SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
[X] Current Report Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
December 9, 1998
(Date of Report)
Commission file number: 0-28354
Great Lakes REIT
(Exact name of Registrant as specified in its Charter)
Maryland 36-4238056
(State or other jurisdiction (I.R.S. Employer identification no.)
of incorporation organization)
823 Commerce Drive, Suite 300, Oak Brook, IL 60523
(Address of principal executive offices) (Zip Code)
(630) 368 - 2900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Item 5. Other Events.
Great Lakes REIT owns a limited partnership interest and the sole general
partnership interest in Great Lakes REIT, L.P. (the "Operating Partnership")
totaling more than 99% of the outstanding partnership interests of the Operating
Partnership. Great Lakes REIT, its subsidiaries and the Operating Partnership
are referred to herein collectively as the "Company".
On December 1, 1998 the Company consummated on behalf of the Operating
Partnership, the borrower, a $75,000,000 laon transaction (the "Secured Loan")
with AUSA Life Insurance Company, as lender, and AEGON USA Realty Advisors Inc.,
as agent, (collectively the "Lender") pursuant to which the Company granted a
first mortgage lien on 13 Properties. The Properties subject to the first
mortgage lien include Arlington Ridge, One Hawthorn Place, Woodcreek I,
Woodcreek II, 3400 Dundee Road, 2 Marriott Drive, One Park Plaza, Lincoln Center
II, Lincoln Center III, Park Place VII, Long Lake Crossing, 40 Oak Hollow and
Oak Hollow Gateway. The Secured Loan bears interest at a fixed annual interest
rate of 6.83%. The Secured Loan matures on January 1, 2009 and provides monthly
payments of principal and interest based on a 20-year amortization schedule. All
or a portion of the Secured Loan can be repaid at the Company's option at any
time on December 1, 2000 subject to a prepayment premium.
A portion of the proceeds from the Company's borrowings under the Secured Loan
(approximately $40,890,000) were used to repay the remaining interest and
principal under the Unsecured Revolving Credit Agreement dated January 6, 1998
among the Company, and Bank of America National Trust and Savings Association,
The First National Bank of Chicago, and Dresdner Bank AG, New York and Grand
Cayman branches, which Unsecured Revolving Credit Agreement expires December 31,
1998. Proceeds of $29,110,000 were used to repay interest and a portion of the
principal due under the Unsecured Revolving Credit Agreement dated April 6, 1998
among the Company and Bank of America National Trust and Savings Association,
The First National Bank of Chicago, Dresdner Bank AG, New York and Grand Cayman
branches, US Bank National Association, and LaSalle National Bank, which expires
in April 2001 with the balance ($5,000,000) retained by the Company for working
capital.
ITEM 7.
(c) Exhibits
The following exhibit is filed here with:
Exhibit Description
10.1 Loan Agreement dated December 1, 1998 between the Company and
AUSA Life Insurance Company, Inc., a New York life insurance
company.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Great Lakes REIT
(Registrant)
Date: December 9, 1998 By: /s/ Richard L. Rasley
Richard L. Rasley, Secretary
Exhibit 10.1
AEGON Loan No. 87786
$75,000,000 December 1, 1998
Loan Agreement
THIS AGREEMENT (the "Agreement") is made as of this 1st day of December, 1998,
by and between AUSA Life Insurance Company, Inc., a New York life insurance
company having an administrative office c/o AEGON USA Realty Advisors, Inc.,
4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-5223 and a home office in
Purchase, New York ("Lender"), and Great Lakes REIT, L.P., a limited partnership
organized under Delaware law (the "Borrower").
1. RECITALS
Under the terms of a commercial Mortgage Loan Application and
Commitment dated August 14, 1998 (the "Commitment"), AEGON USA
Realty Advisors, Inc. ("AEGON"), as agent for Lender, agreed to
fund a loan in an original principal amount to be determined in
accordance with procedures described in the Commitment (the
"Loan"). The Loan is evidenced by a $75,000,000 promissory note (the
"Note"), made by the Borrower and of even date herewith. The
Note is secured by certain mortgages (the "Mortgages"), each
encumbering certain of the parcels of land depicted on the site
plans attached to the Commitment as Exhibits A-1 through A-13
(each, a "Parcel" and collectively, the "Real Property").
