Document:

ex10-1.htm

 

    

LOAN AGREEMENT

 

dated as of

 

September 30, 2010

 

among

 

DOUGLAS EMMETT 2010, LLC,

 

a Delaware limited liability company

 

as Borrower,

 

the LENDERS Party Hereto

 

and

 

EUROHYPO AG, NEW YORK BRANCH,

 

as Administrative Agent

 

───────────────────

 

$400,000,000

 

───────────────────

 

EUROHYPO AG, NEW YORK BRANCH,

 

as Lead Arranger and Sole Bookrunner

 

	  	
 

	  
	  

 

 

LOAN AGREEMENT

 

LOAN AGREEMENT dated as of September 30, 2010, by Douglas Emmett 2010, LLC, a Delaware limited liability company (the “Borrower”); each of the lenders (including Eurohypo (as hereinafter defined) in its capacity as a lender) that is a signatory hereto identified under the caption “LENDERS” on the signature pages hereto and each lender that becomes a “Lender” after the date hereof pursuant to Section 14.07(b) (individually, a “Lender” and, collectively, the “Lenders”); and EUROHYPO AG, NEW YORK BRANCH, as agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

 

RECITALS:

 

A.           Borrower is the owner of (i) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Village on Canon, in the City of Beverly Hills, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-1 attached hereto (the “Village on Canon Project”); (ii) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Camden Medical Arts, in the City of Beverly Hills, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-2 attached hereto (the “Camden Medical Arts Project”); (iii) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Saltair/San Vicente, in the City of Los Angeles, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-3 attached hereto (the “Saltair/San Vicente Project”); (iv) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as One Westwood, in the City of Los Angeles, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-4 attached hereto (the “One Westwood Project”); (v) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as 9601 Wilshire, in the City of Beverly Hills, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-5 attached hereto (the “9601 Wilshire Project”), (vi) a fee simple interest in and to that certain office building listed in Schedule 1A attached hereto known as Santa Monica Square, in the City of Santa Monica, County of Los Angeles, State of California, on certain land more fully described in Schedule 1B-6 attached hereto (the “Santa Monica Square Project”); and (vii) a fee simple interest in and to those certain office buildings listed in Schedule 1A attached hereto known as Bishop Square, in the City and County of Honolulu, Island of Oahu, State of Hawaii, on certain land more fully described in Schedule 1B-7 attached hereto (the “Bishop Square Project”) (each of the Village on Canon Project, the Camden Medical Arts Project, the Saltair/San Vicente Project, the One Westwood Project, the 9601 Wilshire Project, the Santa Monica Square Project and the Bishop Square Project and the Borrower’s rights to the land on which each such office building project is located, together with any air rights and other rights, privileges, easements, hereditaments and appurtenances thereunto relating or appertaining thereto, all Improvements (as hereinafter defined) thereon, together with all fixtures and equipment required for the operation thereof, all personal property related to the foregoing and the rights of the Borrower with respect to all other items described in the granting clause of the Deed of Trust relating to such office building and interest in land is referred to herein individually as a “Project” and collectively as the “Projects”).

 

B.           The Projects consist of eight (8) improved office buildings containing approximately 1,761,099 rentable square feet (each such Project and all other improvements constructed on each Project being, individually and collectively, the “Improvements”).

 

C.           The Borrower has requested and applied to the Lenders for a loan in the aggregate principal amount of $400,000,000 in connection with the Projects for the purposes provided herein.

 

D.           The Lenders are willing to make such loans on and subject to the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I.

 

 

DEFINITIONS AND ACCOUNTING MATTERS

 

1.01 Certain Defined Terms

 

.  As used herein, the following terms shall have the following meanings:

 

 “9601 Wilshire Project” shall have the meaning assigned to such term in Recital A.

 

“Additional Costs” shall have the meaning assigned to such term in Section 5.01.

 

“Adjusted LIBO Rate” shall mean, for any Eurodollar Loan for any Interest Period therefor, a rate per annum (expressed as a percentage and rounded upwards, if necessary, to the nearest 1/10000 of 1%) determined by the Administrative Agent to be equal to a fraction, the numerator of which is equal to the LIBO Rate for such Eurodollar Loan for such Interest Period and the denominator of which is equal to (x) 1 minus (y) the Reserve Requirement (if any) for such Eurodollar Loan for such Interest Period.

 

“Adjusted Net Operating Income” shall mean Net Operating Income, exclusive of any income from tenants subject to any proceeding or case under the Bankruptcy Code (except to the extent such income has been actually received) and excluding income from tenants under Leases that are not Approved Leases.

