt by Mezzanine Lender or the officer making the sale or the proceeds
of such sale shall be a sufficient discharge to the purchaser or purchasers of
the Interest Rate Cap Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to Mezzanine Lender or such officer or be answerable in any way for
the misapplication or non-application thereof.
SECTION 9.11 REPLACEMENT INTEREST RATE CAP AGREEMENT (JUNIOR
TIER MEZZANINE). If, in connection with Mezzanine Borrower's exercise of the
Extension Option pursuant to Section 5 of the Mezzanine Note, Mezzanine Borrower
delivers a Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine), all
the provisions of this Article IX applicable to the Interest Rate Cap Agreement
(Junior Tier Mezzanine) delivered on the Closing Date shall be applicable to the
Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine) as of the date
that was the Initial Maturity Date.
X. RESERVED.
XI. RESERVED.
XII. ENVIRONMENTAL MATTERS.
SECTION 12.1 REPRESENTATIONS. Mezzanine Borrower hereby
represents and warrants that except as set forth in the environmental reports
and studies delivered to Mezzanine Lender (the ENVIRONMENTAL REPORTS), (i)
neither Mezzanine Borrower, Senior Tier Mezzanine Borrower nor Mortgage Borrower
has engaged in or knowingly permitted any operations or activities upon, or any
use or occupancy of the Property, or any portion thereof, for the purpose of or
in any way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal of any Hazardous
Substances on, under, in or about the Property, or transported any Hazardous
Substances to, from or across the Property, except in all cases in material
compliance with Environmental Laws and only in the course of legitimate business
operations at the Property; (ii) to Mezzanine Borrower's knowledge, no tenant,
occupant or user of the Property, nor any other person, has engaged in or
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any material way
involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Substances
on, in or about the Property, or
75
transported any Hazardous Substances to, from or across the Property, except in
all cases in material compliance with Environmental Laws and only in the course
of legitimate business operations at the Property; (iii) to Mezzanine Borrower's
knowledge, no Hazardous Substances are presently constructed, deposited, stored,
or otherwise located on, under, in or about the Property except in material
compliance with Environmental Laws; (iv) to Mezzanine Borrower's knowledge, no
Hazardous Substances have migrated from the Property upon or beneath other
properties which would reasonably be expected to result in material liability
for Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower; and
(v) no Hazardous Substances have migrated or threaten to migrate from other
properties upon, about or beneath the Property which would reasonably be
expected to result in material liability for Mezzanine Borrower, Senior Tier
Mezzanine Borrower or Mortgage Borrower.
SECTION 12.2 COVENANTS.
12.2.1 COMPLIANCE WITH ENVIRONMENTAL LAWS. Subject to
Mortgage Borrower's right to contest under Section 7.3 of the Loan Agreement
(Mortgage), Mezzanine Borrower, Senior Tier Mezzanine Borrower and Mortgage
Borrower shall comply in all material respects with all applicable Environmental
Laws. If at any time prior to the repayment in full of the Obligations (Junior
Tier Mezzanine), a Governmental Authority having jurisdiction over the Property
requires remedial action to correct the presence of Hazardous Materials in,
around, or under the Property (an ENVIRONMENTAL EVENT), Mezzanine Borrower shall
deliver prompt notice of the occurrence of such Environmental Event to Mezzanine
Lender. Within thirty (30) days after Mezzanine Borrower has knowledge of the
occurrence of an Environmental Event, Mezzanine Borrower shall deliver to
Mezzanine Lender an Officer's Certificate (an ENVIRONMENTAL CERTIFICATE)
explaining the Environmental Event in reasonable detail and setting forth the
proposed remedial action, if any. Mezzanine Borrower shall promptly provide
Mezzanine Lender with copies of all notices which allege or identify any actual
or potential violation or noncompliance received by or prepared by or for
Mezzanine Borrower in connection with any Environmental Law. For purposes of
this paragraph, the term "notice" shall mean any summons, citation, directive,
order, claim, pleading, letter, application, filing, report, findings,
declarations or other materials pertinent to compliance of the Property and
Mezzanine Borrower with such Environmental Laws.
SECTION 12.3 ENVIRONMENTAL REPORTS. Upon the occurrence of an
Environmental Event with respect to the Property or during the continuance of
any Event of Default, Mezzanine Lender shall have the right to have its
consultants perform a comprehensive environmental audit of the Property. Such
audit shall be conducted by an environmental consultant chosen by Mezzanine
Lender and may include a visual survey, a record review, an area reconnaissance
assessing the presence of hazardous or toxic waste or substances, PCBs or
storage tanks at the Property, an asbestos survey of the Property, which may
include random sampling of the improvements and air quality testing, and such
further site assessments as Mezzanine Lender may reasonably require due to the
results obtained from the foregoing. Mezzanine Lender, its agents, consultants
and contractors shall have the right to enter the Property as reasonable or
appropriate for the circumstances for the purposes of performing such studies
and the reasonable cost of such studies shall be due and payable
76
by Mezzanine Borrower to Mezzanine Lender upon demand and shall be secured by
the Lien of this Agreement and the Pledge (Junior Tier Mezzanine). Mezzanine
Lender shall not unreasonably interfere with, and shall direct the environmental
consultant to use its commercially reasonable efforts not to hinder, Mortgage
Borrower's or any Tenant's, other occupant's or Manager's operations upon the
Property when conducting such audit, sampling or inspections. By undertaking any
of the measures identified in and pursuant to this Section 12.3, Mezzanine
Lender shall not be deemed to be exercising any control over the operations of
Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower or the
handling of any environmental matter or hazardous wastes or substances of
Mezzanine Borrower, Senior Tier Mezzanine Borrower or Mortgage Borrower for
purposes of incurring or being subject to liability therefor.
SECTION 12.4 ENVIRONMENTAL INDEMNIFICATION. Mezzanine Borrower
shall protect, indemnify, save, defend, and hold harmless the Indemnified
Parties from and against any and all liability, loss, damage, actions, causes of
action, costs or expenses whatsoever (including reasonable attorneys' fees and
expenses) and any and all claims, suits and judgments which any Indemnified
Party may suffer, as a result of or with respect to: (a) any Environmental Claim
relating to or arising from the Property; (b) the violation of any Environmental
Law in connection with the Property; (c) any release, spill, or the presence of
any Hazardous Substances affecting the Property; and (d) the presence at, in, on
or under, or the release, escape, seepage, leakage, discharge or migration at or
from, the Property of any Hazardous Substances, whether or not such condition
was known or unknown to Mezzanine Borrower; provided that, in each case,
Mezzanine Borrower shall be relieved of its obligation under this subsection if
any of the matters referred to in clauses (a) through (d) above did not occur
(but need not have been discovered) prior to the foreclosure of the Pledge
(Junior Tier Mezzanine). If any such action or other proceeding shall be brought
against Mezzanine Lender, upon written notice from Mezzanine Borrower to
Mezzanine Lender (given reasonably promptly following Mezzanine Lender's notice
to Mezzanine Borrower of such action or proceeding), Mezzanine Borrower shall be
entitled to assume the defense thereof, at Mezzanine Borrower's expense, with
counsel reasonably acceptable to Mezzanine Lender; provided, however, Mezzanine
Lender may, at its own expense, retain separate counsel to participate in such
defense, but such participation shall not be deemed to give Mezzanine Lender a
right to control such defense, which right Mezzanine Borrower expressly retains.
Notwithstanding the foregoing, each Indemnified Party shall have the right to
employ separate counsel at Mezzanine Borrower's reasonable expense if, in the
reasonable opinion of legal counsel, a conflict or potential conflict exists
between the Indemnified Party and Mezzanine Borrower that would make such
separate representation advisable. Notwithstanding anything set forth herein,
Mezzanine Borrower shall have no obligation to indemnify an Indemnified Party
for damage or loss resulting from such Indemnified Party's gross negligence or
willful misconduct.
77
SECTION 12.5 RECOURSE NATURE OF CERTAIN INDEMNIFICATIONS.
Notwithstanding anything to the contrary provided in this Agreement or in any
other Loan Document (Junior Tier Mezzanine), the indemnification provided in
Section 12.4 shall be fully recourse to Mezzanine Borrower and shall be
independent of, and shall survive: (i) the discharge of the Indebtedness, the
release of the Liens created by this Agreement and the Pledge (Junior Tier
Mezzanine), and/or (ii) the conveyance of title to the Collateral to Mezzanine
Lender or any purchaser or designee in connection with a foreclosure of this
Agreement and the Pledge (Junior Tier Mezzanine) or conveyance in lieu of
foreclosure.
