Document:

Exhibit 10.2

Exhibit 4.1
and 10.2

EXECUTION VERSION

SECOND LETTER AMENDMENT

Dated as of September 30, 2008

Deutsche Bank Trust Company Americas,

       as Administrative Agent under the

       Credit Agreement referred to below

60 Wall Street

New York, New York 10005

			
	     Re:	 	Grubb & Ellis Company Credit Facility

Ladies and Gentlemen:

     Reference is made to the Second Amended and Restated Credit Agreement dated as of December 7,
2007 (as amended by that certain First Letter Amendment dated as of August 4, 2008, the “Credit
Agreement”) by and among Grubb & Ellis Company (the “Borrower”), the guarantors named therein,
Deutsche Bank Trust Company Americas, as administrative agent (the “Administrative Agent”), the
financial institutions identified therein as lender parties (the “Lender Parties”), Deutsche Bank
Trust Company Americas, as syndication agent, and Deutsche Bank Securities Inc., as sole book
running manager and sole lead arranger. Capitalized terms not otherwise defined herein shall have
their respective meanings set forth in the Credit Agreement.

     It is hereby agreed by you and us as follows:

     Section 1. Amendments to Credit Agreement. The Credit Agreement is, upon the
occurrence of the Amendment Effective Date (as defined in Section 3 below), hereby amended as
follows:

     (a) The definition of “Applicable Margin” set forth in Section 1.01 of the Credit
Agreement is hereby amended by deleting the pricing grid therein and substituting the
following pricing grid therefor:

	 	 	 	 	 	 	 
	 	 	 	 	Applicable Margin	 	Applicable Margin
	Pricing	 	 	 	for Base Rate	 	for Eurodollar Rate
	Level	 	Debt/EBITDA Ratio	 	Advances	 	Advances
	I
	 	> 2.50:1.00
	 	2.50%
	 	3.50%
	II
	 	3
1.50:1.00 but £ 2.50:1.00
	 	2.00%
	 	3.00%
	III
	 	< 1.50:1.00
	 	1.50%
	 	2.50%

     (b) The definition of “Dividend/Share Repurchase Limitation” set forth in Section 1.01 of
the Credit Agreement is hereby deleted in its entirety.

     (c) The definition of “Limited Purpose Subsidiary” is hereby amended by (i) inserting the
words “and/or owning” immediately prior to the words “and improving” in the fifth
(5th) line thereof and (ii) inserting the following sentence at the end thereof:
“As of the Second Amendment Effective Date, the Borrower acknowledges that the Limited Purpose
Subsidiaries

 

 

include (i) GERA Abrams Centre LLC, (ii) GERA 6400 Shafer LLC, (iii) GERA Danbury
Corporate Center LLC, (iv) NNN 200 Galleria, LLC and (v) NNN Avallon, LLC.”

     (d) Section 1.01 of the Credit Agreement is hereby amended by adding the following new
defined terms thereto in appropriate alphabetical order:

     “GERA Assets” means any real property owned or held by any of the GERA Property
Acquisition Subsidiaries, which includes, (i) the property located at 6400 Shafer
Court, Rosemont, Illinois, (ii) the property located at 9330 LBJ Freeway, Dallas,
Texas, and (iii) the property located at 39 & 55 Old Ridgebury Road, Danbury,
Connecticut.

     “Second Amendment Effective Date” means September 30, 2008.

     (e) Section 2.01(a) of the Credit Agreement is hereby amended by (i) deleting “the
Termination Date” on the fourth (4th) line thereof and substituting therefor
“September 30, 2008, but expressly subject to the last sentence of this Section 2.01(a),”, and
(ii) inserting the following sentence at the end thereof: “For the avoidance of doubt,
notwithstanding anything to the contrary contained herein, no Revolving Credit Advances shall
be available after September 30, 2008 until such time as the Revolving Credit Commitments have
been reduced to less than $50,000,000, at which time Revolving Credit Advances shall be
available up to the Unused Revolving Credit Commitments of the Revolving Credit Lenders at
such time.”

     (f) Section 2.01(b) of the Credit Agreement is hereby amended by (i) deleting “the
Termination Date” on the third (3rd) line thereof and substituting therefor
“September 30, 2008, but expressly subject to the last sentence of this Section 2.01(b),”, and
(ii) inserting the following sentence at the end thereof: “For the avoidance of doubt,
notwithstanding anything to the contrary contained herein, no Swing Line Advances shall be
available after September 30, 2008 until such time as the Revolving Credit Commitments have
been reduced to less than $50,000,000, at which time Swing Line Advances shall be available
(i) in an aggregate amount not to exceed at any time outstanding the Swing Line Bank’s Swing
Line Commitment at such time and (ii) in an amount for each such Swing Line Advance not to
exceed the aggregate of the Unused Revolving Credit Commitments of the Revolving Credit
Lenders at such time.”