 

“Administrative Agent” shall have the meaning assigned to such term in the preamble.

 

“Administrative Agent’s Account” shall mean the account maintained by the Administrative Agent and of which the Borrower shall have been notified, with such bank as may from time to time be specified by the Administrative Agent.

 

“Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by the Administrative Agent.

 

“Advance Date” shall have the meaning assigned to such term in Section 4.06.

 

“Affiliate” shall mean, with respect to any Person, another Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person and, if such Person is an individual, any member of the immediate family (including parents, spouse, children and siblings) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust.  As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person that owns directly or indirectly securities having ten percent (10%) or more of the voting power for the election of directors or other governing body of a publicly traded corporation or ten percent (10%) or more of the partnership, membership or other ownership interests of any other publicly traded Person (other than as a limited partner of such other Person) shall be deemed to control such corporation or other Person.

 

“Aggregate Notional Amount” shall have the meaning assigned to such term in Section 8.19(a).

 

“Agreement” shall mean this Loan Agreement, as the same may from time to time hereafter be Modified and in effect from time to time.

 

“All-in-Rate” shall mean, for any period, an annual interest rate equal to the weighted average of the following rates:  (i) as to any portions of the Outstanding Principal Amount which are covered by one or more Hedge Agreements (including any Excess Hedge Agreement for which a Hedge Agreement Pledge has been executed and delivered to the Administrative Agent and remains in effect) which are in effect during such period (collectively, the “Hedged Principal Amount”), an imputed rate equal to the sum of all interest payments due with respect to such period on the Hedged Principal Amount, plus all payments due by the Borrower or Other Swap Pledgor with respect to such period under all Hedge Agreements maintained pursuant to Section 8.19 (including any Excess Hedge Agreement for which a Hedge Agreement Pledge has been executed and delivered to the Administrative Agent and remains in effect), minus all payments due to the Borrower or Other Swap Pledgor with respect to such period under all Hedge Agreements maintained pursuant to Section 8.19 (including any Excess Hedge Agreement for which a Hedge Agreement Pledge has been executed and delivered to the Administrative Agent and remains in effect) (with all such interest and other payments to be annualized), divided by the Hedged Principal Amount and (ii) as to any portion of the Outstanding Principal Amount which is not covered by any Hedge Agreement (or Excess Hedge Agreement for which a Hedge Agreement Pledge has been executed and delivered to the Administrative Agent and remains in effect) during such period, the weighted average annual interest rate actually payable hereunder on such Loans during such period.  For purposes of this calculation, the notional amount provided for in any Hedge Agreement (or Excess Hedge Agreement) in effect during any period shall be deemed to “cover” a portion of the Outstanding Principal Amount outstanding during such period in proportion to the amount which the notional amount provided for in such Hedge Agreement (or Excess Hedge Agreement) bears to the entire Outstanding Principal Amount outstanding during such period.  If this Agreement requires the calculation of  the “All-in-Rate” based upon any monthly or quarterly periods, and the period during which any Hedge Agreement (or Excess Hedge Agreement) covering any portion of the Outstanding Principal Amount is in effect is less than the entirety of the relevant month or quarter, the calculation required under this definition shall be made separately with respect to the different periods during such month or quarter during which such portion of the Outstanding Principal Amount is covered by such Hedge Agreement (or Excess Hedge Agreement), and such calculations shall be aggregated, on a weighted average basis, for the relevant period of one month or quarter.

 

“Allocated Loan Amount” shall mean, solely for the purposes of performing certain calculations hereunder: for any Project, the portion of the Loans allocated to such Project in Schedule 1.01(1) attached hereto, which Allocated Loan Amounts may be adjusted from time to time, in the Administrative Agent’s reasonable discretion, based on and in proportion to the Appraised Values for each of the Projects set forth in new Appraisals obtained in accordance with this Agreement.  The Allocated Loan Amount of a Project suffering a Casualty Event or a Taking shall be reduced by the amount of any Net Proceeds attributable to such Project applied by the Administrative Agent in prepayment of the Outstanding Principal Amount pursuant to Section 2.07.

 

“Allocated Loan Percentage” means at any time with respect to any Project a percentage determined by multiplying one hundred percent (100%) by a fraction, the numerator of which is the Allocated Loan Amount for such Project and the denominator of which is the Allocated Loan Amounts for all Projects which, at such time, are collateral for the Loans.  The Allocated Loan Percentage for all Projects which, at such time, are collateral for the Loans shall always equal one hundred percent (100%).