XIII. ASSIGNMENTS AND PARTICIPATIONS.
SECTION 13.1 ASSIGNMENT AND ACCEPTANCE. Mezzanine Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (Junior Tier Mezzanine)
(including, without limitation, all or a portion of the Mezzanine Note);
provided that the parties to each such assignment shall execute and deliver to
Mezzanine Lender, for its acceptance and recording in the Register (as
hereinafter defined), an Assignment and Acceptance. In addition, Mezzanine
Lender may participate to one or more Persons all or any portion of its rights
and obligations under this Agreement and the other Loan Documents (Junior Tier
Mezzanine) (including without limitation, all or a portion of the Mezzanine
Note) utilizing such documentation to evidence such participation and the
parties' respective rights thereunder as Mezzanine Lender, in its sole
discretion, shall elect. Notwithstanding anything to the contrary in this
Article XIII, Mezzanine Borrower shall not be required to indemnify any assignee
or participant (with respect to circumstances existing as of the date of the
assignment or participation) for Special Taxes or Other Taxes in excess of
amounts that would be payable to Mezzanine Lender under this Agreement or any
Loan Document (Junior Tier Mezzanine).
SECTION 13.2 EFFECT OF ASSIGNMENT AND ACCEPTANCE. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (i) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of Mezzanine Lender, as the case may be, hereunder and such
assignee shall be deemed to have assumed such rights and obligations, and (ii)
Mezzanine Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement and the other
Loan Documents (Junior Tier Mezzanine) (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of Mezzanine Lender's rights
and obligations under this Agreement and the other Loan Documents (Junior Tier
Mezzanine), Mezzanine Lender shall cease to be a party hereto) accruing from and
after the effective date of the Assignment and Acceptance, except with respect
to (A) any payments made by Mezzanine Borrower to Mezzanine Lender pursuant to
the terms of the Loan Documents (Junior Tier Mezzanine) after the effective date
of the Assignment and Acceptance and (B) any letter of credit, cash deposit or
other deposits or security (other than the Liens of this Agreement and the
Pledge (Junior Tier Mezzanine)) and the other Loan Documents (Junior Tier
Mezzanine)) delivered to or for the benefit
78
of or deposited with German American Capital Corporation, as Mezzanine Lender,
for which German American Capital Corporation, as Mezzanine Lender, shall remain
responsible for the proper disposition thereof until such items are delivered to
a party who is qualified as an Approved Bank and agrees to hold the same in
accordance with the terms and provisions of the agreement pursuant to which such
items were deposited.
SECTION 13.3 CONTENT. By executing and delivering an
Assignment and Acceptance, Mezzanine Lender and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, Mezzanine Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Documents (Junior Tier Mezzanine) or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with, this Agreement or any other Loan
Documents (Junior Tier Mezzanine) or any other instrument or document furnished
pursuant hereto or thereto; (ii) Mezzanine Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Mezzanine Borrower or the performance or observance by Mezzanine Borrower of
any of its obligations under any Loan Documents (Junior Tier Mezzanine) or any
other instrument or document furnished pursuant thereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon Mezzanine
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents (Junior Tier
Mezzanine); (v) such assignee appoints and authorizes Mezzanine Lender to take
such action as agent on its behalf and to exercise such powers and discretion
under the Loan Documents (Junior Tier Mezzanine) as are delegated to Mezzanine
Lender by the terms hereof together with such powers and discretion as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform, in accordance with their terms, all of the obligations which by the
terms of this Agreement and the other Loan Documents (Junior Tier Mezzanine) are
required to be performed by Mezzanine Lender.
SECTION 13.4 REGISTER. Mezzanine Lender shall maintain a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of Mezzanine Lender and each
assignee pursuant to this Article XIII and the principal amount of the Loan
owing to each such assignee from time to time (the REGISTER). The entries in the
Register shall, with respect to such assignees, be conclusive and binding for
all purposes, absent manifest error. The Register shall be available for
inspection by Mezzanine Borrower or any assignee pursuant to this Article XIII
at any reasonable time and from time to time upon reasonable prior written
notice.
79
SECTION 13.5 SUBSTITUTE MEZZANINE NOTES. Upon its receipt of
an Assignment and Acceptance executed by an assignee, together with any
Mezzanine Note or Mezzanine Notes subject to such assignment, Mezzanine Lender
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of EXHIBIT B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt written notice thereof to Mezzanine Borrower. Within five (5)
Business Days after its receipt of such notice, Mezzanine Borrower, at Mezzanine
Lender's own expense, shall execute and deliver to Mezzanine Lender in exchange
and substitution for the surrendered Mezzanine Note or Mezzanine Notes a new
Mezzanine Note to the order of such assignee in an amount equal to the portion
of the Loan assigned to it and a new Mezzanine Note to the order of Mezzanine
Lender in an amount equal to the portion of the Loan retained by it hereunder.
Such new Mezzanine Note or Mezzanine Notes shall be in an aggregate principal
amount equal to the aggregate then outstanding principal amount of such
surrendered Mezzanine Note or Mezzanine Notes, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially the
form of the Mezzanine Note (modified, however, to the extent necessary so as not
to impose duplicative or increased obligations on Mezzanine Borrower and to
delete obligations previously satisfied by Mezzanine Borrower). Notwithstanding
the provisions of this Article XIII, Mezzanine Borrower shall not be responsible
or liable for any additional taxes, reserves, adjustments or other costs and
expenses that are related to, or arise as a result of, any transfer of the Loan
or any interest or participation therein that arise solely and exclusively from
the transfer of the Loan or any interest or participation therein or from the
execution of the new Mezzanine Note contemplated by this Section 13.5,
including, without limitation, any mortgage tax. Mezzanine Lender and/or the
assignees, as the case may be, shall from time to time designate one agent
through which Mezzanine Borrower shall request all approvals and consents
required or contemplated by this Agreement and on whose statements Mezzanine
Borrower may rely.
SECTION 13.6 PARTICIPATIONS. Each assignee pursuant to this
Article XIII may sell participations to one or more Persons (other than
Mezzanine Borrower or any of its Affiliates) in or to all or a portion of its
rights and obligations under this Agreement and the other Loan Documents (Junior
Tier Mezzanine) (including, without limitation, all or a portion of the
Mezzanine Note held by it); provided, however, that (i) such assignee's
obligations under this Agreement and the other Loan Documents (Junior Tier
Mezzanine) shall remain unchanged, (ii) such assignee shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such assignee shall remain the holder of any such Mezzanine Note for all
purposes of this Agreement and the other Loan Documents (Junior Tier Mezzanine)
and (iv) Mezzanine Borrower, Mezzanine Lender and the assignees pursuant to this
Article XIII shall continue to deal solely and directly with such assignee in
connection with such assignee's rights and obligations under this Agreement and
the other Loan Documents (Junior Tier Mezzanine). In the event that more than
one (1) party comprises Mezzanine Lender, Mezzanine Lender shall designate one
party to act on the behalf of all parties comprising Mezzanine Lender in
providing approvals and all other necessary consents under the Loan Documents
(Junior Tier Mezzanine) and on whose statements Mezzanine Borrower may rely.
80
SECTION 13.7 DISCLOSURE OF INFORMATION. Any assignee pursuant
to this Article XIII may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Article XIII, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to Mezzanine Borrower furnished to such assignee by or on behalf of
Mezzanine Borrower; provided, however, that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree in
writing for the benefit of Mezzanine Borrower to preserve the confidentiality of
any confidential information received by it.
