Document:

Exhibit 10.33

 

LEHMAN BROTHERS BANK FSB.

921 North Orange Street

Wilmington, Delaware 19801

 

October 28, 2005

 

RKB
Washington Propery Fund I L.P.

Presidents
Park I LLC

Presidents
Park II LLC

Presidents
Park III LLC

1280
Maryland Avenue, S.W.

Washington,
D.C.

20024

 

Re:          Property known as Presidents Park I, II, and III in
Herndon, Virginia 

(the “Property”)

 

Dear
Mark Keller:

 

Lehman
Brothers Bank, FSB hereby issues this commitment (the “Commitment”) to make, or
cause an affiliate to make, a first mortgage loan on the Property described
above (the “Loan”) to Presidents Park I LLC, Presidents Park II LLC and
Presidents Park III LLC (collectively “Borrower”), each of which is, and shall
at the time of the closing of the Loan be, a special purpose entity indirectly
owned and controlled by RKB Washington Property Fund I L.P. (the “Sponsor”), or
its successor in interest, on the terms and subject to the conditions described
in this letter and the Mortgage Loan Terms and Conditions attached hereto as Exhibit A
(the “Term Sheet”).  Borrower and Sponsor
expressly acknowledge and agree that Lender’s
obligation to make this Loan is subject to, among other things, Lender’s
satisfactory completion of its due diligence as specified in the Term Sheet and
such other matters as Lender shall determine.

 

If
Borrower’s and Sponsor’s acceptance of this Commitment is not received by 5:00
pm, New York City time on November 2, 2005, this Commitment shall be of no
further force and effect. This Commitment shall expire on January 24, 2006
(unless extended by the mutual agreement of Borrower, Sponsor and Lender, which
agreement shall be in the sole discretion of the respective parties) by which
time the Loan must have closed or this Commitment shall be of no further force
and effect.

 

Borrower
and Sponsor represent that (i) the proposed finance transaction described
herein is not the subject of a commitment from another lender and (ii) no
other party has a right of refusal or any other option which could cause the
transaction contemplated herein not to be consummated.  Borrower and Sponsor represent and warrant to
Lender that no broker(s), agent(s) or finder(s) retained or engaged by
Borrower, Sponsor, or any affiliate thereof

 

 

arranged for this Commitment
or were otherwise involved in any manner in the financing or any aspect
thereof.

 

This Commitment, together with the attachments hereto,
and that certain letter agreement dated the date hereof between Sponsor,
Borrower, Republic Properties Corporation, RKB Washington Property Fund I, L.P.,
Republic Property Trust and Lehman Brothers Inc. (the “IPO Letter”), contains
the entire agreement between Borrower, Sponsor and Lender, and any other
agreements shall be deemed to have merged herewith.  The Commitment is for the benefit only of the
parties hereto and their respective affiliates and no third party shall have
any interest herein or in the proceeds of the Loan.  This Commitment and the proceeds thereof are
not assignable by Borrower or Sponsor to any other person, entity or
corporation without Lender’s written consent; provided, however, that this
Commitment may be assigned by Sponsor to Republic Property Trust (“RPT”), a
Maryland real estate investment trust that has been formed to succeed to the
assets and operations of Sponsor, in connection with the consummation of the
initial public offering of common shares of RPT, or to Republic Property
Limited Partnership (“RPLP”), provided that RPT is the sole general partner
thereof and RPLP has succeeded to the assets and operations of the Sponsor, in
which event the Assignee shall become the Sponsor.  The terms and provisions of this Commitment
cannot be waived or modified except in writing and signed by Borrower, Sponsor
and Lender.  Except for the immediate
preceding paragraph and any provisions concerning fees and expenses, the terms
of this Commitment shall not survive the closing of the Loan.  This Commitment may be executed in
counterpart, each of which when executed and delivered shall be an original and
together shall constitute one and the same instrument.  This Commitment shall be governed and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.  Each
party hereto hereby submits to the exclusive jurisdiction of the courts of the
State of New York for any legal action or proceeding resulting from the
transaction contemplated herein.  This
Commitment has been negotiated, issued and accepted in New York City, New York.  Each party hereto hereby waives its right to
a trial by jury.