Certain of the agreements of the Borrower and the Lender with
respect to the Loan are personal to the Borrower and are not intended
by the Borrower and the Lender to run with the land, which agreements
the Borrower and the Lender wish to evidence in this Agreement.
2. Agreement
NOW THEREFORE, to evidence the agreements described in the Commitment,
and in consideration of the sum of ten dollars ($10.00) and other
valuable consideration, the receipt and sufficiency of which are
acknowledged, the Borrower and the Lender hereby enter into this
Agreement on the terms that follow. Capitalized terms used but not
defined in this Agreement shall have the definitions given them in the
Note, the Mortgages, and the other Loan Documents (as defined below).
3. Definitions
"Approved Lease Form" means the lease form or forms attached to this
Agreement as Exhibit B.
"Business Day" means any day when state and federal banks are
open for business in Cedar Rapids, Iowa.
"Carveout Obligor" means Great Lakes REIT, a Maryland business trust.
"Indebtedness" means all sums that are owed or become due
pursuant to the terms of the Note or of any other Loan Document, or
pursuant to any other communications or writings by or between the
Borrower and the Lender relating to the Loan, including scheduled
principal payments, scheduled interest payments, default interest, late
charges, prepayment premiums, accelerated or matured principal
balances, advances, collection costs (including reasonable attorneys'
fees), reasonable attorneys' fees and costs in enforcing or protecting
the Note, the Mortgage, or any of the other Loan Documents in any
bankruptcy proceeding, receivership costs and all other financial
obligations of Borrower incurred in connection with the Loan
transaction.
"Loan Documents" means all of the documents evidencing the Loan and the
agreements with respect to the Loan made by the Borrower and the Lender
on the date hereof, including, without limitation:
o this Agreement;
o the Note;
o the Mortgages;
o the Absolute Assignments of Leases and Rents;
o the Financing Statements;
o the Guarantee and Indemnity Agreement (Guaranty and Indemnity of
Carveouts);
o the Environmental Indemnity Agreement; and
o the Borrower's Certificate.
"Loan Year" means each twelve-month period commencing on
December 1, 1998, and on the first day of December of each of each
subsequent year during which the Loan remains outstanding.
"Mortgages" means the mortgages granted by the Borrower in
connection with the making of the Loan.
"Mortgage Taxes" means the mortgage recording, transfer or
other taxes to be paid upon recordation of the Mortgages.
"Notice" means a notice given in accordance with the
provisions of Subsection 10.3.
4. Borrower's agreements; DEFAULT
The Borrower agrees to borrow the proceeds of the Loan in accordance
with the terms of this Agreement and the other Loan Documents, and to
fully and timely perform all of its obligations under the Loan
Documents. A "Default" shall exist under this Agreement upon the
occurrence of a "Default" as defined in the Note or any other Loan
Document.
5. Conditional Waiver of Escrow Payment Requirement
The Lender conditionally waives its right to collect Monthly Escrow
Payments as described in the Mortgages. This waiver is personal to the
Borrower and revocable (i) if the Borrower at any time fails to provide
evidence of the timely payment of all Escrow Expenses (as defined in
the Mortgages), or (ii) if a Default exists under this Agreement.
6. Conversion Feature
If the Borrower meets the conditions specified in Section 6.1 below
(the "Conversion Conditions") during the term of the Loan, the Borrower
shall have the right to prepay the Loan at par. In order to exercise
this right, the Borrower must first offer the Lender the option of
accepting a rated debt instrument or instruments (the "Rated Notes") as
the prepayment. The Borrower shall be the issuer of the Rated Notes,
which shall have the same maturity date as the Loan and be guaranteed
by the Carveout Obligor and which must meet the requirements specified
in Section 6.2 below (the "Rated Note Requirements").