SECTION 13.8 SECURITY INTEREST IN FAVOR OF FEDERAL RESERVE
BANK. Notwithstanding any other provision set forth in this Agreement or any
other Loan Document (Junior Tier Mezzanine), any assignee pursuant to this
Article XIII may at any time create a security interest in all or any portion of
its rights under this Agreement or the other Loan Documents (Junior Tier
Mezzanine) (including, without limitation, the amounts owing to it and the
Mezzanine Note or Mezzanine Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
XIV. RESERVED.
XV. RESERVED.
XVI. RESERVED.
XVII. DEFAULTS.
SECTION 17.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an
event of default hereunder (an EVENT OF DEFAULT):
(i) subject to the last sentence of Section
3.1.6(b), if (A) the Indebtedness is not paid in full on the Maturity Date, (B)
any regularly scheduled monthly payment of interest due under the Mezzanine Note
is not paid in full on the applicable Payment Date, (C) any prepayment of
principal due under this Agreement or the Mezzanine Note is not paid when due,
(D) the Liquidated Damages Amount is not paid when due, (E) any deposit to the
Mezzanine Account is not made on the required deposit date therefor; or (F)
except as to any amount included in (A), (B), (C), (D) and/or (E) of this clause
(i), any other amount payable pursuant to this Agreement, the Mezzanine Note or
any other Loan Document (Junior Tier Mezzanine) is not paid in full when due and
payable in accordance with the provisions of the applicable Loan Document
(Junior Tier Mezzanine), with such failure continuing for ten (10) Business Days
after Mezzanine Lender delivers written notice thereof to Mezzanine Borrower;
81
(ii) subject to the last sentence of Section
3.1.6(b) of the Loan Agreement (Mortgage) and subject to Mortgage Borrower's
right to contest as set forth in Section 7.3 of the Loan Agreement (Mortgage),
if any of the Impositions or Other Charges are not paid prior to the imposition
of any interest, penalty, charge or expense for the non-payment thereof;
(iii) if the insurance policies required by
Section 6.1(a) hereof or Section 3(c) of the Security Instrument are not kept in
full force and effect, or if certificates of insurance or certified copies of
any of such insurance policies are not delivered to Mezzanine Lender within the
time frames set forth in Section 6.1.11 of the Loan Agreement (Mortgage) with
such failure to deliver continuing for ten (10) days after Mezzanine Lender
delivers notice thereof to Mezzanine Borrower;
(iv) if any transfer is made in violation of
Article VIII or a declaration of condominium is filed with respect to the
Property;
(v) if any representation or warranty made by
Mezzanine Borrower herein or by Mezzanine Borrower, Guarantor or any Affiliate
of Mezzanine Borrower in any other Loan Document (Junior Tier Mezzanine), or in
any report, certificate, financial statement or other instrument, agreement or
document furnished to Mezzanine Lender on or prior to the date hereof shall have
been false or misleading in any material respect as of the date the
representation or warranty was made;
(vi) if Mezzanine Borrower, Senior Tier Mezzanine
Borrower or Mortgage Borrower or any Guarantor shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall
be appointed for Mezzanine Borrower, Senior Tier Mezzanine Borrower, Mortgage
Borrower or any Guarantor or if Mezzanine Borrower, Senior Tier Mezzanine
Borrower, Mortgage Borrower or any Guarantor shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by, Mezzanine Borrower,
Senior Tier Mezzanine Borrower, Mortgage Borrower or any Guarantor, or if any
proceeding for the dissolution or liquidation of Mezzanine Borrower, Senior Tier
Mezzanine Borrower, Mortgage Borrower or any Guarantor shall be instituted;
provided, however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Mezzanine Borrower, Senior Tier Mezzanine
Borrower Mortgage Borrower or any Guarantor upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(viii) if Mezzanine Borrower or any Guarantor, as
applicable, attempts to assign its rights under this Agreement or any of the
other Loan Documents (Junior Tier Mezzanine) or any interest herein or therein
in contravention of the Loan Documents (Junior Tier Mezzanine);
82
(ix) the occurrence of a Mortgage Event of
Default (without regard to any cure thereof by Mezzanine Lender or Senior Tier
Mezzanine Lender);
(x) the occurrence of a Senior Tier Mezzanine
Event of Default (without regard to any cure thereof by Mezzanine Lender);
(xi) with respect to any term, covenant or
provision set forth herein or in any other Loan Document which specifically
contains a notice requirement or grace period (other than the other subsections
of this Section 17.1 and the provisions referenced therein), if Mezzanine
Borrower or any Guarantor shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of such grace
period, with such failure continuing for ten (10) Business Days after Mezzanine
Lender delivers written notice thereof to Mezzanine Borrower;
(xii) if any of the assumptions contained in the
Non-Consolidation Opinion, in any Additional Non-Consolidation Opinion or in any
other non-consolidation opinion delivered to Mezzanine Lender in connection with
the Loan, or in any other non-consolidation delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect;
(xiii) if Mezzanine Borrower, having notified
Mezzanine Lender of its election to extend the Maturity Date as set forth in
Section 5(a) of the Mezzanine Note, fails to deliver the Replacement Interest
Rate Cap Agreement (Junior Tier Mezzanine) to Mezzanine Lender not later than
one (1) Business Day prior to the first day of the extended term of the Loan and
Mezzanine Borrower has not prepaid the Loan pursuant to the terms of the
Mezzanine Note prior to such first day of the extended term;
(xiv) if Mezzanine Borrower shall fail to comply
with any covenants set forth in Article V with such failure continuing for ten
(10) Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower; provided, however, that if such breach is not a Monetary
Default and is susceptible of cure but cannot reasonably be cured within such
fifteen (15) Business Day period and provided further that Mezzanine Borrower
shall have commenced to cure such breach within such fifteen (15) Business Day
period and thereafter diligently proceeds to cure the same, such fifteen (15)
Business Day period shall be extended for such time as is reasonably necessary
for Mezzanine Borrower in the exercise of due diligence to cure such breach,
such additional period not to exceed thirty (30) days;
(xv) if Mezzanine Borrower shall fail to comply
with any covenants set forth in Article XI with such failure continuing for ten
(10) Business Days after Mezzanine Lender delivers written notice thereof to
Mezzanine Borrower; provided, however, that if such breach is not a Monetary
Default and is susceptible of cure but cannot reasonably be cured within such
fifteen (15) Business Day period and provided further that Mezzanine Borrower
shall have commenced to cure such breach within such fifteen (15) Business Day
period and thereafter diligently proceeds to cure the same, such fifteen (15)
Business Day period shall be extended for such time as is reasonably
83
necessary for Mezzanine Borrower in the exercise of due diligence to cure such
breach, such additional period not to exceed thirty (30) days;
(xvi) if Mezzanine Borrower shall fail to deposit
the full amount required to be deposited in the Mezzanine Account pursuant to
Section 3.1.5 within the time periods (if any) required by Section 3.1.5(i);
(xvii) if this Agreement or any other Loan Document
(Junior Tier Mezzanine) or any Lien granted hereunder or thereunder, in whole or
in part, shall cease to be effective or shall cease to be a legally valid,
binding and enforceable obligation of Mezzanine Borrower or any Guarantor, or
any Lien securing the Indebtedness shall, in whole or in part, cease to be a
perfected first priority Lien (except in any of the foregoing cases by reason of
any affirmative act of Mezzanine Lender);
(xviii) if Guarantor denies in writing that
Guarantor has any liability or obligations under the Guaranty (other than in
connection with a good faith defense), or shall notify Mezzanine Lender in
writing of Guarantor's intention to attempt to cancel or terminate the Guaranty,
or shall fail to observe or comply with any term, covenant, condition or
agreement under the Guaranty (after the expiration of any applicable notice and
cure period);
(xix) if Mezzanine Borrower allows Senior Tier
Mezzanine Borrower to allow the Mortgage Borrower to enter into a Prohibited
Mortgage Loan Amendment without the prior written consent of Mezzanine Lender;
(xx) if Mezzanine Borrower allows Senior Tier
Mezzanine Borrower to enter into a Prohibited Senior Tier Mezzanine Loan
Amendment without the prior written consent of Mezzanine Lender;
(xxi) if Mezzanine Borrower or Guarantor shall
continue to be in Default under any of the other terms, covenants or conditions
of this Agreement or any Loan Documents (Junior Tier Mezzanine) not specified in
subsections (i) to (xix) above, for thirty (30) days after notice from Mezzanine
Lender; provided, however, that if such Default is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that Mezzanine Borrower or Guarantor shall have commenced to cure such
Default within such thirty (30) day period and thereafter diligently proceeds to
cure the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Mezzanine Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed 90 days;
(xxii) if the Interest Rate Cap Agreement (Junior
Tier Mezzanine) is terminated for any reason prior to the Maturity Date and a
Replacement Interest Rate Cap Agreement (Junior Tier Mezzanine) is not delivered
to Mezzanine Lender within ten (10) Business Days after the date of such
termination, together with an acceptable Acknowledgment in the form of EXHIBIT L
and a Counterparty Opinion;
84
(xxiii) if (A) there shall occur any default by
Mortgage Borrower under the REAs in the observance or performance of any
material term, covenant or condition of the REAs, and said default is not cured
prior to the expiration of any applicable grace or cure period therein provided
the default of which shall have a Material Adverse Effect, (B) any one or more
of the events referred to in the REAs shall occur which would give any party to
the REAs the right to terminate any REA, (C) the REAs or the easements granted
pursuant to the REAs shall be surrendered, (D) the REAs shall be lawfully
terminated or canceled for any reason or under any circumstances whatsoever, or
(E) except as otherwise provided in this Agreement, any of the terms, covenants
or conditions of the REAs shall in any manner be modified, changed,
supplemented, altered or amended without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed.