 

Please indicate your acceptance of the matters set
forth herein by signing in the place provided below and returning the executed
Commitment, together with the executed IPO Letter,  to Steve Hentschel at Lehman Brothers, 399
Park Avenue, 8th Floor, New York, New York 10022 or via facsimile transmission
to (646) 758-4460, and delivering the Application Deposit in the amount of
$100,000.00 and a portion of the Origination Fee in the amount of $620,000.00
by wire transfer as provided in the Term Sheet prior to 5:00 PM New York City
time on November 2, 2005.  Please contact
Steve Hentschel at (212) 526-3762 if you have any further questions regarding
this Commitment.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Lehman Brothers Bank FSB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ken Cohen

  	
   

  
	
   

  	
   

  	
  Name: Authorized Signatory

  

 

 

By
its signature below, the undersigned hereby unconditionally accepts the
Commitment in accordance with the terms and conditions set forth herein and
further agrees that the Loan will be accepted by the undersigned upon the terms
and conditions set forth herein.

 

 

	
   

  	
  Presidents
  Park I LLC

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark Keller

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark Keller

  
	
   

  	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
  Presidents
  Park II LLC

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark Keller

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark Keller

  
	
   

  	
   

  	
   

  	
  Title:President

  
	
   

  	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
  Presidents
  Park III LLC

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark Keller

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark Keller

  
	
   

  	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
  RKB Washington Property Fund I L.P., by RKB

  Washington Property Fund I LLC, its general

  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark Keller

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  	
  Facsimile:

  

 

 

Please
provide us with the name, address and telephone number of your counsel in the
space below:

 

Eleanor Zappone, Esquire (202-857-6273) (FAX: 202-857-6395)

Joseph M. Fries, Esquire (202-857-6156)

Arent Fox PLLC

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

 

 

 

EXHIBIT A

 

Mortgage Loan Terms and
Conditions

October 28, 2005

 

The general terms and
conditions outlined below are not all inclusive or fully exhaustive.

 

	
  Lender:

  	
   

  	
  Lehman Brothers Bank, FSB, (“Lehman”) an affiliate
  or an entity engaged by Lehman to provide origination services.

  
	
   

  	
   

  	
   

  
	
  Sponsor:

  	
   

  	
  RKB Washington Property Fund I L.P.

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  Borrower shall be a special-purpose,
  bankruptcy-remote limited partnership or limited liability company or
  business trust whose sole business shall be the ownership and operation of
  the Property having at least one partner, member or beneficiary, as
  applicable, that shall be a special-purpose, bankruptcy-remote corporation
  with two independent board member(s), whose vote will be required in
  connection with the filing of a bankruptcy or similar action with respect to
  Borrower. Borrower shall deliver upon the funding of the Loan (the “Closing
  Date”) a bankruptcy non-consolidation opinion in form and substance
  satisfactory to Lender from independent counsel satisfactory to Lender.

  
	
   

  	
   

  	
   

  
	
  Property:

  	
   

  	
  The land and improvements including the office
  buildings known as Presidents Park I, Presidents Park II and Presidents Park
  III located in Herndon, VA.

  
	
   

  	
   

  	
   

  
	
  Closing Date:

  	
   

  	
  On or before January 23, 2006.

  
	
   

  	
   

  	
   

  
	
  IPO:

  	
   

  	
  Notwithstanding anything contained herein, in the
  event the Initial Public Offering of Republic Property Trust occurs prior to
  the closing of the Loan, Lender shall have no obligation to fund the Loan.

  
	
   

  	
   

  	
   

  
	
  Principal Amount:

  	
   

  	
  $124 million
  (the “Loan”)

  

  The Loan will be subject to Lender’s due diligence, including but not limited
  to, satisfactory review of the tenant leases and estoppels and confirmation
  that the information provided to Lender is accurate in all material respects,
  including information relating to tenant reimbursements, lease termination
  rights and payments by tenants arising therefrom, other income and free rent.

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  The Interest Rate will be the sum of one-month LIBOR
  plus 3.00%.Interest shall be payable monthly, in arrears and calculated on
  the basis of actual days elapsed in a 360-day year. The Loan Documents shall
  contain customary provisions (a) protecting the Lender against 

  

 

 

	
   

  	
   

  	
  increased costs or loss of yield resulting from
  changes in reserve, tax, capital adequacy and other requirements of law and
  from the imposition of or changes in withholding or other taxes and (b)
  indemnifying the Lender for “breakage costs” (“Breakage”) incurred in
  connection with, among other things, any prepayment on a day other than the
  last day of an interest period.