6.1 Conversion Conditions. The following are the Conversion Conditions:
(a) No more than sixty days prior to the Borrower's written notice to
Lender of its intent to exercise its rights under this Section 6, two
rating agencies from among Moody's Investors Services, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P"), Fitch Investors
Service, Inc., and Duff & Phelps Credit Rating Co. must have rated the
unsecured debt of the Carveout Obligor as investment grade. One of the
ratings must be from either Moody's or S&P.
(b) No earlier than sixty days prior to the Borrower's written notice to
Lender of its intent to exercise its rights under this Section 6, the
National Association of Insurance Commissioners must have rated the
unsecured debt of the Carveout Obligor NAIC-2 or higher.
(c) The Carveout Obligor must be a reporting company under the Securities
Exchange Act of 1934, as amended, pursuant to an effective registration
statement on Form 10 (or any successor form).
(d) The Rated Notes must meet the Rated Note Requirements.
(e) No Default shall exist under the terms of the Loan Documents.
(f) The Borrower must have delivered its notice of its intent to exercise
its rights under this Section 6 during the third, fourth or fifth Loan
Year.
6.2 Procedure. If the Borrower decides to exercise its rights under this
Section 6, it shall provide written notice of its election to the Lender,
certifying that it has met the Conversion Conditions (subject to finalization of
documentation meeting the Rated Note Requirements) and that it desires to prepay
the Loan through delivery of the Rated Notes in the amount of the principal
balance of the Loan, and providing such materials as the Lender shall reasonably
require evidencing compliance with the Conversion Conditions. In addition, the
Borrower shall provide all information as the Lender shall require in order to
permit the Lender to complete an internal rating of the Rated Notes and
compliance by Borrower and the Carveout Obligor with the Conversion Conditions.
Within sixty days of the notice and the receipt of all requested materials, the
parties will finalize the documentation for the Rated Notes, and Lender shall
give the Borrower notice of its decision either to accept the Rated Notes in
prepayment of the Loan or to decline to accept the Rated Notes. If the Lender
decides to accept the Rated Notes as prepayment of the Loan, or arranges (in its
sole discretion) for the sale of the Rated Notes to another investor in a
transaction in which the escrowed purchase price of the Rated Notes is applied
in prepayment of the Loan at par, the Lender shall release the Real Property
from the liens of the Mortgages and the other applicable Loan Documents upon
delivery of the Rated Notes. If the Lender declines to accept the Rated Notes or
to arrange such a transaction, notwithstanding that all Conversion Conditions
have been met, the Borrower may prepay the Loan in cash at par (receiving a
credit for the refund of the Origination Fee, as defined in the Commitment) at
any time during the sixty-day period following notice by Lender that it has
declined to accept the Rated Notes.
6.3 The Rated Note Requirements. The Rated Notes and related documentation
shall be in accordance with Model Form No. 2 of Note Purchase Agreement
promulgated by the Private Placement Enhancement Project. The documentation
evidencing the Rated `Notes shall impose on Borrower and Carveout Obligor, as
applicable, affirmative and negative covenants that are standard and customary
for debt instruments issued or guaranteed by an investment grade REIT, shall
include reasonable and customary call protection provisions, and shall otherwise
be satisfactory to Lender at the time of delivery of the Rated Notes, including,
without limitation:
(a) A requirement that the Carveout Obligor maintain minimum consolidated
tangible net worth of no less than 80% of the Carveout Obligor's
consolidated tangible net worth as of the end of the quarter most
nearly preceding the closing of the conversion, plus 50% of the net
proceeds of any subsequent equity offering.
(b) A limit on the incurrence of debt by the Carveout Obligor to 50% of
consolidated adjusted capitalization, calculated as the book value of
the Carveout Obligor's consolidated tangible net worth plus debt and
accumulated depreciation.
(c) A minimum consolidated debt service coverage ratio of EBITDA to
interest, of 2.0 to 1.0.