(b) unless waived in writing by Mezzanine Lender, upon
the occurrence and during the continuance of an Event of Default and at any time
thereafter Mezzanine Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents (Junior
Tier Mezzanine) or at law or in equity, Mezzanine Lender may take such action,
without notice or demand, that Mezzanine Lender deems advisable to protect and
enforce its rights against Mezzanine Borrower and in the Collateral, including,
without limitation, (i) declaring immediately due and payable the entire
Principal Amount together with interest thereon and all other sums due by
Mezzanine Borrower under the Loan Documents (Junior Tier Mezzanine), (ii)
collecting interest on the Principal Amount at the Default Rate whether or not
Mezzanine Lender elects to accelerate the Mezzanine Note and (iii) enforcing or
availing itself of any or all rights or remedies set forth in the Loan Documents
(Junior Tier Mezzanine) against Mezzanine Borrower and the Collateral,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in Section 17.1(a)(vi) or
(a)(vii) above, the Indebtedness and all other obligations of Mezzanine Borrower
hereunder and under the other Loan Documents (Junior Tier Mezzanine) shall
immediately and automatically become due and payable, without notice or demand,
and Mezzanine Borrower hereby expressly waives any such notice or demand,
anything contained herein or in any other Loan Document (Junior Tier Mezzanine)
to the contrary notwithstanding. The foregoing provisions shall not be construed
as a waiver by Mezzanine Lender of its right to pursue any other remedies
available to it under this Agreement, the Pledge (Junior Tier Mezzanine) or any
other Loan Document (Junior Tier Mezzanine). Any payment hereunder may be
enforced and recovered in whole or in part at such time by one or more of the
remedies provided to Mezzanine Lender in the Loan Documents (Junior Tier
Mezzanine).
(c) Upon the occurrence of an Event of Default pursuant
to Section 17.1(a)(ix), within five (5) Business Days after the first to occur
of (a) receipt by Mortgage Borrower of notice from Mortgage Lender of such
Mortgage Default or Mortgage Event of Default from Mortgage Lender or (b) the
date Mortgage Borrower obtains actual knowledge of the occurrence of such
Mortgage Event of Default, a detailed description of the actions to be taken by
Mortgage Borrower and Mezzanine Borrower to cure such Mortgage Event of Default
and the dates by which each such action shall occur shall be delivered to
Mezzanine Lender. Such schedule shall be subject to the approval of Mezzanine
Lender. All such actions as are necessary to cure such Mortgage Event of Default
by the date approved by Mezzanine Lender shall be taken by Mortgage Borrower and
85
Mezzanine Borrower and not less frequently than weekly thereafter written
updates concerning the status of Mortgage Borrower's efforts to cure such
Mortgage Event of Default shall be delivered to Mezzanine Lender. Mezzanine
Lender shall have the right, but not the obligation, to pay any sums or to take
any action which Mezzanine Lender deems necessary or advisable to cure any
default or alleged default under the Loan Documents (Mortgage) (whether or not
Mortgage Borrower is undertaking efforts to cure such default), and such payment
or such action is hereby authorized by Mezzanine Borrower, and any sum so paid
and any expense incurred by Mezzanine Lender in taking any such action shall be
evidenced by this Agreement and secured by this Agreement and the Pledge (Junior
Tier Mezzanine) and shall be immediately due and payable by Mezzanine Borrower
to Mezzanine Lender with interest at the Default Rate until paid. Mezzanine
Lender shall be permitted to enter upon the Property for the purpose of curing
any default or alleged default under the Loan Documents (Mortgage) or hereunder.
Subject to the rights of the Mortgage Lender under the Loan Agreement
(Mortgage), Mezzanine Borrower hereby transfers and assigns any excess proceeds
arising from any foreclosure or sale under power pursuant to the Loan Documents
(Mortgage) or any instrument evidencing the indebtedness secured thereby, and
Mezzanine Borrower hereby authorizes and directs the holder or holders of the
Loan Documents (Mortgage) to pay such excess proceeds directly to Mezzanine
Lender up to the amount of the Obligations (Mezzanine).
(d) Upon the occurrence of an Event of Default pursuant
to Section 17.1(a)(x), within five (5) Business Days after the first to occur of
(a) receipt by Senior Tier Mezzanine Borrower of notice from Senior Tier
Mezzanine Lender of such Senior Tier Mezzanine Default or Senior Tier Mezzanine
Event of Default from Senior Tier Mezzanine Lender or (b) the date Senior Tier
Mezzanine Borrower obtains actual knowledge of the occurrence of such Senior
Tier Mezzanine Event of Default, a detailed description of the actions to be
taken by Senior Tier Mezzanine Borrower and Mezzanine Borrower to cure such
Senior Tier Mezzanine Event of Default and the dates by which each such action
shall occur shall be delivered to Mezzanine Lender. Such schedule shall be
subject to the approval of Mezzanine Lender. All such actions as are necessary
to cure such Senior Tier Mezzanine Event of Default by the date approved by
Mezzanine Lender shall be taken by Senior Tier Mezzanine Borrower and Mezzanine
Borrower and not less frequently than weekly thereafter written updates
concerning the status of Senior Tier Mezzanine Borrower's efforts to cure such
Senior Tier Mezzanine Event of Default shall be delivered to Mezzanine Lender.
Mezzanine Lender shall have the right, but not the obligation, to pay any sums
or to take any action which Mezzanine Lender deems necessary or advisable to
cure any default or alleged default under the Loan Documents (Senior Tier
Mezzanine) (whether or not Senior Tier Mezzanine Borrower is undertaking efforts
to cure such default), and such payment or such action is hereby authorized by
Mezzanine Borrower, and any sum so paid and any expense incurred by Mezzanine
Lender in taking any such action shall be evidenced by this Agreement and
secured by this Agreement and the Pledge (Junior Tier Mezzanine) and shall be
immediately due and payable by Mezzanine Borrower to Mezzanine Lender with
interest at the Default Rate until paid. Mezzanine Lender shall be permitted to
enter upon the Property for the purpose of curing any default or alleged default
under the Loan Documents (Senior Tier Mezzanine) or hereunder.
86
SECTION 17.2 REMEDIES.
(a) Unless waived in writing by Mezzanine Lender, upon
the occurrence and during the continuance of an Event of Default, all or any one
or more of the rights, powers, privileges and other remedies available to
Mezzanine Lender against Mezzanine Borrower under this Agreement or any of the
other Loan Documents (Junior Tier Mezzanine) executed and delivered by, or
applicable to, Mezzanine Borrower or at law or in equity may be exercised by
Mezzanine Lender at any time and from time to time, whether or not all or any of
the Indebtedness shall be declared due and payable, and whether or not Mezzanine
Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents (Junior
Tier Mezzanine) with respect to the Collateral. Any such actions taken by
Mezzanine Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Mezzanine Lender may determine in its sole discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Mezzanine Lender permitted by law, equity or
contract or as set forth herein or in the other Loan Documents (Junior Tier
Mezzanine). Without limiting the generality of the foregoing, Mezzanine Borrower
agrees that if an Event of Default is continuing (i) Mezzanine Lender is not
subject to any one action or election of remedies law or rule, and (ii) all
liens and other rights, remedies or privileges provided to Mezzanine Lender
shall remain in full force and effect until Mezzanine Lender has exhausted all
of its remedies against the Collateral and this Agreement and the Pledge (Junior
Tier Mezzanine) have been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Indebtedness or the Indebtedness has been paid in full.
(b) Upon the occurrence and during the continuance of any
Event of Default, Mezzanine Lender may, but without any obligation to do so and
without notice to or demand on Mezzanine Borrower and without releasing
Mezzanine Borrower from any obligation hereunder, take any action to cure such
Event of Default. Upon the occurrence and during the continuance of an Event of
Default, Mezzanine Lender may appear in, defend, or bring any action or
proceeding to protect its interests in the Collateral or to foreclose its
security interest under this Agreement and the Pledge (Junior Tier Mezzanine) or
under any of the other Loan Documents (Mezzanine) or collect the Indebtedness.