     (g) Section 2.01(c) of the Credit Agreement is hereby amended by (i) deleting “60 days
before the Termination Date” on the fourth (4th) line thereof and substituting
therefor “September 30, 2008, but expressly subject to the last sentence of this Section
2.01(c),”, and (ii) inserting the following sentence at the end thereof: “For the avoidance of
doubt, notwithstanding anything to the contrary contained herein, no Letters of Credit shall
be available after September 30, 2008 until such time as the Revolving Credit Commitments have
been reduced to less than $50,000,000, at which time Letters of Credit shall be available in
an Aggregate Available Amount (i) for all Letters of Credit issued by the Issuing Bank not to
exceed at any time the Letter of Credit Facility at such time, (ii) for all Letters of Credit
issued by the Issuing Bank not to exceed such Issuing Bank’s Letter of Credit Commitment at
such time and (iii) for each such Letter of Credit not to exceed an amount equal to the Unused
Revolving Credit Commitments of the Revolving Credit Lenders at such time.”

     (h) The following new subsection (iii) is hereby added to the end of Section 2.05(b) of
the Credit Agreement:

     (iii) Upon the receipt of any prepayment pursuant to Section 2.06(e), the
Revolving Credit Commitments shall be permanently reduced by one hundred percent

2

 

(100%) of the principal amount of such prepayment; provided, however, under no
circumstances shall the Revolving Credit Commitments be reduced to less than
$50,000,000 by reason of the operation of this Section 2.05(b)(iii).

     (i) Section 2.06(e)(i) is hereby amended by (i) deleting “In the event that the sale
contemplated by Section 5.02(e)(v) is not consummated on or before September 30, 2008, the” at
the beginning thereof and substituting therefor “The”, and (ii) inserting the words “of GERA
Assets” immediately following the word “sale” in the parenthetical on the third
(3rd) line thereof.

     (j) Section 2.07(a)(1) of the Credit Agreement is hereby amended by inserting the
following sentence at the end of such Section immediately prior to the period: “; provided,
however, such rate shall never be less than the sum of the Eurodollar Rate plus the Applicable
Margin for Eurodollar Rate Advances (assuming a one (1) month Interest Period) plus 1.00%.”

     (k) Section 5.01(s) of the Credit Agreement is hereby amended by deleting “real property
held by each Limited Purpose Subsidiary” and substituting therefor “GERA Assets”.

     (l) Section 5.02(b) of the Credit Agreement is hereby amended by (i) inserting “and
Preferred Interests” at the end of the title of such Section immediately prior to the period,
and (ii) inserting the following immediately after the word “Debt” and prior to the word
“except”: “or create, incur, assume or suffer to exist, or permit any of its Restricted
Subsidiaries to create, incur, assume or suffer to exist any Preferred Interests, in each
case”.

     (m) Section 5.02(b)(iii)(F) of the Credit Agreement is hereby amended by deleting
“$125,000,000” and substituting therefor “$50,000,000”.

     (n) Section 5.02(b)(iii)(H) is hereby amended and restated in its entirety to read as
follows:

     “(H) other Debt subordinated to Debt incurred hereunder and/or Preferred
Interests, in each case in amounts and on terms and conditions satisfactory to the
Administrative Agent and Required Lenders;”

     (o) Section 5.02(b)(iv) of the Credit Agreement is hereby amended by inserting “next to”
immediately prior to the word “last” in the last line of such Section.

     (p) The proviso immediately following Section 5.02(b)(v) is hereby amended by (i)
deleting the comma immediately following the reference to “(iii)(D)(y)”, (ii) inserting the
word “and” immediately following the reference to “(iii)(D)(y)”, and (iii) deleting “and
(iii)(H)” immediately following the reference to “(iii)(E)”.

     (q) Section 5.02(g) is hereby amended by deleting the colon at the end of the first
paragraph of such Section and all text following the colon in such Section and substituting
therefor: “, any Loan Party may make Restricted Payments to another Loan Party.”