 

“Annual Budget” shall have the meaning assigned to such term in Section 8.16(a).

 

“Anti-Terrorism Order” shall mean Executive Order No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the United States of America (Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism).

 

“Applicable Law” shall mean any statute, law (including Environmental Laws), regulation, ordinance, rule, judgment, rule of common law, order, decree, Government Approval, approval, concession, grant, franchise, license, agreement, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, whether now or hereinafter in effect and, in each case, as amended (including any thereof pertaining to land use, zoning and building ordinances and codes).

 

“Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the “Lending Office” of such Lender (or of an Affiliate of such Lender) designated for such Type of Loan on Schedule 1.01(2) or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office by which its Loans of such Type are to be made and maintained.

 

“Applicable Margin” shall mean (a) for Base Rate Loans, 235 basis points per annum; and (b) for Eurodollar Loans, 200 basis points per annum.

 

“Appraisal” shall mean an appraisal of each Project prepared by an Appraiser, each such Appraisal must comply in all respects with the standards for real estate appraisal established pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended, and otherwise in form and substance satisfactory to the Administrative Agent.

 

“Appraised Value” shall mean, for any Project, the appraised “as is” value indicated for such Project, as determined by the most recent Appraisal obtained for such Project.  The initial Appraised Values for the Projects are set forth in Schedule 1.01(3) attached hereto.

 

“Appraiser” shall mean, with respect to the Bishop Square Project, Cushman & Wakefield Western, Inc., and with respect to the other Projects, Real Estate Research Corporation, or any other “state certified general appraiser” as such term is defined and construed under applicable regulations and guidelines issued pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended, which appraiser must have been licensed and certified by the applicable Governmental Authority having jurisdiction in the State of California or the State of Hawaii, as applicable, and which appraiser shall have been selected by the Administrative Agent.

 

“Approved Annual Budget” shall have the meaning assigned to such term in Section 8.16(a).

 

“Approved Capital Expenditures” shall have the meaning assigned to such term in Section 11.01(b).

 

“Approved Fund” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business (and which is not engaged and which does not have an Affiliate (which term for purposes of this definition shall be defined without reference to the proviso set forth in the definition thereof) that is engaged in the business of acquiring direct or indirect ownership interests in commercial real estate projects) and that is administered or managed by (a) a Lender or an entity that manages a Lender, or (b) a Person that meets the requirements in clauses (i), (ii), (iii) or (iv) of the definition of “Eligible Assignee.”

 

“Approved Lease” shall mean (a) each existing Lease as of the Closing Date as set forth in the Leasing Affidavit and (b) each Lease entered into after the Closing Date in accordance with the terms and conditions contained in Section 9.09 as such leases and related documents shall be Modified as permitted pursuant to the terms of this Agreement.

 

“Approved Leasing Expenditures” shall have the meaning assigned to such term in Section 11.01(b).

 

“Arranger” shall mean EUROHYPO AG, NEW YORK BRANCH as lead arranger and sole bookrunner of the lending syndicate.

 

“Assignment and Assumption” shall mean an Assignment and Assumption, duly executed by the parties thereto, in substantially the form of Exhibit A attached hereto and, if required pursuant to Section 14.07(b) consented to by the Borrower and the Administrative Agent.

 

“Authorized Officer” shall mean, with respect to the Borrower, any Borrower Party, or the Borrower’s Member, as applicable, any of the individual officers serving as the Chief Executive Officer, President, Vice President, Chief Financial Officer, Secretary, Treasurer, Assistant Treasurer or Chief Accounting Officer of Borrower’s Manager, in its respective capacity as the manager, general partner or manager of the general partner or manager of such Person, and whose name appears on a certificate of incumbency executed by the Secretary of Borrower’s Manager, and delivered concurrently with the execution of this Agreement, as such certificate of incumbency may be amended from time to time to identify the names of the individuals then holding such offices and certified by the Secretary of Borrower’s Manager.

 

“Bankruptcy Code” shall mean the Federal Bankruptcy Code of 1978, as amended from time to time.

 

“Bankruptcy Party” shall mean any of the Borrower Parties while such Person qualifies as a “Borrower Party” under the definition of such term, the REIT, its Operating Partnership, and any REIT Subsidiary that holds direct or indirect interests in and controls the Borrower.

 

“Base Rate” shall mean, for any day, a rate per annum equal to the greater of (i) the Federal Funds Rate for such day, or (ii) the LIBO Rate for a Eurodollar Loan that would be advanced on such day having an Interest Period of thirty (30) days; provided, however, if the Base Rate is being determined as a result of circumstances described in Section 5.02(a), the Base Rate shall be determined based on the Federal Funds Rate set forth in clause (i) hereof.  Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate.