(c) Upon the occurrence and during the continuance of an
Event of Default, with respect to the Account Collateral (Junior Tier
Mezzanine), the Mezzanine Lender may:
(i) without notice to Mezzanine Borrower, except
as required by law, and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Account Collateral (Junior Tier
Mezzanine) against the Obligations (Mezzanine), Operating Expenses and/or
capital expenditures for the Property or any part thereof;
(ii) in Mezzanine Lender's sole discretion, at
any time and from time to time, exercise any and all rights and remedies
available to it under this Agreement, and/or as a secured party under the UCC;
87
(iii) demand, collect, take possession of or
receipt for, settle, compromise, adjust, sue for, foreclose or realize upon the
Account Collateral (Junior Tier Mezzanine) (or any portion thereof) as Mezzanine
Lender may determine in its sole discretion; and
(iv) take all other actions provided in, or
contemplated by, this Agreement.
(d) With respect to Mezzanine Borrower, the Account
Collateral (Junior Tier Mezzanine), the Interest Rate Cap Collateral and the
Collateral, nothing contained herein or in any other Loan Document (Junior Tier
Mezzanine)shall be construed as requiring Mezzanine Lender to resort to the
Collateral for the satisfaction of any of the Indebtedness, and Mezzanine Lender
may seek satisfaction out of the Collateral or any part thereof, in its absolute
discretion in respect of the Indebtedness. In addition, Mezzanine Lender shall
have the right from time to time to partially foreclose this Agreement and the
Pledge (Junior Tier Mezzanine) in any manner and for any amounts secured by this
Agreement or the Pledge (Junior Tier Mezzanine) then due and payable as
determined by Mezzanine Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Mezzanine Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Mezzanine Lender may foreclose
this Agreement and the Pledge (Junior Tier Mezzanine) to recover such delinquent
payments, or (ii) in the event Mezzanine Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Mezzanine Lender may
foreclose this Agreement and the Pledge (Junior Tier Mezzanine) to recover so
much of the principal balance of the Loan as Mezzanine Lender may accelerate and
such other sums secured by this Agreement or the Pledge (Junior Tier Mezzanine)
as Mezzanine Lender may elect. Notwithstanding one or more partial foreclosures,
the Collateral shall remain subject to this Agreement and the Pledge (Junior
Tier Mezzanine) to secure payment of sums secured by this Agreement and the
Pledge (Junior Tier Mezzanine) and not previously recovered.
SECTION 17.3 REMEDIES CUMULATIVE; WAIVERS. The rights, powers
and remedies of Mezzanine Lender under this Agreement and the Loan Documents
(Junior Tier Mezzanine) shall be cumulative and not exclusive of any other
right, power or remedy which Mezzanine Lender may have against Mezzanine
Borrower pursuant to this Agreement or the other Loan Documents (Junior Tier
Mezzanine), or existing at law or in equity or otherwise. Mezzanine Lender's
rights, powers and remedies may be pursued singly, concurrently or otherwise, at
such time and in such order as Mezzanine Lender may determine in Mezzanine
Lender's sole discretion. No delay or omission to exercise any remedy, right or
power accruing upon an Event of Default shall impair any such remedy, right or
power or shall be construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Mezzanine
Borrower or any Guarantor shall not be construed to be a waiver of any
subsequent Default or Event of Default by Mezzanine Borrower or any Guarantor or
to impair any remedy, right or power consequent thereon.
88
SECTION 17.4 COSTS OF COLLECTION. In the event that after an
Event of Default: (i) the Mezzanine Note or any of the Loan Documents (Junior
Tier Mezzanine) is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding; (ii) an
attorney is retained to represent Mezzanine Lender in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors' rights
and involving a claim under this Agreement, the Mezzanine Note or any of the
Loan Documents (Junior Tier Mezzanine); or (iii) an attorney is retained to
protect or enforce the lien or any of the terms of this Agreement, the Pledge
(Junior Tier Mezzanine) or any of the Loan Documents (Junior Tier Mezzanine);
then Mezzanine Borrower shall pay to Mezzanine Lender all reasonable attorney's
fees, costs and expenses actually incurred in connection therewith, including
costs of appeal, together with interest on any judgment obtained by Mezzanine
Lender in respect of such fees, costs and expenses at the Default Rate
(collectively, ENFORCEMENT COSTS).
SECTION 17.5 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event
that, following the occurrence and during the continuance of any Event of
Default, any monies are received in connection with the enforcement of any of
the Loan Documents (Junior Tier Mezzanine), or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, Mezzanine Lender for or in respect of all reasonable costs,
expenses, disbursements and actual losses which shall have been incurred or
sustained by Mezzanine Lender to protect or preserve the Collateral or in
connection with the collection of such monies by Mezzanine Lender (including
without limitation, Enforcement Costs), for the exercise, protection or
enforcement by Mezzanine Lender of all or any of the rights, remedies, powers
and privileges of Mezzanine Lender under this Agreement or any of the other Loan
Documents (Junior Tier Mezzanine) or in respect of the Collateral or in support
of any provision of adequate indemnity to Mezzanine Lender against any taxes or
liens which by law shall have, or may have, priority over the rights of
Mezzanine Lender to such monies;
(b) Second, to all other Obligations (Mezzanine) in such
order or preference as Mezzanine Lender shall determine in its sole and absolute
discretion;
(c) Third, the excess, if any, shall be returned to Mezzanine
Borrower or to such other Persons as are entitled thereto.
XVIII. SPECIAL PROVISIONS
89
SECTION 18.1 EXCULPATION.
18.1.1 EXCULPATED PARTIES. Except as set forth in
this Section 18.1, the Recourse Guaranty and the Environmental Indemnity, no
personal liability shall be asserted, sought or obtained by Mezzanine Lender or
enforceable against (i) Mezzanine Borrower, (ii) any Affiliate of Mezzanine
Borrower, (iii) any Person owning, directly or indirectly, any legal or
beneficial interest in Mezzanine Borrower or any Affiliate of Mezzanine Borrower
or (iv) any direct or indirect partner, member, principal, officer, Controlling
Person, beneficiary, trustee, advisor, shareholder, employee, manager, agent,
Affiliate or director of any Persons described in clauses (i) through (iii)
above (collectively, the EXCULPATED PARTIES) and none of the Exculpated Parties
shall have any personal liability (whether by suit, deficiency judgment or
otherwise) in respect of the Obligations (Mezzanine), this Agreement, the Pledge
(Junior Tier Mezzanine), the Mezzanine Note, the Collateral or any other Loan
Document (Junior Tier Mezzanine), or the making, issuance or transfer thereof,
all such liability, if any, being expressly waived by Mezzanine Lender and each
successive holder of the Mezzanine Note and any other Loan Documents (Junior
Tier Mezzanine). The foregoing limitation shall not in any way limit or affect
Mezzanine Lender's right to any of the following and Mezzanine Lender shall not
be deemed to have waived any of the following:
(a) Foreclosure of the lien of this Agreement and the
Pledge (Junior Tier Mezzanine) in accordance with the terms and provisions set
forth herein and in the Pledge (Junior Tier Mezzanine);
(b) Action against any other security at any time given
to secure the payment of the Mezzanine Note and under the other Loan Documents
(Junior Tier Mezzanine);
(c) Exercise of any other remedy set forth in the
Agreement or in any other Loan Document (Junior Tier Mezzanine)which is not
inconsistent with the terms of this Section 18.1
(d) Any right which Mezzanine Lender may have under
Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code
to file a claim for the full amount of the Indebtedness secured by this
Agreement and the Pledge (Junior Tier Mezzanine) or to require that all
collateral shall continue to secure all of the Indebtedness owing to Mezzanine
Lender in accordance with the Loan Documents (Junior Tier Mezzanine); and
(e) The liability of any given Exculpated Party with
respect to any separate written guaranty or agreement given by any such
Exculpated Party in connection with the Loan (including, without limitation, the
Recourse Guaranty and the Environmental Indemnity).