     (r) Section 5.03(d) of the Credit Agreement is hereby amended by (i) deleting “Upon the
request of the Administrative Agent,” at the beginning of such Section and substituting
therefor “As soon as possible and in any event within thirty (30) days after the end of each
calendar month,”, (ii) inserting the following after the word “month,” in the seventh
(7th) line thereof: “and unaudited statements of gross revenues and operating and
other expenses with respect to each

3

 

parcel of real property owned or held by any Limited Purpose Subsidiary, in each case in
form and detail satisfactory to the Administrative Agent,”

     (s) Section 5.04(a) of the Credit Agreement is hereby amended by deleting the table
therein and substituting the following table therefor:

	 	 	 
	Quarter Ending	 	Ratio
	December 31, 2007

	 	3.75:1.00
	March 31, 2008

	 	3.75:1.00
	June 30, 2008

	 	3.75:1.00
	September 30, 2008

	 	5.50:1.00
	December 31, 2008

	 	5.50:1.00
	March 31, 2009 and thereafter

	 	3.50:1.00

     (t) Section 5.04(b) of the Credit Agreement is hereby amended by deleting the table
therein and substituting the following table therefor:

	 	 	 
	Quarter Ending	 	Ratio
	December 31, 2007

	 	3.25:1.00
	March 31, 2008

	 	3.25:1.00
	June 30, 2008

	 	3.25:1.00
	September 30, 2008

	 	3.25:1.00
	December 31, 2008

	 	3.25:1.00
	March 31, 2009

	 	3.25:1.00
	June 30, 2009

	 	3.50:1.00
	September 30, 2009

	 	3.50:1.00
	December 31, 2009

	 	4.00:1.00
	March 31, 2010

	 	4.00:1.00
	June 30, 2010

	 	4.00:1.00
	September 30, 2010

	 	4.00:1.00
	December 31, 2010 and thereafter

	 	4.50:1.00

     (u) Section 5.04(c) of the Credit Agreement is hereby amended by deleting the table
therein and substituting the following table therefor:

4

 

	 	 	 
	Quarter Ending	 	Ratio
	December 31, 2007

	 	2.25:1.00
	March 31, 2008

	 	2.25:1.00
	June 30, 2008

	 	2.25:1.00
	September 30, 2008

	 	4.25:1.00
	December 31, 2008

	 	4.25:1.00
	March 31, 2009 and thereafter

	 	2.25:1.00

     (v) Section 5.04(d) of the Credit Agreement is hereby amended by deleting “$60,000,000”
and substituting therefor “$30,000,000”.

     (w) Section 5.04(f) of the Credit Agreement is hereby amended by deleting “$25,000,000”
and substituting therefor “$15,000,000”.

     (x) Schedule I (Commitments, Pro Rata Shares and Applicable Lending Offices) to the
Credit Agreement is hereby replaced with Schedule I attached hereto.

     (y) Schedule IV to the Credit Agreement is hereby replaced with Schedule IV attached
hereto.

     Section 2. Representations and Warranties. The Borrower hereby represents and
warrants that the representations and warranties contained in each of the Loan Documents (as
amended or supplemented to date, including pursuant to this Amendment) are true and correct on and
as of the Amendment Effective Date (defined below), before and after giving effect to this
Amendment (including, without limitation, the representation and warranty set forth in Section
4.01(o) of the Credit Agreement, as amended by this Amendment), as though made on and as of such
date.

     Section 3. Effectiveness of Amendment. This Second Letter Amendment (this
“Amendment”) shall become effective as of the date first above written (the “Amendment Effective
Date”) solely when (i) the Administrative Agent shall have received counterparts of this Amendment
executed by the Borrower, the Guarantors, the Administrative Agent and the Required Lenders or, as
to any of the Lender Parties, advice satisfactory to the Administrative Agent that such Lender
Party has executed this Amendment, (ii) the Administrative Agent shall have received counterparts
of the Consent attached hereto executed by the Guarantors, (iii) the Administrative Agent shall
have received payment in full of an amendment fee equal to 0.25% of the sum of the Revolving Credit
Commitments of those Lenders that have executed and delivered to the Administrative Agent a
signature page to this Amendment, which fee shall be for the ratable benefit of such Lenders and
(iv) all fees and expenses of the Administrative Agent (including the reasonable fees and expenses
of counsel for the Administrative Agent) due and payable on the date hereof shall have been paid in
full and in accordance with Section 5 below.

     Section 4. Ratification. The Credit Agreement, as amended hereby, and each of the
other Loan Documents are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender Party or the Administrative
Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

5

 

     Section 5. Costs and Expenses. The Borrower agrees to pay on demand all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this Amendment and the other
instruments and documents to be delivered hereunder (including, without limitation, the reasonable
fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section
9.04 of the Credit Agreement.

     Section 6. Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this Amendment.