(d) A maximum priority debt ratio of secured debt to consolidated
adjusted capitalization not to exceed 35%.
(e) A requirement that total unencumbered tangible assets (at undepreciated
book value) be at least 1.75 times unsecured debt.
(f) Maintenance of existence and conduct of business.
(g) Maintenance of satisfactory insurance.
(h) Maintenance of same line of business.
(i) Maintenance of proper books and records.
(j) Payment of all taxes, except where being contested in good faith by
appropriate proceedings and subject to maintenance of adequate
reserves.
(k) Compliance with all laws and regulations, including environmental and
employee benefit laws, except where the failure to comply would not
have a material adverse effect.
(l) Maintenance of the ratings obtained in satisfaction of the Conversion
Conditions specified in Section 6.1(a).
(m) Delivery of financial statements and compliance reports.
(n) Restrictions on transactions with affiliates, except on an arm's-length
basis.
(o) Restriction against incurring or permitting liens on properties of the
Carveout Obligor (with customary exceptions).
(p) Restrictions on guarantees, accommodation obligations, or investments
in or advances to other companies or persons.
(q) Restrictions on dividend payments, loans and advances, subject to the
rules of the Internal Revenue Service regarding real estate investment
trusts.
(r) Prohibition of mergers, acquisitions, divestitures and sales of assets.
(s) Limitation on change in control.
(t) A requirement that the Borrower pay the reasonable cost of Lender's
outside counsel for all reasonable and necessary legal work required in
connection with the conversion.
(u) A requirement that the Lender shall have received a privity letter
from the Borrower's accountants.
(v) A requirement that the Lender and any qualified institutional
buyer designated by the Lender shall have received such financial and other
information as the Lender may reasonably determine to be necessary in order
to permit compliance with the information requirements of Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act") (or any other
applicable exemption from registration under the Securities Act similar in
effect to Rule 144A) in connection with the resale of Rated Notes, except
at such times as the Borrower is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act. For the purpose of this Section
6.3(v) the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act.
(w) Standard lender indemnification provisions.
(x) A requirement that, upon conversion, the interest rate be the greater
of the "Note Rate" (as defined in the Promissory Note) or 50 basis
points over comparably rated publicly traded debt of like maturity for
office building REITs on a semi-annual bond equivalent yield basis.
(y) A requirement that disputes be resolved through a reasonable and
customary alternative dispute resolution mechanism as specified in
Section 6.4 below.
6.4 Alternate Dispute Resolution. The parties agree to seek resolution
of any dispute concerning satisfaction of the Conversion Conditions or the Rated
Note Requirements or the exercise by the Borrower of the conversion right set
forth in this Section 6, including without limitation any tort claim ("Issue"),
by the use of Alternative Dispute Resolution ("ADR") methods of mediation or
arbitration to the extent described as follows:
(a) Upon notice ("Negotiation Notice") by either party to the other seeking
a negotiation with respect to any Issue, the parties agree to promptly
meet in a good faith effort to negotiate in order to seek a mutually
acceptable resolution of the Issue.
(b) If any Issue between the parties is not resolved by negotiation within
twenty days of the delivery of the Negotiation Notice, either party may
initiate an effort by the parties to resolve the Issue through
mediation under the Commercial Mediation Rules of the American
Arbitration Association ("AAA"). Mediation shall occur in the City of
Chicago, Illinois. The mediator shall be a member of the American
College of Investment Counsel actively engaged in representing issuers
or purchasers in connection with institutional private placements.
(c) The parties agree to enter mediation in a good faith effort to resolve
the Issue. Any party or the mediator shall have the unfettered right to
terminate the mediation proceeding any time after the first session of
the mediation effort.
(d) If the parties settle their dispute in the mediation, they agree that
they shall promptly reduce the terms of their settlement to a writing
with the aid of the mediator.