  
	
   

  	
   

  	
   

  
	
  Interest Rate Cap:

  	
   

  	
  At closing, Borrower shall purchase from a
  counterparty with an unqualified credit rating of “AA-” from Standard &
  Poor’s Ratings Group and “Aa3” from Moody’s Investors Service an interest
  rate cap with a notional amount equal to the Principal Amount and a LIBOR
  strike price equal to 5% for the remaining term of the Loan with payments and
  interest period calculations in accordance with the Loan documentation.

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  Maturity
  date of June 15, 2007

  
	
   

  	
   

  	
   

  
	
  Amortization:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Origination
  Fee:

  	
   

  	
  A total of 1.00% of the Principal Amount. A portion
  of the Origination Fee equal to $620,000 shall be paid at the time of the acceptance
  of the Commitment and shall be non-refundable, except  that
  in the event that the Loan does not close because Lender determines not to
  proceed with the Loan based on provisions set forth herein or imposes reserve
  requirements greater than the dollar amounts specified herein or Borrower is
  unable to fulfill any closing requirements of the Lender (whether or not set
  forth herein) for any reason that is not within the Borrower’s reasonable
  control, the portion of the Application Fee paid to Lender shall be returned
  to Borrower except to any portion thereof that is necessary to reimburse
  Lender for expenses reimbursable to Lender hereunder that have not been paid
  from the Application Deposit.
  In the event the Loan does not close, the paid portion
  of the Origination Fee may be credited against a future line of credit
  facility as set forth in the IPO Letter. The remaining portion
  of the Origination Fee shall be paid at closing of the Loan and only if the Loan closing occurs.in the event that the Loan does not close because Lender

  
	
   

  	
   

  	
   

  
	
  Exit
  Fee:

  	
   

  	
  1.00% of the Principal
  Amount payable at the earlier to occur of repayment or the maturity date;
  provided, however, there shall be no exit fee due in the event that Lender
  provides permanent takeout financing of the Loan

  
	
   

  	
   

  	
   

  
	
  Prepayment:

  	
   

  	
  The Loan may be prepaid at any time, provided that
  any prepayment shall be accompanied by the amount of interest that would have
  accrued on the principal amount of such prepayment through the end of the
  accrual period during which such prepayment is made, together 

  

 

2

 

	
   

  	
   

  	
  with any Breakage

  
	
   

  	
   

  	
   

  
	
  Cash Management:

  	
   

  	
  All rents from the Property shall be deposited into
  an account controlled by Lender (the “Lockbox Account”) established by Borrower
  with a financial institution acceptable to Lender (the “Lockbox Bank”). The
  Lockbox Account shall be subject to a Cash Management Agreement among Lender,
  Borrower and the Lockbox Bank. The Cash Management Agreement shall provide,
  among other things, that all cash flow after payment of debt service and
  funding of the reserves set forth below shall be remitted to Borrower,
  provided no event of default shall have occurred and be continuing.

  
	
   

  	
   

  	
   

  
	
  Capital Expenditure Reserve:

  	
   

  	
  The Lender shall have the right to require a
  separate Capital Expenditure Reserve in an amount equal to 125% of the cost
  of the immediate and year-one deferred maintenance items, as identified in
  the engineering and environmental reports. This reserve shall be determined
  upon completion of due diligence.

  

  On-going Capital Expenditures and replacement reserves, to be funded each
  month in an amount equal to the greater of 1/12 of$0.30 per square foot per
  year or as determined in the Engineering Report.

  

  The Borrower shall receive interest on all funds in the Capital Expenditure
  Reserve.

  
	
   

  	
   

  	
   

  
	
  Tax and Insurance Reserve:

  	
   

  	
  The Borrower will be required to fund a Tax and Insurance Reserve
  each month in an amount equal to 1/12 of the estimated annual expense for
  taxes and insurance. Notwithstanding the foregoing, Borrower shall not be
  required to fund an Insurance Reserve, provided that Borrower, throughout the
  term of the Loan, delivers evidence reasonably satisfactory to Lender that
  all premiums then due have been paid under Borrower’s blanket insurance
  policy covering the Property.

  

  The Borrower shall receive interest on all funds in the Tax and Insurance
  Reserve account.