     Section 7. Governing Law. This Amendment constitutes a Loan Document and shall be
governed by, and construed in accordance with, the laws of the State of New York.

[Balance of page intentionally left blank]

6

 

	 	 	 	 	 
	 	Very truly yours,

GRUBB & ELLIS COMPANY,

as Borrower

 	 
	 	By  	/s/ Richard w. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Executive Vice President and Chief
Financial Officer 	 
	 

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

 

 

Agreed as of the date first above written:

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Administrative Agent, a Lender, Issuing Bank

and Swing Line Bank

	 	 	 	 	 
	By

	 	/s/ James Rolison
	 	 
	 

	 	 	 	 
	 

	 	Name: James Rolison

Title: Managing Director	 	 
	 
	 	 	 	 
	By

	 	/s/ Linda Wang	 	 
	 

	 	 	 	 
	 

	 	Name: Linda Wang

Title: Director	 	 

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

 

 

JPMORGAN CHASE BANK, N.A.,

as a Lender

	 	 	 	 	 
	By

	 	/s/ Amy S. Applebaum
	 	 
	 

	 	 	 	 
	 

	 	Name: Amy S. Applebaum

Title: Vice President	 	 

 

 

KEYBANK NATIONAL ASSOCIATION,

as a Lender

	 	 	 	 	 
	By

	 	/s/ Jennifer L. Wells
	 	 
	 

	 	 	 	 
	 

	 	Name: Jennifer L. Wells

Title: Vice President	 	 

 

 

FIFTH THIRD BANK,

as a Lender

	 	 	 	 	 
	By

	 	/s/ Matthew D. Rodgers
	 	 
	 

	 	 	 	 
	 

	 	Name: Matthew D. Rodgers	 	 
	 

	 	Title:Vice President	 	 

 

 

CONSENT

Dated as of September 30, 2008

     Each of the undersigned, as a Guarantor under the Guaranty set forth in Article VIII of the
Second Amended and Restated Credit Agreement dated as of December 7, 2007 (as amended by a certain
First Letter Amendment dated as of August 4, 2008), in favor of the Administrative Agent, for its
benefit and the benefit of the Lender Parties party to the Credit Agreement referred to in the
foregoing Second Letter Amendment, hereby consents to such Second Letter Amendment and hereby
confirms and agrees that notwithstanding the effectiveness of such Second Letter Amendment, the
Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects.

	 	 	 	 	 
	 	GRUBB & ELLIS AFFILIATES, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS AFFILIATES, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS MANAGEMENT SERVICES, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS OF ARIZONA, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS ASSET SERVICES COMPANY

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

(Signatures continued on next page)

 

 

	 	 	 	 	 
	 	GRUBB & ELLIS CONSULTING SERVICES COMPANY

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS INSTITUTIONAL PROPERTIES, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS OF MICHIGAN, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS MORTGAGE GROUP, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS OF NEVADA, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS NEW YORK, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

(Signatures continued on next page)

 

 

	 	 	 	 	 
	 	GRUBB & ELLIS ADVISERS OF CALIFORNIA, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS SOUTHEAST PARTNERS, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	HSM INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	WM. A. WHITE/GRUBB & ELLIS INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	LANDAUER HOSPITALITY INTERNATIONAL, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	LANDAUER SECURITIES, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

(Signatures continued on next page)

 

 

	 	 	 	 	 
	 	GRUBB & ELLIS MANAGEMENT SERVICES OF MICHIGAN, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GRUBB & ELLIS EUROPE, INC.

 	 
	 	By  	/s/ Richard W. Pehlke
 	 
	 	 	Name:  	Richard W. Pehlke 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	NNN REALTY ADVISORS, INC.

 	 
	 	By  	/s/ Andrea R. Biller
 	 
	 	 	Name:  	Andrea Biller 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	GRUBB & ELLIS REALTY INVESTORS, LLC

 	 
	 	By  	/s/ Andrea R. Biller
 	 
	 	 	Name:  	Andrea Biller 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	TRIPLE NET PROPERTIES REALTY INC.

 	 
	 	By  	/s/ Jeffrey T. Hanson
 	 
	 	 	Name:  	Jeffrey T. Hanson 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	GRUBB & ELLIS RESIDENTIAL MANAGEMENT INC.