(e) At any time after the first mediation hearing, the mediation may be
terminated at the will of either party, and the parties agree to proceed to
arbitration before a panel of three neutral arbitrators designated and acting
under the Commercial Arbitration Rules of the AAA. The arbitration shall occur
in the City of Chicago, Illinois. Each arbitrator shall be a member of the
American College of Investment Counsel actively engaged in representing issuers
or purchasers in connection with institutional private placements. The award or
decision of the arbitrators shall upon application of either party, on notice to
the other party, be entered as a final and conclusive judgment in any state or
federal court with jurisdiction.
(f) The parties agree that the cost of mediation and arbitration, including
the fees of the mediator and the arbitration panel shall be shared
equally by the parties.
(g) The arbitrators shall render their award without written opinion within
sixty days after the Issue is referred to the arbitrators.
(h) Notwithstanding the parties' agreement to mediate and arbitrate their
disputes as provided in this Agreement, any party may seek emergency
relief or provisional remedies in court without waiving the right or
obligation thereafter to mediate or arbitrate the merits of the
dispute. Any statutes of limitations or doctrines of estoppel, waiver,
laches or similar statutes or doctrines, which would otherwise be
applicable in a judicial action brought by a party, shall be applicable
in any arbitration proceeding hereunder.
(i) Neither party nor the arbitrators may make any disclosure of the
existence or the results of the negotiation, mediation or arbitration
hearing hereunder without the prior written consent of the other
parties. The parties expressly agree that all discussions and
proceedings in any negotiation, mediation or other non-binding ADR
procedure shall not be admissible at an arbitration hearing or in any
litigation which may ensue with respect to the Issue, nor shall any
neutral advisor or mediator be subject to subpoena to disclose or
testify to any communication between such neutral advisor or mediator
and any party in interest to any issue.
7. PERMITTED TRANSFER
7.1 TRANSFER TO AN APPROVED PURCHASER
Notwithstanding the provisions of those Sections of the
Mortgages headed "Due on Transfer or Encumbrance," the
Borrower shall have the right, on one occasion during the term
of the Loan, to sell or transfer the Real Property (in its
entirety only) in a transaction approved by Lender. Lender
agrees to approve a transfer if the following conditions are
satisfied:
(a) No Default
No Default shall exist, and no act, omission or
circumstance shall exist which, if uncured following
Notice and the passage of time, would become a
Default.
(b) Request and Supporting Materials
Lender shall receive a written request for its
approval at least forty-five (45) days before the
proposed transfer. The request shall specify the
identity of the proposed transferee and the terms of
the transaction, and shall be accompanied by the
financial statements, tax returns, and organizational
documents of the proposed transferee and its
principals.
(c) Criteria to be Considered
The ownership structure, financial strength, credit
history and demonstrated property management
expertise of the proposed transferee and its
principals shall be satisfactory to Lender in its
sole discretion. Lender expressly reserves the right
to withhold its approval of the proposed transfer if
the proposed transferee or any of its principals is
or has been the subject of any bankruptcy,
insolvency, or similar proceeding.
(d) Assumption Agreement
Under the terms of the proposed transfer, the
proposed transferee shall assume the Loan, without
modification, under the terms of an assumption
agreement and additional documentation satisfactory
to Lender in form and substance.
(e) Title Insurance Endorsement
The Borrower shall agree to provide endorsements to
Lender's mortgagee title insurance policies, insuring
the continued validity and priority of the Mortgages
following the assumption.
(f) Assumption Fee
Lender shall receive an assumption fee of 1% of the
outstanding balance of the Loan, and Borrower shall
agree to reimburse Lender's reasonable out-of-pocket
expenses incurred in connection with the proposed
transfer, including title, recording, and attorneys'
fees, regardless of whether the transfer is
consummated.
(g) Carveout Obligations
Under the terms of the assumption agreement and
additional documentation, liability for Carveout
Obligations arising after the date of the transfer
and assumption shall be assumed by the transferee or
other persons or entities satisfactory to the Lender,
and liability for the Carveout Obligations arising
before or in connection with the transfer shall be
retained by those liable for them before the
transfer.
7.2 TRANSACTION COSTS
The Borrower shall pay all reasonable out-of-pocket expenses
incurred by the Lender in the review, approval and processing
of a Permitted Transfer.