  
	
   

  	
   

  	
   

  
	
  Tenant Improvement and Leasing Commission
  Reserve:

  	
   

  	
  The Borrower will be required to deposit $6,517,661 into a reserve to
  be used for future tenant improvements and leasing commissions at the
  Property. In addition, the Borrower will be required to deposit $4,247,235
  into the Tenant Improvement and Leasing Commission Reserve for outstanding
  landlord obligations due to Network Solutions, as well as any other
  outstanding landlord obligations. Such amount deposited for outstanding
  landlord obligations shall be recalculated prior to closing, taking into
  account any amounts that may have been paid to such tenant prior to closing.

  
	
   

  	
   

  	
   

  
	
  Debt Service Reserve:

  	
   

  	
  Borrower will be required to deposit $3,850,000 into a reserve to be

  

 

3

 

	
   

  	
   

  	
  used to pay debt service in the event the net cash flow from the
  Property is insufficient to do so.The amount of the debt service reserve
  shall be subject to Lender’s due diligence. Funds on reserve in the Debt
  Service Reserve may be transferred to the Tenant Improvement and Leasing
  Commission Reserve in the event that the Property meets certain debt service
  coverage ratio and occupancy tests as outlined in the loan documents.

  
	
   

  	
   

  	
   

  
	
  Other Reserves:

  	
   

  	
  Lender reserves the right to require additional
  up-front and/or on going reserves, at Lenders discretion, pursuant to
  Lender’s due diligence and third party investigations, including but not
  limited to reserves for environmental remediation, free rent, rent abatements
  and/or prospective lease or space terminations, appropriations risk, and
  significant lease turnover. All tenant lease termination payments shall be
  reserved by Lender, unless otherwise specified in the Loan documents.

  

  The Borrower shall receive interest on all funds in all the Reserve accounts.

  
	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  The Loan shall be secured by (i) the
  cross-collateralized and cross-defaulted first mortgage/deed of trust and
  security agreement, or its equivalent on the fee simple estate(s) of Borrower
  in the Property; (ii) a first priority assignment of all leases and rents
  with respect to the Property and (iii) a first priority security interest in
  all personal property used in connection with the Property.

  
	
   

  	
   

  	
   

  
	
  Additional Collateral:

  	
   

  	
  At Lender’s election, Borrower shall, or shall cause
  Sponsor to, grant a security interest and assign and pledge to Lender, as
  additional security for the Loan, all excess cash flow derived from the
  properties owned by Sponsor, which properties are listed on Schedule B of
  this term sheet. The structure, terms and documentation of such security
  interest and pledge shall be mutually agreed to by Borrower and Lender.

  
	
   

  	
   

  	
   

  
	
  Transfer of Property:

  	
   

  	
  Neither the Property nor any direct or indirect
  interest in the Borrower may be transferred, directly or indirectly, unless
  (i) prior to a Secondary Market Transaction, Lender has approved such
  transfer or, after a Secondary Market Transaction the Rating Agencies have
  confirmed in writing that such a transfer will not result in the
  qualification, downgrade or withdrawal of the then-current rating assigned to
  certificates (the “Certificates”) issued in connection with a Secondary
  Market Transaction, (ii) the transferee meets certain minimum net worth,
  experience and similar requirements, which will be set forth in the Loan
  documentation and (iii) the transferee is a bankruptcy remote special purpose
  entity and a non-consolidation opinion acceptable to (a) prior to a Secondary
  Market Transaction, Lender or (b) after the Secondary Market Transaction, the
  Rating

  

 

4

 

	
   

  	
   

  	
  Agencies, has been delivered, and (if applicable)
  (iv) either (a) the Mezzanine Lender shall have approved such transfer
  (including formation of a new Mezzanine Borrower acceptable to Mezzanine
  Lender and assumption of the Mezzanine Loan) or (b) the Mezzanine Loan shall
  have been paid in full. Notwithstanding the foregoing, indirect interests in
  the Borrower, or if a Mezzanine Loan has been created, only in the Mezzanine
  Borrower, may be transferred to
  Republic Property Trust or Republic Property Limited Partnership in the event
  of the Initial Public Offering of Republic Property Trust.