 	 
	 	By  	/s/ Michael Rispoli
 	 
	 	 	Name:  	Michael Rispoli 	 
	 	 	Title:  	Chief Financial Officer 	 

 

 

	 	 	 	 	 

SCHEDULE I

COMMITMENTS, PRO RATA SHARES AND APPLICABLE LENDING OFFICES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving	 	 	 	 	 	Letter of	 	 	 	 	 	Domestic	 	Eurodollar
	 	 	Credit	 	Revolver Pro Rata	 	Credit	 	Swing Line	 	Lending	 	Lending
	Name of Lender	 	Commitment	 	Share	 	Commitment	 	Commitment	 	Office	 	Office
	Deutsche Bank Trust
	 	$	20,186,773.50	 	 	 	30	%	 	$	7,500,000.00	 	 	$	4,000,000	 	 	60 Wall Street	 	Commercial Loan
	Company Americas
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	New York, NY	 	Division
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10005	 	90 Hudson Street
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Jersey City, NJ
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	07302
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fifth Third Bank
	 	$	13,457,849.00	 	 	 	20	%	 	$	0	 	 	$	0	 	 	233 South Wacker,	 	233 South Wacker,
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Suite 400	 	Suite 400
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chicago, IL 60606	 	Chicago, IL 60606
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	JPMorgan Chase, N.A.
	 	$	13,457,849.00	 	 	 	20	%	 	$	0	 	 	$	0	 	 	245 Park Avenue,	 	245 Park Avenue,
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Floor 14	 	Floor 14
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	New York, NY 10167	 	New York, NY 10167
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	KeyBank National
	 	$	20,186,773.50	 	 	 	30	%	 	$	0	 	 	$	0	 	 	1200 Abernathy	 	1200 Abernathy
	Association
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Road, NE	 	Road, NE
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Suite 1550	 	Suite 1550
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Atlanta, GA 30328	 	Atlanta, GA 30328
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals
	 	$	67,289,245.00	 	 	 	100	%	 	$	7,500,000.00	 	 	$	4,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

SCHEDULE IV

	 	 	 
	A.

	 	6400 Shafer Court

Rosemont, IL
	 
	 	 
	B.

	 	9330 LBJ Freeway

Dallas, Texas
	 
	 	 
	C.

	 	Danbury Corporate Center

Danbury, Connecticut
	 
	 	 
	D.

	 	200 Galleria

200 Galleria Parkway

Atlanta, Georgia
	 
	 	 
	E.

	 	The Avallon

10415 and 10431 Morado Circle and 10814 Jollyville Road

Austin, Texasexv10w1

EXHIBIT 10.1

INTERESTS AND LIABILITIES AGREEMENT

(hereinafter referred to as the “Agreement”)

to the

PROPERTY FOURTH PER RISK EXCESS OF LOSS

REINSURANCE AGREEMENT

between

PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE COMPANY

both of Bala Cynwyd, Pennsylvania

(hereinafter collectively referred to as the “Company’)

and

SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

(hereinafter referred to as the “Subscribing Reinsurer”)

It is hereby agreed that the Subscribing Reinsurer shall have a 75% share in the interests and
liabilities of all reinsurers participating in the attached Property Fourth Per Risk Excess of
Loss Reinsurance Agreement effective from 12:01 a.m., Eastern Standard Time, January 1, 2008.

The share of the Subscribing Reinsurer in the interests and liabilities of all reinsurers
participating in said Contract shall be separate and apart from the shares of such other
reinsurers to the said Contract. The interests and liabilities of the Subscribing Reinsurer shall
not be joint with those of the other reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of the other reinsurers participating in said
Contract.

It is further agreed that the following shall apply to the Subscribing Reinsurer’s share in the
interests and liabilities of all the reinsurers participating in the Property Fourth Per Risk
Excess of Loss Reinsurance Agreement:

Page 1 of 9 Pages

 

	1.	 	The Preamble is revised to read:

PROPERTY FOURTH PER RISK EXCESS OF LOSS

REINSURANCE AGREEMENT

(the “Contract”)

between

PHILADELPHIA INSURANCE COMPANY

PHILADELPHIA INDEMNITY INSURANCE COMPANY

both of Bala Cynwyd, Pennsylvania

(the “Company”)

and

THE SUBSCRIBING REINSURER(S) EXECUTING THE

INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED HERETO

(the “Reinsurer”)

	2.	 	Paragraph E. is added to Article III — Special Termination:

	 	E.	 	This Article shall not apply to those Reinsurers with an A.M. Best’s rating of “A+”
or better at the inception of this Contract.

	3.	 	Paragraph C.1. of Article IV— Definitions is revised to read:

	 	1.	 	Extra Contractual Obligations

	 	 	 	“Extra Contractual Obligations” are defined as those liabilities not covered under
any other provision of this Agreement and which arise from the handling of any claim
on business covered hereunder, such liabilities arising because of, but not limited
to, the following: failure by the Company to settle within the Policy limit, or by
reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action
against its insured or in the preparation or prosecution of an appeal consequent
upon such action.
	 