8. Release and Substitution of Collateral
If the Borrower desires to secure the release of any Parcel from the
lien of the related Mortgage in order to sell the Parcel in an arm's
length transaction, it may do so provided the Loan is not in Default
and another commercial real property satisfactory to Lender is
substituted for the released Parcel as collateral for the Loan. The
substitute parcel must be at least equal in market value to the Parcel,
as determined by appraisal and review of both parcels market values
using the procedure for appraisal completed at the time of origination.
The Lender may consider any other factor reasonably related to the
quality of the proposed substitute property as collateral, including,
market value, cash flow, projected capital requirements, tenant
quality, location, condition of title, quality and expected life of the
improvements, and the environmental condition of the property. The
closing of the substitution of the collateral shall be carried out in
accordance with AEGON's then-current mortgage loan origination
practices, however, AEGON shall collect (as compensation for its
underwriting and closing efforts) a fee of one percent of the original
value of the related Parcel (as determined by the appraisal completed
at the time of origination).
9. Election of Remedies
If a Default exists under this Agreement, the Lender may exercise its
remedies under all Loan Documents securing this Agreement in whatever
order the Lender deems appropriate for the protection of its economic
interests. The Lender's election of the priority for the exercise of
such remedies shall be made at its sole and absolute discretion.
10. Miscellaneous
10.1 APPLICABLE LAW
This Agreement shall be interpreted, construed, applied, and
enforced according to, and will be governed by, the laws of
the State of Illinois, without regard to any choice of law
principles which, but for this provision, would require the
application of the law of another jurisdiction and regardless
of where executed or delivered, where payable or paid, where
any cause of action accrues in connection with this
transaction, where any action or other proceeding involving
this Agreement is instituted or pending, or whether the laws
of the State of Illinois otherwise would apply the laws of
another jurisdiction. Borrower agrees that the sole and
exclusive forum for the determination of any action relating
to the validity and enforceability of the Note, this Agreement
shall be either in an appropriate court of the State of
Illinois or the applicable United States District Court.
10.2 RELEASE OF CLAIMS
Borrower hereby RELEASES, DISCHARGES and ACQUITS forever
Lender and its officers, directors, trustees, agents,
employees and counsel (in each case, past, present or future)
from any and all Claims existing as of the date hereof (or the
date of actual execution hereof by Borrower, if later). As
used herein, the term "Claim" shall mean any and all
liabilities, claims, defenses, demands, actions, causes of
action, judgments, deficiencies, interest, liens, costs or
expenses (including court costs, penalties, attorneys' fees
and disbursements, and amounts paid in settlement) of any kind
and character whatsoever, including claims for usury, breach
of contract, breach of commitment, negligent misrepresentation
or failure to act in good faith, in each case whether now
known or unknown, suspected or unsuspected, asserted or
unasserted or primary or contingent, and whether arising out
of written documents, unwritten undertakings, course of
conduct, tort, violations of laws or regulations or otherwise.
10.3 NOTICES
In order for any demand, consent, approval or other
communication to be effective under the terms of this
Agreement, "Notice" must be provided under the terms of this
Subsection. All Notices must be in writing. Notices may be (a)
delivered by hand, (b) transmitted by telecopy (with a
duplicate copy sent by first class mail, postage prepaid), (c)
sent by certified or registered mail, postage prepaid, return
receipt requested, or (d) sent by reputable overnight courier
service, delivery charges prepaid. Notices shall be addressed
as set forth below:
If to Lender:
AUSA Life Insurance Company, Inc.
AEGON USA Realty Advisors, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-5443
Attn: Mortgage Loan Department
Telecopy Number: (319) 369-2277
Reference: Loan #87786
If to the Borrower:
c/o Great Lakes REIT, L.P.