  
	
   

  	
   

  	
   

  
	
  Subordinate Debt:

  	
   

  	
  Except for (i) mezzanine financing provided
  by Lehman and (ii) any other subordinate debt expressly agreed to by Lender
  prior to closing, no subordinate financing will be permitted on the Property
  and no direct or indirect interest in Borrower (other
  than limited partner interest in Sponsor) may be
  additionally pledged or encumbered as collateral for any financing.

  
	
   

  	
   

  	
   

  
	
  Insurance:

  	
   

  	
  Borrower shall maintain liability and “all
  risk” property insurance coverage on the Property, with limits equal to the
  full replacement cost of the Property plus 24 months of business interruption
  coverage. The policies must be satisfactory to Lender and issued by insurers
  with a claims paying ability rated “A/A2” or better by Standard & Poor’s
  or Moody’s respectively. The Borrower will be required to maintain insurance
  for acts of terrorism or an insurance policy without terrorism exclusion,
  subject to a cap on cost to be mutually agreed upon.

  
	
   

  	
   

  	
   

  
	
  Management:

  	
   

  	
  The Property shall be managed by a manager approved
  by the Lender. Lender hereby approves Republic Properties Corporation and any
  affiliate of Republic Property Trust as a property manager.
  Lender shall have the right to cause Borrower to (i) terminate the
  management agreement and (ii) appoint a replacement manager satisfactory to
  Lender pursuant to an agreement in the form of the existing Management
  Agreement or otherwise, reasonably satisfactory to Lender in the event that
  (a) an event of default occurs under the Loan and all cure periods have expired
  or (b) a default by the property manager occurs under the management
  agreement and is continuing beyond any applicable notice and grace periods.

  
	
   

  	
   

  	
   

  
	
  Recourse:

  	
   

  	
  The Loan shall be non-recourse except for standard
  carve-outs including, but without limitation, environmental matters,
  intentional misrepresentation, misappropriation of funds (including proceeds
  paid under any insurance policies or condemnation proceedings, rents and
  security deposits), real estate taxes, fraud, intentional waste, unauthorized
  transfer, filing of bankruptcy, and any other of Lender’s customary
  carve-outs, all of which shall be recourse to Borrower and Sponsor;
  provided, however, that recourse liability shall not apply in

  

 

5

 

	
   

  	
   

  	
  the
  case of failure to pay real estate taxes if such failure results solely from
  a lack of available cash flow to make the required payment necessary to avoid
  recourse liability.

  
	
   

  	
   

  	
   

  
	
  Reporting:

  	
   

  	
  During the term of the Loan, the Borrower shall
  provide to the Lender annual audited (if available, otherwise certified by
  Borrower’s Chief Financial Officer that such statements fairly reflect
  Borrower’s financial condition)  financial statements
  on the Property within 90 days after the end of each calendar year,
  monthly unaudited financial statements and certified updated rent rolls
  within 60
  days following the end of each quarter.

  
	
   

  	
   

  	
   

  
	
  Loan Documentation/Due
  Diligence:

  	
   

  	
  The closing of the Loan is conditioned upon
  finalization, execution and delivery of the Lender’s standard loan documents,
  which shall include, but not be limited to, a note, a mortgage or deed of
  trust, the assignments of rents, and an environmental and hazardous substance
  indemnification agreement.

  

  Lender’s obligation to make the Loan to Borrower shall be subject to Lender’s
  review and approval of the items on Schedule A attached hereto.
  Notwithstanding the foregoing, all leases and agreements relating to the
  Property shall be satisfactory to Lender in all material respects.

  
	
   

  	
   

  	
   

  
	
  Secondary Market Transactions:

  	
   

  	
  Borrower understands that Lender may engage in a
  secondary market transaction by selling the Loan or selling participations in
  the Loan or securitizing the Loan (each, a “Secondary Market Transaction”).
  Sponsors and Borrower shall, among other things, provide Lender information
  reasonably necessary (including updated financial and operating statements)
  to facilitate the Secondary Market Transaction and to assist Lender in the
  preparation of a disclosure document for the Secondary Market Transaction.
  The costs and expenses incurred in connection with a Secondary Market
  Transaction (other than Borrower’s legal counsel) shall be paid by Lender.