	 	 	 	The date on which an Extra Contractual Obligation is incurred by the Company shall
be deemed, in all circumstances, to be the date of the original accident, casualty,
disaster or loss occurrence.

Page 2 of 9 Pages

 

	4.	 	Paragraph C.3. and Paragraph C.4. of Article IV — Definitions are revised to read:

	 	3.	 	This paragraph C. shall not apply where an Extra Contractual Obligation and/or
Loss in Excess of policy limits has been incurred due to the fraud of a member of the
Board of Directors or a corporate officer of the Company acting individually or
collectively or in collusion with any individual or corporation or any other
organization or party involved in the presentation, defense or settlement of any claim
covered hereunder.
	 
	 	4.	 	Recoveries, collectibles or retention from any other form of insurance or
reinsurance including deductibles or self— insured retention which protect the
Company against claims which are the subject matter of this paragraph C., whether
collectible or not, shall inure to the benefit of the Reinsurer and shall be deducted
from the total amount of such claims for purposes of determining the loss hereunder.

	5.	 	Paragraph D. of Article IV — Definitions is revised to read:

	 	D.	 	“Loss Adjustment Expense” as used herein shall mean all costs and expenses
allocable to a specific claim that are incurred by the Company in the investigation,
appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim,
including court costs and costs of supersedeas and appeal bonds, and including 1}
pre-judgment interest, unless included as part of the award or judgment; 2)
post-judgment interest; 3) legal expenses and costs incurred in connection with
coverage questions and legal actions connected thereto, including Declaratory Judgment
Expense; and 4) a pro rata share of salaries and expenses of Company field employees,
and expenses of other company employees who have been temporarily diverted from their
normal and customary duties and assigned to the field adjustment of losses covered by
this Contract. Loss Adjustment Expense does not include the salaries and expenses of
Company employees, other than (4) above, office expenses and other overhead expenses.

	6.	 	Paragraph F. of Article IV— Definitions is revised to read:

	 	F.	 	Net Earned Premium

	 	 	 	“Net Earned Premium” as used herein is defined as gross earned premium of the Company
during the term of the Contract for the classes of business reinsured hereunder, less
the earned portion of premiums ceded by the Company for reinsurance which inures to
the benefit of the Reinsurer.

Page 3 of 9 Pages

 

	7.	 	Paragraph J. of Article IV — Definitions is revised to read:

	 	J.	 	Ultimate Net Loss

	 	 	 	The term “Ultimate Net Loss” shall mean the actual loss, including any pre—judgment
interest which is included as part of the award or judgment, Loss Adjustment
Expense, 90% of Loss in Excess of Policy Limits, and 90% of Extra Contractual
Obligations, paid by the Company on its net retained liability after making
deductions for all recoveries, salvages, subrogations and all claims on inuring
reinsurance, whether collectible or not; provided, however, that in the event of the
insolvency of the Company, payment by the Reinsurer shall be made in accordance with
the provisions of the INSOLVENCY ARTICLE. Nothing herein shall be construed to mean
that losses under this Contract are not recoverable until the Company’s Ultimate Net
Loss has been ascertained.

	8.	 	Exclusion H. of Article VI — Exclusions is revised to read:

	 	H.	 	Pollution and Seepage as per the attached Pollution and Seepage
Exclusion Clause.

	9.	 	Exclusion Q. of Article VI — Exclusions is revised to read:

	 	i.	 	Loss, damage or expense of whatsoever nature caused directly or indirectly by
any of the following, regardless of any other cause or event contributing
concurrently or in any other sequence to the loss: nuclear reaction or radiation,
or radioactive contamination, however caused.
	 
	 	ii.	 	However, if nuclear reaction or radiation, or radioactive contamination results in
fire it is specifically agreed herewith that this Agreement will pay for such fire
loss or damage subject to all of the terms, conditions and limitations of this
Agreement.
	 
	 	iii.	 	This exclusion shall not apply to loss, damage or expense originating from
and occurring at risks using radioactive isotopes in any form where the nuclear
exposure is not considered by the Company to be the primary hazard.

	10.	 	The following exclusions X., Y. and Z. are added to of Article VI — Exclusions:

	 	X.	 	Risks where at the time of cession the Total Insured Value over all interests
exceeds $250,000,000.
	 
	 	Y.	 	Ex-gratia payments.
	 
	 	Z.	 	Any incident that involves the use, release or escape of pathogenic or poisonous
biological or chemical materials. However, this exclusion does not apply to the
Terrorism Annual Aggregate Limit for the excess layer stated in paragraph B of the
Coverage Article.