 

“Base Rate Loans” shall mean the portions of the Outstanding Principal Amount that bear interest at rates based upon the Base Rate.

 

“Basel II” means that certain revised at-risk capital framework published by the Basel Committee on Banking Supervision in its paper entitled “International Convergence of Capital Measurement and Capital Standards: a Comprehensive Framework” in June, 2006, as amended, modified and in effect from time to time.

 

“Bishop Square Project” shall have the meaning assigned to such term in Recital A.

 

“Borrower” shall mean the Borrower named in the preamble to this Agreement until such time (if any) as a Qualified Successor Entity shall acquire the Projects owned by the Borrower and assume the obligations of the Borrower under the Loan Documents and the originally named Borrower shall be released from its obligations under the Loan Documents, in accordance with Section 9.03(a)(iii), at which time the term “Borrower” shall include such Qualified Successor Entity.

 

“Borrower Party” shall mean the Borrower and its general partner or manager, but shall not include any other REIT Subsidiary or any other Person owning a direct or indirect Equity Interest in the Borrower (unless it is the general partner or manager of the Borrower) and shall not include the Operating Partnership or the REIT (regardless of whether the Operating Partnership or the REIT is the general partner or manager of the Borrower). Upon the acquisition of any of the Projects, but not of direct or indirect Equity Interests in any Borrower, by a Qualified Successor Entity, “Borrower Party” shall also mean and include such Qualified Successor Entity and the general partner or manager thereof (except that if the general partner or manager of such Qualified Successor Entity is the REIT or the Operating Partnership, the term “Borrower Party” shall not include the REIT or the Operating Partnership ) and, unless the Borrower, the Borrower’s Manager or any other Person constitutes the general partner or manager of the Qualified Successor Entity, shall no longer include the applicable original Borrower, the applicable original Borrower’s Manager or such other applicable Person (and in any event shall not include any such Person that is not the general partner or manager of the Qualified Successor Entity).

 

“Borrower’s Account” shall mean an account maintained by the Borrower with such bank as may from time to time be specified by or approved by the Administrative Agent to accept the deposit of funds in accordance with this Agreement.

 

“Borrower’s Manager” shall mean Douglas Emmett Management, Inc., a Delaware corporation, or any successor thereto permitted under this Agreement.  It is understood that, notwithstanding anything to the contrary contained in this Agreement, any covenants, representations or warranties that are required to be observed under this Agreement by the “Borrower’s Manager” shall not be required to be observed by any manager of the Borrower consisting of the REIT or the Operating Partnership.

 

“Borrower’s Member” shall mean the Operating Partnership, as sole member under the Organizational Documents of the Borrower, and its successors thereunder as sole member of the Borrower as permitted under the Loan Documents.  It is understood that, notwithstanding anything to the contrary contained in this Agreement, any covenants, representations or warranties that are required to be observed under this Agreement by the “Borrower’s Member” shall not be required to be observed by any member or partner of the Borrower consisting of the REIT, the Operating Partnership or any REIT Subsidiary that is not the general partner or manager of the Borrower including, without limitation, the Borrower’s Member as of the date hereof, if it is not the general partner or manager of the Borrower.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City (or, with respect only to payments to be made by the Borrower, in California) are authorized or required by law to remain closed; provided that, when used in connection with a borrowing, or Continuation of, a Conversion into, a payment or prepayment of principal of or interest on, or an Interest Period for, a Eurodollar Loan, or a notice by the Borrower with respect to any such borrowing, Continuation, Conversion, payment, prepayment or Interest Period, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“Business Interruption Insurance” shall mean rental and/or business income insurance required pursuant to Section 8.05(a)(iii) or otherwise maintained in accordance with this Agreement.

 

“Camden Medical Arts Project” shall have the meaning assigned to such term in Recital A.

 

“Capital Lease Obligations” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) property to the extent such obligations would generally be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“Cash Trap Account Security Agreement” shall mean a Cash Trap Account Security Agreement, among the Borrower, the Administrative Agent (on behalf of the Lenders) and the Depository Bank, substantially in the form of Exhibit C attached hereto, and which is established and maintained in accordance with Section 11.01.

 

“Cash Trap Account” shall have the meaning assigned to such term in the Cash Trap Account Security Agreement.