18.1.2 CARVEOUTS FROM NON-RECOURSE LIMITATIONS.
Notwithstanding the foregoing or anything in this Agreement or any of the Loan
Documents (Junior Tier Mezzanine) to the contrary, there shall at no time be any
limitation on Mezzanine Borrower's or any Guarantor's liability for the payment,
in accordance with the terms of this Agreement, the Mezzanine Note, the
90
Pledge (Junior Tier Mezzanine) and the other Loan Documents (Junior Tier
Mezzanine), to Mezzanine Lender of:
(a) any loss, damage, cost or expense incurred by
Mezzanine Lender by reason of the fraudulent acts of Mezzanine Borrower, Senior
Tier Mezzanine Borrower or Guarantor;
(b) Proceeds which Mortgage Borrower, Senior Tier
Mezzanine Borrower, Mezzanine Borrower or Guarantor has received and to which
Mezzanine Lender is entitled pursuant to the terms of this Agreement or any of
the Loan Documents (Junior Tier Mezzanine) to the extent the same have not been
applied toward payment of the Indebtedness, or used for the repair or
replacement of the Property in a manner permitted by the Loan Agreement
(Mortgage), the Loan Documents (Mortgage), the Loan Agreement (Senior Tier
Mezzanine) or the other Loan Documents (Senior Tier Mezzanine);
(c) all loss, damage, cost or expense as incurred by
Mezzanine Lender and arising from any intentional misrepresentation of Mortgage
Borrower, Senior Tier Mezzanine Borrower, Mezzanine Borrower or Guarantor;
(d) any knowing misappropriation of Rents or security
deposits by Mortgage Borrower, any Affiliate of Mortgage Borrower, Senior Tier
Mezzanine Borrower, any Affiliate of Senior Tier Mezzanine Borrower, Mezzanine
Borrower or any Affiliate of Mezzanine Borrower;
(e) any loss, damage, cost or expense incurred by
Mezzanine Lender by reason of all or any part of the Collateral being encumbered
by a Lien (other than this Agreement or the Pledge (Junior Tier Mezzanine))
intentionally granted by Mezzanine Borrower in violation of the Loan Documents
(Junior Tier Mezzanine) through the execution of an instrument or agreement;
(f) after an Event of Default by Mezzanine Borrower
hereunder or under any other Loan Document (Junior Tier Mezzanine), any Rents,
issues, profits and/or income collected by Mortgage Borrower, Senior Tier
Mezzanine Borrower, Mezzanine Borrower or Guarantor (other than the Rent sent to
the Collection Account or paid directly to Mortgage Lender pursuant to any
notice of direction delivered to tenants of the Property) and not applied to
payment of the Obligations or used to pay normal and verifiable Operating
Expenses of the Property or otherwise applied in a manner permitted under the
Loan Documents (Mortgage), the Loan Documents (Senior Tier Mezzanine) and the
Loan Documents (Junior Tier Mezzanine);
(g) physical damage to the Property from intentional
waste committed by Mortgage Borrower, Senior Tier Mezzanine Borrower, Mezzanine
Borrower or Guarantor; and
(h) reasonable attorney's fees and expenses incurred by
Mezzanine Lender in connection with any successful suit filed on account of any
of the foregoing clauses (a) through (g).
91
XIX. MISCELLANEOUS
SECTION 19.1 SURVIVAL. This Agreement and all covenants,
indemnifications, agreements, representations and warranties made herein and in
the certificates delivered pursuant hereto shall survive the making by Mezzanine
Lender of the Loan and the execution and delivery to Mezzanine Lender of the
Mezzanine Note, and shall continue in full force and effect so long as all or
any of the Indebtedness is outstanding and unpaid unless a longer period is
expressly set forth herein or in the other Loan Documents (Junior Tier
Mezzanine); provided however that this sentence shall not mean that any
representations or warranties set forth in the Agreement shall be deemed made on
any date other than the date hereof unless otherwise specifically provided
herein. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Mezzanine Borrower, shall inure to the benefit of the successors and assigns
of Mezzanine Lender.
SECTION 19.2 MEZZANINE LENDER'S DISCRETION. Whenever pursuant
to this Agreement, Mezzanine Lender exercises any right given to it to approve
or disapprove, or any arrangement or term is to be satisfactory to Mezzanine
Lender, the decision of Mezzanine Lender to approve or disapprove or to decide
whether arrangements or terms are satisfactory or not satisfactory shall (except
as is otherwise specifically herein provided) be in the sole discretion of
Mezzanine Lender and shall be final and conclusive.
SECTION 19.3 GOVERNING LAW.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, THE LOAN WAS MADE BY MEZZANINE LENDER AND ACCEPTED BY MEZZANINE BORROWER
IN THE STATE OF NEW YORK WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND
THE OBLIGATIONS (JUNIOR TIER MEZZANINE) ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE
UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, MEZZANINE
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE MEZZANINE NOTE
AND THE OTHER LOAN DOCUMENTS (JUNIOR TIER MEZZANINE), AND THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
92
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
MEZZANINE LENDER OR MEZZANINE BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY AT JUNIOR TIER LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND MEZZANINE BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND MEZZANINE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. MEZZANINE BORROWER DOES HEREBY DESIGNATE AND APPOINT:
BLACKSTONE REAL ESTATE
ACQUISITIONS III L.L.C.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREE THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO MEZZANINE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MEZZANINE BORROWER (I)
SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (II) HEREBY DESIGNATES
CORPORATION SERVICE COMPANY
80 STATE STREET
ALBANY, NEW YORK 12207-2543
AS A SUBSTITUTE IF ITS INITIAL AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW
YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR AND (III) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
93
SECTION 19.4 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Mezzanine Note, or of any other Loan Document (Junior Tier
Mezzanine), nor consent to any departure by Mezzanine Borrower therefrom, shall
in any event be effective unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein no notice to or demand on,
Mezzanine Borrower shall entitle Mezzanine Borrower to any other or future
notice or demand in the same, similar or other circumstances.
SECTION 19.5 DELAY NOT A WAIVER. Neither any failure nor any
delay on the part of Mezzanine Lender in insisting upon strict performance of
any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege hereunder, or under the Mezzanine Note or under any other
Loan Document (Junior Tier Mezzanine), or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Mezzanine Note or any other Loan Document (Junior Tier
Mezzanine), Mezzanine Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Mezzanine Note or the other Loan Documents (Junior Tier
Mezzanine), or to declare a default for failure to effect prompt payment of any
such other amount.
SECTION 19.6 NOTICES. All notices, consents, approvals and
requests required or permitted hereunder or under any other Loan Document
(Junior Tier Mezzanine) shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) certified or registered United States
mail, postage prepaid, return receipt requested or (b) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or (c) by telecopier (with answer back acknowledged),
addressed as follows (or at such other address and Person as shall be designated
from time to time by any party hereto, as the case may be, in a written notice
to the other parties hereto in the manner provided for in this Section:
If to Mezzanine Lender: German American Capital Corporation
31 West 52nd Street, 17th Floor
New York New York 10019
Attention: Michael Hart and General Counsel
Telecopy No.: (212) 469-8518
Confirmation No.: (212) 469-5000
94
With a copy to: ORIX Real Estate Capital Markets
1717 Main Street
Dallas, Texas 75201
Attention: Dan Olsen
Telecopy No.: (214) 237-2199
Confirmation No.: (214) 237-2190
With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Harvey R. Uris, Esq.
Telecopy No.: (917) 777-2212
Confirmation No.: (212) 735-2212
If to Mezzanine Borrower: BRE/Park Place Junior Mezzanine L.L.C.
c/o Blackstone Real Estate Acquisitions III L.L.C.
345 Park Avenue
New York, New York 10154
Attention: Gary M. Sumers
Telecopy No.: (212) 583-5726
Confirmation No.: (212) 583-5813
With a copy to: Simpson Thatcher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gregory J. Ressa, Esq.
Telecopy No.: (212) 455-2502
Confirmation No.: (212) 455-7430
All notices, elections, requests and demands under this Agreement shall be
effective and deemed received upon the earliest of (i) the actual receipt of the
same by personal delivery or otherwise, (ii) one (1) Business Day after being
deposited with a nationally recognized overnight courier service as required
above, (iii) three (3) Business Days after being deposited in the United States
mail as required above or (iv) on the day sent if sent by facsimile with
confirmation on or before 5:00 p.m. New York time on any Business Day or on the
next Business Day if so delivered after 5:00 p.m. New York time or on any day
other than a Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, election, request, or
demand sent.