Page 4 of 9 Pages

 

	11.	 	The penultimate paragraph of Article VI — Exclusions is revised to read:
	 
	 	 	If the Company is bound without knowledge of or contrary to the instructions of the
Company’s supervisory underwriting personnel, or any business falling within the scope of
one or more of the exclusions set forth in this section, these exclusions, except A, B, C,
D, E, F, H, J, L, M, O, X, Y, Z, shall suspend with respect to such business until 60 days
after an underwriting supervisor of the Company acquires knowledge of such business.
	 
	12.	 	The following Paragraph D is added to Article IX— Reinsurance Premium:
	 
		 	D. As respects this Article:

	 	1.	 	All statements shall be sent to the Reinsurer at:

	 	a.	 	E-Mail/XML or EDT Formats: reaccount_armonk@swissre.com, or
	 
	 	b.	 	Standard Mail:

Swiss Reinsurance America Corporation

Accounting Department

175 King Street

Armonk, NY 10504

Telephone: 914-828-8000

Facsimile:   914-828-5919

	 	2.	 	All checks and supporting documentation shall be sent to the Reinsurer through
one of the options set forth below:

	 	a.	 	WIRE TRANSFER

	 	(i)	 	As respects payments in United States dollars, all wires should be
sent to:

The Bank of New York

1 Wall Street

New York, NY 10286

Account Name:      Swiss Reinsurance America Corporation

Account Number:   8900489197

ABA Number:         021000018

SWIFT:                   IRVTUS3N

	 	(ii)	 	All supporting documentation should be Sent to:

Swiss Reinsurance America Corporation

Accounting Department

175 King Street

Armonk, NY 10504

Page 5 of 9 Pages

 

	 	b.	 	LOCK BOX
	 
	 	 	 	As respects payments in United States dollars, both checks and
supporting documentation shall be sent to:

Swiss Reinsurance America Corporation

P.O. Box 7247-7281

Philadelphia, PA 19170-7281

	13.	 	Paragraph D of Article X, Notice of Loss and Loss Settlements shall be deleted.
	 
	14.	 	Article XI — Agency Agreement is revised to read:

ARTICLE XI

	 	 	 	AGENCY AGREEMENT

	 	 	 	For purposes of sending and receiving notices and payments required by this Agreement, the
reinsured company that is set forth first in the Preamble to this Agreement shall be deemed
the agent of all other reinsured companies referenced in the Preamble. In no event,
however, shall any reinsured company be deemed the agent of another with respect to the
terms of Article XXVII — Insolvency.

	15.	 	Article XII — Salvage and Subrogations is revised to read:

	 	A.	 	In the event of the payment of any indemnity by the Reinsurer under this
Agreement, the Reinsurer shall be subrogated, to the extent of such payment, to all of
the rights of the Company against any person or entity legally responsible for damages
of the loss. The Company agrees to enforce such rights; but, in case the Company
refuses or neglects to do so, the Reinsurer is hereby authorized and empowered to
bring any appropriate action in the name of the Company or their policyholders or
otherwise to enforce such rights.
	 
	 	B.	 	The Reinsurer shall be credited with salvage or subrogation recoveries (i.e.,
reimbursement obtained or recovery made by the Company, less Loss Adjustment Expense
incurred in obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage and subrogation recoveries
thereon shall always be used to reimburse the excess carriers in the reverse order of
their priority according to their participation before being used in any way to
reimburse the Company for its primary lose.

	16.	 	Article XXII — Mortgagee Reinsurance Endorsements shall be deleted in its entirety.

Page 6 of 9 Pages

 

	17.	 	Article XXIII — Third Party Rights (BRMA 52C Modified) is revised to read as follows and,
accordingly, the Table of Contents is revised to show deletion of the word “Modified” after
the reference to BRMA 52C.

ARTICLE XXIII

	 	 	 	THIRD PARTY RIGHTS (BRMA 52C)

	 	 	 	This Contract is solely between the Company and the Reinsurer, and in no instance shall any
other party have any rights under this Contract except as expressly provided otherwise in
the Insolvency Article.

	18.	 	Article XXVI — Access to Records (BRMA 1E) is revised to read as follows and, accordingly,
the Table of Contents is revised to show the deletion of the reference to (BRMA 1E).