  
	
   

  	
   

  	
   

  
	
  Lender’s Right to Sell,
  Participate, or Assign Mortgage or Create Mezzanine Debt:

  	
   

  	
  Lender will have the right, without the consent of
  Borrower, to sell, assign or participate the Loan, in whole or in part,
  including the right to split the Loan into two or more parts, notes or
  components, resulting in a first or second mortgage on the Property provided that
  the total aggregate debt and monthly debt service payments do not change.
  Lender shall bear any costs associated with such transfer, assignment or
  participation of the Loan. Further, Lender will also have the right to recast
  a portion of the Loan into one or more mezzanine loans, each of which shall
  be made to one or more newly formed bankruptcy remote single purpose entities
  that own 100% of the direct and indirect ownership interests in Borrower, and
  which will be secured by, among other things, a pledge of all of these

  

 

6

 

	
   

  	
   

  	
  ownership interests. In the event such recasting
  occurs prior to the Closing Date, all costs will be borne by Borrower. If
  such recasting occurs after the Closing Date, all expenses (other than
  Borrower’s legal counsel) of such recasting will be borne by Lender. Borrower
  agrees to cooperate with any such sale, securitization, assignment,
  participation, split, and/or in the creation of a mezzanine loan(s),
  including the restructuring of appropriate Loan documents to facilitate the
  same.

  
	
   

  	
   

  	
   

  
	
  Costs and Expenses:

  	
   

  	
  Sponsor shall cause Borrower to pay, whether or not
  the Loan closes, all third party  costs and expenses in connection
  with the Loan, including without limitation, the fees and disbursements of
  Lender’s counsel, appraisal costs, the costs of engineering and environmental
  reports, title insurance premiums, survey charges, mortgage taxes, recording
  charges, brokerage commissions and lockbox fees.

  
	
   

  	
   

  	
   

  
	
  USA PATRIOT Act:

  	
   

  	
  Lender is committed to complying with U.S. statutory
  and regulatory requirements designed to assist the federal government in
  combating money laundering and any activity which facilitates the funding of
  terrorist or criminal activities. The USA PATRIOT Act enhances the money
  laundering prevention requirements imposed on securities firms and other
  financial institutions. As part of our customer identification and
  verification procedures, Lender may ask Borrower and Sponsor to provide
  additional information as necessary to verify their identity and comply with
  these procedures. Until such additional information or documentation is
  provided, Lender may not be able to effect any transactions for the Borrower
  or the Sponsor.

  
	
   

  	
   

  	
   

  
	
  Confidentiality:

  	
   

  	
  This term sheet is being furnished to Borrower and
  Sponsor on a confidential basis and may not be disclosed to third parties
  without Lender’s prior written consent and may not be relied upon by any
  third parties, provided, however that Borrower and Sponsor shall be permitted
  to disclose the Commitment, including this term sheet, to its attorneys,
  accountants, direct and indirect constituent members, partners and
  shareholders and as required by law

  
	
   

  	
   

  	
   

  
	
  Material Adverse Change:

  	
   

  	
  The obligation of Lender to close and fund the Loan
  is subject to (i) there not occurring or becoming known to Lender any
  material adverse condition or material adverse change in or affecting the
  business, operations, Properties, financial or operating condition of the
  Borrower or Sponsor, (ii) Lender not becoming aware after the date hereof of
  any information or other matter affecting the Borrower(s) or Sponsor(s) which
  is inconsistent in a material and adverse manner with any such information or
  other matter disclosed to Lender prior to the date hereof, and (iii)
  there not having occurred an outbreak or escalation of hostilities involving
  the United States or the declaration by the United States of a national
  emergency or war.

  

 

7

 

	
  Application
  Deposit:

  	
   

  	
  A $100,000.00
  Application Deposit shall be due and payable by Borrower to Lender, upon
  Borrower’s execution of this application and as a condition precedent to the
  effectiveness thereof.

  Lender’s Account for
  Wire Transfers:

  Chase Manhattan Bank

  New York, New York

  ABA 021 000 021

  Account Name: Lehman Brothers Bank FSB

  Account Number: 066-614287

  
	
   

  	
   

  	
   

  
	
  Miscellaneous:

  	
   

  	
  Any commitment, as well as Loan transactions
  generally, shall be governed by the laws of the State of New York.

  

  This term sheet is not intended to describe all of the terms and conditions
  of the proposed transaction described herein. It is intended only to be
  indicative of certain terms and conditions around which the loan documents
  will be structured, and not to preclude negotiations within the general scope
  of these terms and conditions.