95
SECTION 19.7 TRIAL BY JURY. MEZZANINE BORROWER AND ALL PERSONS
CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, THE PLEDGE (JUNIOR TIER
MEZZANINE), THE MEZZANINE NOTE OR ANY OTHER LOAN DOCUMENT (JUNIOR TIER
MEZZANINE), INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION
THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT,
THE PLEDGE (JUNIOR TIER MEZZANINE), THE MEZZANINE NOTE OR ANY OTHER LOAN
DOCUMENT (JUNIOR TIER MEZZANINE) (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND MEZZANINE BORROWER HEREBY
AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY
BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER
OF ANY RIGHT TO TRIAL BY JURY. MEZZANINE BORROWER ACKNOWLEDGES THAT IT HAS
CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.
SECTION 19.8 HEADINGS. The Article and/or Section headings and
the Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
SECTION 19.9 SEVERABILITY. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
SECTION 19.10 PREFERENCES. To the extent Mezzanine Borrower
makes a payment or payments to Mezzanine Lender, which payment or proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by Mezzanine Lender.
96
SECTION 19.11 WAIVER OF NOTICE. Mezzanine Borrower shall not
be entitled to any notices of any nature whatsoever from Mezzanine Lender except
with respect to matters for which this Agreement or the other Loan Documents
(Junior Tier Mezzanine) specifically and expressly provide for the giving of
notice by Mezzanine Lender to Mezzanine Borrower and except with respect to
matters for which Mezzanine Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Mezzanine Borrower hereby
expressly waives the right to receive any notice from Mezzanine Lender with
respect to any matter for which this Agreement or the other Loan Documents
(Junior Tier Mezzanine) do not specifically and expressly provide for the giving
of notice by Mezzanine Lender to Mezzanine Borrower.
SECTION 19.12 EXPENSES; INDEMNITY.
(a) Mezzanine Borrower covenants and agrees to pay or, if
Mezzanine Borrower fails to pay, to reimburse, Mezzanine Lender upon receipt of
written notice from Mezzanine Lender for all reasonable costs and expenses
(including reasonable attorneys' fees and disbursements) incurred by Mezzanine
Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents (Junior Tier Mezzanine)
and the consummation of the transactions contemplated hereby and thereby and all
the costs of furnishing all opinions by counsel for Mezzanine Borrower
(including without limitation any opinions requested by Mezzanine Lender
pursuant to this Agreement); (ii) Mezzanine Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents (Junior Tier Mezzanine) on its part to be performed or
complied with after the Closing Date; (iii) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to this Agreement and the other Loan Documents (Junior Tier
Mezzanine) requested by Mezzanine Borrower and any other documents or matters as
required herein or under the other Loan Documents (Junior Tier Mezzanine); (iv)
securing Mezzanine Borrower's compliance with any requests made pursuant to the
provisions of this Agreement; (v) the filing and recording fees and expenses,
mortgage recording taxes, title insurance and reasonable fees and expenses of
counsel for providing to Mezzanine Lender all required legal opinions, and other
similar expenses incurred in creating and perfecting the Lien in favor of
Mezzanine Lender pursuant to this Agreement and the other Loan Documents (Junior
Tier Mezzanine); (vi) enforcing or preserving any rights, in response to third
party claims or the prosecuting or defending of any action or proceeding or
other litigation, in each case against, under or affecting Mezzanine Borrower,
this Agreement, the other Loan Documents (Junior Tier Mezzanine), the Property,
or any other security given for the Loan; (vii) enforcing any obligations of or
collecting any payments due from Mezzanine Borrower under this Agreement, the
other Loan Documents (Junior Tier Mezzanine) or with respect to the Property or
in connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a work-out or of any insolvency
or bankruptcy proceedings and (viii) procuring insurance policies pursuant to
Section 6; provided, however, that Mezzanine Borrower shall not be liable for
the payment of any such costs and expenses to the extent the same arise (A) by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Mezzanine Lender or (B) in connection with a Securitization, other than the
Mezzanine Borrower's internal administrative costs and up to $5,000
97
for Mezzanine Borrower's external legal costs. Any cost and expenses due and
payable to Mezzanine Lender may be paid from any amounts in the Mezzanine
Account.
(b) Subject to the non-recourse provisions of Section
18.1 , Mezzanine Borrower will protect, indemnify and save harmless Mezzanine
Lender, and all officers, directors, stockholders, members, partners, employees,
agents, successors and assigns thereof (collectively, the Indemnified Parties)
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including all reasonable attorneys' fees
and expenses actually incurred) imposed upon or incurred by or asserted against
the Indemnified Parties, the Collateral or the Property or any part of its
interest therein, by reason of the occurrence or existence of any of the
following (to the extent Proceeds payable on account of the following shall be
inadequate; it being understood that in no event will the Indemnified Parties be
required to actually pay or incur any costs or expenses as a condition to the
effectiveness of the foregoing indemnity) prior to (i) the acceptance by
Mezzanine Lender or its designee of a deed-in-lieu of foreclosure with respect
to the Collateral, (ii) an Indemnified Party or its designee Parties taking
possession or control of the Property, or (iii) the foreclosure of the Pledge
(Junior Tier Mezzanine), except to the extent caused by the fraud, illegal acts,
willful misconduct or gross negligence of the Indemnified Parties (other than
such fraud, illegal acts, willful misconduct or gross negligence imputed to the
Indemnified Parties because of their interest in the Property): (1) ownership of
Mezzanine Borrower's indirect interest in the Property, or any interest therein,
or receipt of any Rents or other sum therefrom, (2) any accident, injury to or
death of any persons or loss of or damage to property occurring on or about the
Property or any Appurtenances thereto, (3) any design, construction, operation,
repair, maintenance, use, non- use or condition of the Property or Appurtenances
thereto, including claims or penalties arising from violation of any Legal
Requirement or Insurance Requirement, as well as any claim based on any patent
or latent defect, whether or not discoverable by Mezzanine Lender, any claim the
insurance as to which is inadequate, and any Environmental Claim, (4) any
Default under this Agreement or any of the other Loan Documents (Junior Tier
Mezzanine) or any failure of Senior Tier Mezzanine Borrower or Mortgage Borrower
to perform or comply with any of the terms of any Lease or REA within the
applicable notice or grace periods, (5) any performance of any labor or services
or the furnishing of any materials or other property in respect of the Property
or any part thereof, (6) any negligence or tortious act or omission on the part
of Mezzanine Borrower or any of its agents, contractors, servants, employees,
sublessees, licensees or invitees, (7) any contest referred to in Section 7.3 of
the Loan Agreement (Mortgage), (8) any obligation or undertaking relating to the
performance or discharge of any of the terms, covenants and conditions of the
landlord contained in the Leases, (9) the presence at, in or under the Property
or the Improvements of any Hazardous Substances in violation of any
Environmental Law or (10) Lender's disclosure of the terms of the settlement
agreement referenced in Schedule IV to the Loan Agreement (Mortgage) to
prospective purchasers of interests in the Loan (Mezzanine). Any amounts the
Indemnified Parties are legally entitled to receive under this Section 19.12(b)
which are not paid within fifteen (15) Business Days after written demand
therefor by the Indemnified Parties or Mezzanine Lender, setting forth in
reasonable detail the amount of such demand and the basis therefor, shall bear
interest from the date of demand at the Default Rate, and shall, together with
such interest, be part of the Indebtedness and secured by this Agreement and the
Pledge (Junior Tier Mezzanine). In case any action, suit or
98
proceeding is brought against the Indemnified Parties by reason of any such
occurrence, Mezzanine Borrower shall at Mezzanine Borrower's reasonable expense
resist and defend such action, suit or proceeding or will cause the same to be
resisted and defended by counsel at Mezzanine Borrower's reasonable expense for
the insurer of the liability or by counsel designated by Mezzanine Borrower
(unless reasonably disapproved by Mezzanine Lender promptly after Mezzanine
Lender has been notified of such counsel); provided, however, that nothing
herein shall compromise the right of Mezzanine Lender (or any Indemnified Party)
to appoint its own counsel at Mezzanine Borrower's reasonable expense for its
defense with respect to any action which in its reasonable opinion presents a
conflict or potential conflict between Mezzanine Lender and Mezzanine Borrower
that would make such separate representation advisable; provided further that if
Mezzanine Lender shall have appointed separate counsel pursuant to the
foregoing, Mezzanine Borrower shall not be responsible for the expense of
additional separate counsel of any Indemnified Party unless in the reasonable
opinion of Mezzanine Lender a conflict or potential conflict exists between such
Indemnified Party and Mezzanine Lender. So long as Mezzanine Borrower is
resisting and defending such action, suit or proceeding as provided above in a
prudent and commercially reasonable manner, Mezzanine Lender and the Indemnified
Parties shall not be entitled to settle such action, suit or proceeding without
Mezzanine Borrower's consent which shall not be unreasonably withheld or
delayed, and claim the benefit of this Section 19.12(b) with respect to such
action, suit or proceeding and Mezzanine Lender agrees that it will not settle
any such action, suit or proceeding without the consent of Mezzanine Borrower;
provided, however, that if Mezzanine Borrower is not diligently defending such
action, suit or proceeding in a prudent and commercially reasonable manner as
provided above, and Mezzanine Lender has provided Mezzanine Borrower with thirty
(30) days' prior written notice, or shorter period if mandated by the
requirements of applicable law, and opportunity to correct such determination,
Mezzanine Lender may settle such action, suit or proceeding and claim the
benefit of this Section 19.12(b) with respect to settlement of such action, suit
or proceeding. Any Indemnified Party will give Mezzanine Borrower prompt notice
after such Indemnified Party obtains actual knowledge of any potential claim by
such Indemnified Party for indemnification hereunder. The Indemnified Parties
shall not settle or compromise any action, proceeding or claim as to which it is
indemnified hereunder without notice to Mezzanine Borrower.