823 Commerce Drive
Oak Brook, Illinois 60523
Attn: Chief Finaicial Officer
Telecopy Number: (630) 368-2929
Notices delivered by hand or by overnight courier shall be
deemed given when actually received or when refused by their
intended recipient. Telecopied Notices will be deemed
delivered when a legible copy has been received (provided
receipt has been verified by telephone confirmation or one of
the other permitted means of giving Notices under this
Subsection). Mailed Notices shall be deemed received three
days after mailing. Either Lender or Borrower may change its
address for Notice by giving at least fifteen Business Days'
prior Notice of such change to the other party.
10.4 NO PARTNERSHIP
Nothing contained in the Loan Documents is intended to create
any partnership, joint venture or association between Borrower
and Lender, or in any way make Lender a co-principal with
Borrower with reference to the Property.
10.5 SUCCESSORS AND ASSIGNS
The terms, covenants, conditions and warranties contained
herein and the powers granted hereby shall run with the land,
shall inure to the benefit of and bind the parties hereto and
their respective heirs, executors, administrators, successors
and assigns, and all tenants, sub-tenants and assigns of same,
and all occupants and subsequent owners of the Real Property.
10.6 SEVERABILITY
In the event that any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal
or unenforceable, in whole or in part, or in any respect, or
in the event that any one or more of the provisions of this
Agreement shall operate, or would prospectively operate, to
invalidate this Agreement, then, and in any such event, such
provision or provisions only shall be deemed to be null and
void and of no force or effect, and shall not affect any other
provision of this Agreement which other provisions shall
remain operative and in full force and effect and shall in no
way be affected, prejudiced or disturbed thereby.
10.7 AMENDMENT
This Agreement may be amended, revised, waived, discharged,
released or terminated only by a written instrument or
instruments executed by the party against which enforcement of
the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision,
waiver, discharge, release or termination that is not so
documented shall be null and void.
10.8 SOLE BENEFIT
This Agreement and the other Loan Documents have been executed
for the sole benefit of Borrower and Lender and the successors
and assigns of Lender. No other party shall have rights
thereunder or be entitled to assume that the parties thereto
will insist upon strict performance of their mutual
obligations hereunder, any of which may be waived from time to
time. Borrower shall have no right to assign any of its rights
under the Loan Documents to any party whatsoever except as set
forth in this Agreement and the Loan Documents.
10.9 INTERPRETATION
(a) Headings and General Application
The section, subsection, paragraph and subparagraph
headings of this Agreement are provided for
convenience of reference only and shall in no way
affect, modify or define, or be used in construing,
the text of the sections, subsections, paragraphs or
subparagraphs. If the text requires, words used in
the singular shall be read as including the plural,
and pronouns of any gender shall include all genders.
(b) Sole Discretion
The Lender may take any action or decide any matter
under the terms of this Agreement or of any other
Loan Document (including any consent, approval,
acceptance, option, election or authorization) in its
sole and absolute discretion, for any reason or for
no reason, unless the related Loan Document contains
specific language to the contrary. Any approval or
consent which the Lender might withhold may be
conditioned in any way.
(c) Result of Negotiations
This Agreement results from negotiations between
Borrower and Lender and from their mutual efforts.
Therefore, it shall be so construed, and not as
though it had been prepared solely by Lender.
(d) Reference to Particulars
The scope of a general statement made in this
Agreement or in any other Loan Document shall not be
construed as having been reduced through the
inclusion of references to particular items that
would be included within the statement's scope.
Therefore, unless the relevant provision of a Loan
Document contains specific language to the contrary,
the term "include" shall mean "include, but shall not
be limited to" and the term "including" shall mean
"including, without limitation."
10.10 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Borrower and the
Lender have made and delivered this Agreement as of this ____ day of
December, 1998.
AUSA Life Insurance Company, Inc.
a New York life insurance company
By: /s/ Thomas L. Nordstrom
Name: Thomas L. Nordstrom
Title: Vice-President
GREAT LAKES REIT, L.P.,
a Delaware limited partnership
By Great Lakes REIT,
a Maryland business trust,
its General Partner
By /s/ James Hicks [SEAL]
James Hicks
Treasurer