  

 

8

 

SCHEDULE A

 

1.     A title insurance policy issued by a
national title company reasonably acceptable to Lender showing indefeasible fee
simple title to the Property vested in Borrower, insuring the first priority of
the lien of the mortgage in an amount acceptable to Lender excepting from
coverage thereunder only such matters as are approved by Lender and including
such co-insurance and/or reinsurance as is required by Lender;

 

2.     MAI appraisal with respect to the Property
prepared by a firm approved by Lender;

 

3.     Phase I survey and, if deemed necessary or
appropriate by Lender Phase II surveys of the Property, from a firm approved by
Lender;

 

4.     Seismic Study, if deemed necessary or
appropriate by Lender, of the Property, from a firm approved by Lender;

 

5.     Structural engineering report from a firm
approved by Lender, identifying, among other things, (a) deferred maintenance
for the Property and the cost thereof and (b) a 12 year schedule of anticipated
capital expenditures and the per annum cost thereof;

 

6.     Three year (or less
for Borrower’s actual period of ownership of the property) historical
operating statement for the Property (certified by a certified public
accounting firm acceptable to Lender), trailing 12 month operating statement
for the Property, re-forecasted operating budget for the Property for the year
ending December 31, 2005 and operating and capital budget for the Property for
the year ending December 31, 2006; 

 

7.     Survey of the Property;

 

8.     Certificate of occupancy for the Property
and reasonable evidence of compliance with all applicable zoning, building,
environmental and other laws applicable to the Property.  Zoning letters or the like from applicable governmental
authorities are acceptable for the purposes hereof;

 

9.     A copy of all leases and material contracts
for the Property and appropriate estoppels relating thereto;

 

10.   Evidence that all utility services required
for the Property are available and that the Property is subject to a separate
tax assessment;

 

11.   Opinions of counsel and local counsel to
Borrower and Sponsors in form and substance reasonably satisfactory to Lender
(including, without limitation a substantive non-consolidation opinion);

 

12.   All organizational documents and evidence of
authorization for the transaction of Borrower, Manager and such entities which
control each of the foregoing as may be reasonably required by Lender and in
form and substance reasonably satisfactory to Lender;

 

13.   Agreed upon procedures letter from a “Big
Four” accounting firm, acceptable to Lender; and,

 

14.   Other information reasonably required by
Lender.

 

9

 

SCHEDULE B

 

	
  Property

  	
   

  	
  Location

  	
   

  	
  Square
  Footage

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Campus at Dulles

  	
   

  	
  Herndon, Virginia

  	
   

  	
  349,839

  
	
  Corporate Oaks

  	
   

  	
  Herndon, Virginia

  	
   

  	
  60,767

  
	
  Corporate Pointe IV

  	
   

  	
  Chantilly, Virginia

  	
   

  	
  80,118

  
	
  Lakeside I & II

  	
   

  	
  Chantilly, Virnigia

  	
   

  	
  173,218

  
	
  Pender Business Park

  	
   

  	
  Fairfax, Virginia

  	
   

  	
  170,940

  
	
  Willowwood Phase II

  	
   

  	
  Washington, D.C

  	
   

  	
  264,140

  

 

10EXHIBIT 10.19

 

November 19, 2004

 

Mr. John Hulburt, CPA

180 Webster Woods Lane

North Andover, MA  01845

 

Dear John:

 

The purpose of this letter is to memorialize the terms
of your eligibility for severance with Datawatch Corporation (“the Company”) in
the event that you are involuntarily terminated by the Company without Cause
(as defined in Paragraph 3) or if you terminate your employment for Good Reason
(as defined in Paragraph 2).

 

1.             As an at-will employee, either you or the Company may
terminate your employment at any time for any or no reason with or without
notice.  Neither this letter nor its
terms constitute a contract for continued employment or a contract for a
specific term of employment.  Instead,
this letter sets forth the terms of our agreement with respect to your
eligibility for severance.

 

2.             In the event that you voluntarily terminate your
employment with the Company at your own election and without Good Reason, you
shall be entitled to no severance.  For
the purpose of this Agreement, “Good Reason” is defined as a material
diminution in the nature or scope of your responsibilities, duties or
authority; provided, however, that the transfer of certain job
responsibilities, or the assignment to others of your duties and
responsibilities while you are out of work due to a disability or on a leave of
absence for any reason, shall not constitute a material diminution in the
nature or scope of the your responsibilities, duties or authority as set forth
in this Section.