SECTION 19.13 EXHIBITS AND SCHEDULES INCORPORATED. The
Exhibits and Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
SECTION 19.14 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any
assignee of Mezzanine Lender's interest in and to this Agreement, the Mezzanine
Note and the other Loan Documents (Junior Tier Mezzanine) shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated to
such documents which Mezzanine Borrower may otherwise have against any assignor
of such documents, and no such unrelated counterclaim or defense shall be
interposed or asserted by Mezzanine Borrower or in any action or proceeding
brought by any such assignee upon such documents and to the extent permitted by
controlling law any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Mezzanine Borrower.
99
SECTION 19.15 LIABILITY OF ASSIGNEES OF MEZZANINE LENDER. No
assignee of Mezzanine Lender shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any other Loan
Document (Junior Tier Mezzanine)or any amendment or amendments hereto made at
any time or times, heretofore or hereafter, any different than the liability of
Mezzanine Lender hereunder. In addition, no assignee shall have at any time or
times hereafter any personal liability, directly or indirectly, under or in
connection with or secured by any agreement, lease, instrument, encumbrance,
claim or right affecting or relating to the Property or to which the Property is
now or hereafter subject any different than the liability of Mezzanine Lender
hereunder. The limitation of liability provided in this Section 19.15 is (i) in
addition to, and not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement or instrument,
and (ii) shall not apply to any assignee's gross negligence or willful
misconduct.
SECTION 19.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Mezzanine Borrower and Mezzanine Lender intend that
the relationships created hereunder and under the other Loan Documents (Junior
Tier Mezzanine) be solely that of mezzanine borrower and mezzanine lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Mezzanine Borrower and
Mezzanine Lender nor to grant Mezzanine Lender any interest in the Property
other than that of mezzanine lender.
(b) This Agreement and the other Loan Documents (Junior
Tier Mezzanine) are solely for the benefit of Mezzanine Lender and Mezzanine
Borrower and nothing contained in this Agreement or the other Loan Documents
(Junior Tier Mezzanine) shall be deemed to confer upon anyone other than
Mezzanine Lender or Mezzanine Borrower any right to insist upon or to enforce
the performance or observance of any of the obligations contained herein or
therein. All conditions to the obligations of Mezzanine Lender to make the Loan
hereunder are imposed solely and exclusively for the benefit of Mezzanine Lender
and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that
Mezzanine Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Mezzanine Lender if, in
Mezzanine Lender's sole discretion, Mezzanine Lender deems it advisable or
desirable to do so.
SECTION 19.17 PUBLICITY. All news releases, publicity or
advertising by Mezzanine Borrower, Lender or their Affiliates through any media
intended to reach the general public which refers to the Loan Documents (Junior
Tier Mezzanine) or the financing evidenced by the Loan Documents (Junior Tier
Mezzanine), shall be subject to the reasonable prior written approval of
Mezzanine Lender and Mezzanine Borrower which approval shall not be unreasonably
withheld or delayed or conditioned.
100
SECTION 19.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest
extent permitted by law, Mezzanine Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Mezzanine Borrower,
Mezzanine Borrower's members and others with interests in Mezzanine Borrower and
of the Collateral, and agrees not to assert any right under any laws pertaining
to the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Mezzanine Lender under the
Loan Documents (Junior Tier Mezzanine) to a sale of the Collateral for the
collection of the Indebtedness without any prior or different resort for
collection or of the right of Mezzanine Lender to the payment of the
Indebtedness out of the net proceeds of the Collateral in preference to every
other claimant whatsoever.
SECTION 19.19 WAIVER OF COUNTERCLAIM AND OTHER ACTIONS.
Mezzanine Borrower hereby expressly and unconditionally waives, in connection
with any suit, action or proceeding brought by Mezzanine Lender on this
Agreement, the Mezzanine Note, the Pledge (Junior Tier Mezzanine) or any Loan
Document (Junior Tier Mezzanine), any and every right it may have to (i)
interpose any counterclaim therein (other than a counterclaim which can only be
asserted in the suit, action or proceeding brought by Mezzanine Lender on this
Agreement, the Mezzanine Note, the Pledge (Junior Tier Mezzanine) or any Loan
Document (Junior Tier Mezzanine) and cannot be maintained in a separate action)
and (ii) have any such suit, action or proceeding consolidated with any other or
separate suit, action or proceeding.
SECTION 19.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents (Junior Tier Mezzanine), the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents (Junior Tier Mezzanine) and that such Loan
Documents (Junior Tier Mezzanine) shall not be subject to the principle of
construing their meaning against the party which drafted same. Mezzanine
Borrower acknowledges that, with respect to the Loan, Mezzanine Borrower shall
rely solely on its own judgment and advisors in entering into the Loan without
relying in any manner on any statements, representations or recommendations of
Mezzanine Lender or any parent, subsidiary or Affiliate of Mezzanine Lender.
Mezzanine Lender shall not be subject to any limitation whatsoever in the
exercise of any rights or remedies available to it under any of the Loan
Documents (Junior Tier Mezzanine) or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Mezzanine Lender of any equity interest any of them may acquire in
Mezzanine Borrower, and Mezzanine Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Mezzanine Lender's exercise of any such rights or remedies. Mezzanine
Borrower acknowledges that Mezzanine Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Mezzanine Borrower
or their Affiliates.
101
SECTION 19.21 PRIOR AGREEMENTS. This Agreement and the other
Loan Documents (Junior Tier Mezzanine) contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written, are superseded by the terms of this Agreement and the other
Loan Documents (Junior Tier Mezzanine) and unless specifically set forth in a
writing contemporaneous herewith the terms, conditions and provisions of any and
all such prior agreements do not survive execution of this Agreement.
SECTION 19.22 BROKERS. Neither Lender nor Mezzanine Borrower
has dealt with any broker or finder with respect to the transactions
contemplated by the Loan Documents (Junior Tier Mezzanine) and neither Lender
nor Mezzanine Borrower has done any acts, had any negotiations or conversations,
or made any agreements or promises which will in any way create or give rise to
any obligation or liability for the payment by either party of any brokerage
fee, charge, commission or other compensation to any Person with respect to the
transactions contemplated by the Loan Documents (Junior Tier Mezzanine).
Mezzanine Borrower and Mezzanine Lender shall each indemnify and hold harmless
the other from and against any loss, liability, cost or expense, including any
judgments, attorneys' fees, or costs of appeal, incurred by the other party and
arising out of or relating to any breach or default by the indemnifying party of
its representations, warranties and/or agreements set forth in this subsection.
SECTION 19.23 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which shall constitute one document.
[Remainder of page intentionally left blank.]
102
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
MEZZANINE BORROWER:
BRE/PARK PLACE JUNIOR MEZZANINE L.L.C.,
a Delaware limited liability company
By: /s/ Frank Cohen
-----------------
Name: Frank Cohen
Title: Vice President
[Mezzanine Lender's signature appears on following page]
MEZZANINE LENDER:
GERMAN AMERICAN CAPITAL CORPORATION,
A MARYLAND CORPORATION
BY: /s/ Robert D. Burns
-----------------------
NAME: Robert D. Burns
TITLE: Vice President
BY: /s/ Stephen H. Choe
-----------------------
NAME: Stephen H. Choe
TITLE: Authorized Signatory