ARTICLE XXVI

	 	 	 	ACCESS TO RECORDS

	 	 	 	The Reinsurer or its duly authorized representatives shall have the right to examine, at
the offices of the Company at a reasonable time, during the currency of this Agreement or
anytime thereafter, all books and records of the Company relating to business which is the
subject of this Agreement.

	19.	 	Paragraph F. of Article XXVIII — Arbitration shall be deleted in its entirety and the
remaining paragraph shall be realphabetized. Furthermore, the previous paragraph G. is
revised as paragraph F., as shall read as follows:

	 	F.	 	Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the cost of the third arbitrator. The remaining
costs of the arbitration shall be allocated by the panel.

	20.	 	Article XXXI — Intermediary (WINT8) shall be deleted in its entirety.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate, by
their duly authorized representatives as of the following dates:

Page 7 of 9 Pages

 

	 	 	 	 	 
	In BALA Cynwyd. PA , this 12TH day of SEPTEMBER          , 2008.	 	 
	 
	 	 	 	 
	ATTEST:
	 	PHILADELPHIA INSURANCE COMPANY	 	 
	 
	 	PHILADELPHIA INDEMNITY INSURANCE COMPANY	 	 
	 
	 	 	 	 
	/s/ William A. McKenna
	 	/s/ Christopher J. Maguire	 	 
	 	 	 	 	 
	 
	 	 	 	 
	WILLIAM A. McKENNA
	 	CHRISTOPHER J. MAGUIRE	 	 
	 	 	 	 	 
	Name
	 	Name	 	 
	 
	 	 	 	 
	AVP – REINSURANCE
	 	EVP & COO	 	 
	 	 	 	 	 
	Title
	 	Title	 	 
	 
	 	 	 	 
	And in Philadelphia , this 15th day of AUGUST          , 2008.	 	 
	 
	 	 	 	 
	ATTEST:
	 	SWISS REINSURANCE AMERICA CORPORATION	 	 
	 
	 	 	 	 
	/s/ M. NINGEN
	 	/s/ M. JOSEPH COOK	 	 
	 	 	 	 	 
	 
	 	 	 	 
	M. NINGEN
	 	M. JOSEPH COOK	 	 
	 	 	 	 	 
	Name
	 	Name	 	 
	 
	 	 	 	 
	Sr. VP
	 	Vice President	 	 
	 	 	 	 	 
	Title
	 	Title	 	 

Page 8 of 9 Pages

 

POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Reinsurance does not apply to:

	 	1.	 	Pollution, seepage, contamination or environmental impairment (hereinafter
collectively referred to as “pollution”) insurances, however styled;
	 
	 	2.	 	Loss or damage caused directly or indirectly by pollution, unless said loss or
damage follows as a result of a loss caused directly by a peril covered hereunder;
	 
	 	3.	 	Expenses resulting from any governmental direction or request that material
present in or part of or utilized on an insured’s property be removed or modified,
except as provided in 5. below;
	 
	 	4.	 	Expenses incurred in testing for and/or monitoring pollutants;
	 
	 	5.	 	Expenses incurred in removing debris, unless (A) the debris results from a loss
caused directly by a peril covered hereunder, and (B) the debris to be removed is itself
covered hereunder, and (C) the debris is on the insured’s premises, subject, however, to
a limit of $5,000 plus 25% of (i) the property damage loss, any risk, any one location,
any one original insured, and (ii) any deductible applicable to the loss;
	 
	 	6.	 	Expenses incurred to extract pollutants from land or water at the insured’s
premises unless (A) the release, discharge, or dispersal of pollutants results from a
loss caused directly by a peril covered hereunder, and (B) such expenses shall not
exceed $10,000;
	 
	 	7.	 	Loss of income due to any increased period of time required to resume operations
resulting from enforcement of any law regulating the prevention, control, repair,
clean-up or restoration of environmental damage;
	 
	 	8.	 	Claims under 5. and/or 6. above, unless notice thereof is given to the Company by
the insured within 180 days after the date of the loss occurrence to which such claims
relate.

“Pollutants” means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled,
reconditioned or reclaimed.

Where no pollution exclusion has been accepted or approved by an insurance regulatory authority
for use in a policy that is subject to this Agreement or where a pollution exclusion that has been
used in a policy is overturned, either in whole or in part, by a court having jurisdiction, there
shall be no recovery for pollution under this Agreement unless said pollution loss or damage
follows as a result of a loss caused directly by a peril covered hereunder.

Nothing herein shall be deemed to extend the coverage afforded by this reinsurance to property or
perils specifically excluded or not covered under the terms and conditions of the original policy
involved.

Page 9 of 9 Pages

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