 

3.             In
the event that the Company terminates your employment for “Cause,” you shall be
entitled to no severance.  Termination by
the Company shall constitute a termination for Cause under this
Paragraph 3 if such termination is for one or more of the following
reasons:

 

(a)           the
willful and continuing failure or refusal by you to render services to the
Company in accordance with your obligations to the Company;

 

(b)           gross
negligence, dishonesty, breach of fiduciary duty or breach of the terms of any
other agreements executed in connection herewith;

 

 

(c)           the
commission by you of an act of fraud, embezzlement or substantial disregard of
the rules or policies of the Company;

 

(d)           acts
which, in the judgment of the Board of Directors, would tend to generate
significant adverse publicity toward the Company;

 

(e)           the
commission, or plea of nolo contendere, by you of a felony; or

 

(f)            a
breach by you of the terms of the Proprietary Information and Inventions
Agreement executed by you.

 

4.             In
the event that the Company terminates your employment for any reason other than
those stated in Paragraph 3 above or if you terminate your employment for Good
Reason as defined in Paragraph 2, and you sign a comprehensive release
in the form, and of a scope, acceptable to the Company (the “Release”), the Company
will pay you severance payments in equal monthly installments at your then
monthly base salary for six months following your termination (the “Severance
Period”).  Such payments shall be made in
accordance with the Company’s customary payroll practices and shall be subject
to all applicable federal and state withholding, payroll and other taxes.

 

If you breach your post-employment obligations under
your Proprietary Information Inventions and Non-Competition Agreement, the
Company may immediately cease payment of all severance and/or benefits
described in this Agreement.  This
cessation of severance and/or benefits shall be in addition to, and not as an
alternative to, any other remedies in law or in equity available to the
Company, including the right to seek specific performance or an injunction.

 

5.             The
terms of this agreement constitute the entire understanding relating to your
employment and supersede and cancel all agreements, written or oral, made prior
to the date hereof between you and the Company relating to your employment with
the Company; provided, however, that nothing herein shall be deemed to limit or
terminate the provisions of Proprietary Information and Inventions Agreement
executed by you or in any manner alter the terms of any stock option entered
into between you and the Company.

 

6.             This
Agreement, the employment relationship contemplated herein and any claim
arising from such relationship, whether or not arising under this Agreement,
shall be governed by and construed in accordance with the internal laws of
Massachusetts, without giving effect to the principles of choice of law or
conflicts of law of Massachusetts and this Agreement shall be deemed to be
performable in Massachusetts.  Any claims
or legal actions by one party against the other arising out of the relationship
between the parties contemplated herein (whether or not arising under this
Agreement) shall be commenced or maintained in any state or federal court
located in Massachusetts, and Executive hereby submits to the jurisdiction and
venue of any such court.

 

 

7.             No
waiver by either party of any breach by the other or any provision hereof shall
be deemed to be a waiver of any later or other breach thereof or as a waiver of
any other provision of this Agreement. 
This Agreement and its terms may not be waived, changed, discharged or
terminated orally or by any course of dealing between the parties, but only by
an instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.  No
modification or waiver by the Company shall be effective without the consent of
the Board of Directors then in office at the time of such modification or
waiver.

 

8.             You
acknowledge that the services to be rendered by you to the Company are unique
and personal in nature.  Accordingly, you
may not assign any of your rights or delegate any of your duties or obligations
under this Agreement.  The rights and
obligations of the Company under this Agreement may be assigned by the Company
and shall inure to the benefit of, and shall be binding upon, the successors
and assigns of the Company.

 

If this letter correctly states the understanding we
have reached, please indicate your acceptance by countersigning the enclosed
copy and returning it to me.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  DATAWATCH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
      /s/ Robert W. Hagger

  	
   

  
	
   

  	
  Robert Hagger

  
	
   

  	
  President and Chief Executive Officer

  

 

YOU REPRESENT THAT YOU HAVE READ THE FOREGOING AGREEMENT, THAT YOU
FULLY UNDERSTAND THE TERMS AND CONDITIONS OF SUCH AGREEMENT AND THAT YOU ARE
VOLUNTARILY EXECUTING THE SAME.

 

ACCEPTED:

 

	
    /s/ John J. Hulburt

  	
  11/19/2004 

  	
   

  
	
   John Hulburt

  	
  Date

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