 

“Cash Trap Release Event” shall mean, at any time after the occurrence of a Cash Trap Trigger Event, that (a) the Debt Yield shall be at or above eight and one-quarter percent (8.25%) for a period of at least two (2) consecutive calendar quarters and (b) the Debt Service Coverage Ratio shall be at or above 1.20:1.00 for a period of at least two (2) consecutive calendar quarters.

 

“Cash Trap Trigger Event” shall mean, commencing as of the end of the first full calendar quarter following the Closing Date and continuing at any time prior to the Maturity Date, (a) that the Debt Yield measured as of the end of any calendar quarter is less than eight percent (8.0%) or (ii) that the Debt Service Coverage Ratio as of the end of any calendar quarter is less than 1.15:1.00.

 

“Cash Trap Trigger Period” shall mean the period of time after a Cash Trap Trigger Event until the occurrence of a Cash Trap Release Event.

 

“Casualty Event” shall mean any loss of or damage to, any portion of any Project by fire or other casualty.

 

“Change of Control” shall mean, (a) with respect to the REIT, any event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding (i) any person or group consisting of Named Principals or Related Parties, (ii) any “person” or “group” which is controlled by one or more Named Principals or Related Parties, (iii) the Depository Trust Company or its nominees, (iv) any “dealer” (as defined in the Securities Act of 1933) who acquires securities of the REIT with a view to, or in connection with, (A) the distribution of such securities, (B) the resale of such securities in accordance with the provisions of Rule 144A(d) promulgated under the Securities Act of 1933 or (C) the resale of such securities in accordance with the provisions of Rule 904 (promulgated under the Securities Act) applicable to “Distributors” as defined in Rule 902 (promulgated under the Securities Act), and (v) any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of forty percent (40%) or more of the equity securities of the REIT entitled to vote for members of the board of directors or equivalent governing body of the REIT on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), or (b) the Operating Partnership ceases to be controlled directly or indirectly by the REIT or the REIT’s interest in the Operating Partnership ceases to be its principal asset.

 

“Closing Date” shall mean the date of this Agreement, which date shall be the initial funding date of the Loans pursuant to Section 2.02.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment” shall mean, as to each Lender, the obligation of such Lender to make a Loan in a principal amount up to but not exceeding the amount set opposite the name of such Lender on Schedule 1.01(4) attached hereto under the caption “Commitment” or, in the case of a Person that becomes a Lender pursuant to an assignment permitted under Section 14.07(b), as specified in the respective Assignment and Assumption pursuant to which such assignment is effected, as such percentage may be modified by any Assignment and Assumption.

 

“Condemnation Awards” shall mean all compensation, awards, damages, rights of action and proceeds awarded to the Borrower by reason of a Taking.

 

“Consumer Price Index” shall mean the “Consumer Price Index -- For all Items” for the Los Angeles-Riverside-Orange County Consolidated Metropolitan Statistical Area, published monthly in the “Monthly Labor Review” of the Bureau of Labor Statistics of the United States Department of Labor.  If at any time the Consumer Price Index is no longer available, then the term “Consumer Price Index” shall be an index selected by the Administrative Agent which, in the opinion of the Administrative Agent, is comparable to the Consumer Price Index.

 

“Continue”, “Continuation” and “Continued” shall refer to the continuation pursuant to Section 2.05 of (a) a Eurodollar Loan from one Interest Period to the next Interest Period or (b) Base Rate Loan at the Base Rate.

 

“Controlled Account” shall mean one or more deposit accounts established by the Administrative Agent (for the benefit of the Lenders) at a depository bank or financial institution that is acceptable to the Administrative Agent, and which is established and maintained in accordance with Section 14.28 hereof.

 

“Controlled Account Agreement” shall have the meaning assigned to such term in Section 14.28(a)(i).

 

“Controlled Account Collateral” shall have the meaning assigned to such term in Section 14.28(c)(i).

 

“Convert”, “Conversion” and “Converted” shall refer to a conversion pursuant to Section 2.05 of one Type of Loan into another Type of Loan, which may be accompanied by the transfer by a Lender (at its sole discretion) of a Loan from one Applicable Lending Office to another.

 

“Debt Service Coverage Ratio” shall mean, with respect to any period being measured, the ratio of (a) Adjusted Net Operating Income for such period to (b) DSCR Debt Service for such period.  Except for purposes of calculating Debt Service Coverage Ratio pursuant to Section 10.03(c) as set forth below, Adjusted Net Operating Income and DSCR Debt Service shall be annualized and Adjusted Net Operating Income calculated on the Net Operating Income for the trailing three (3) month period preceding the date of calculation, adjusted to reflect the results of operations for an annualized basis.  The Debt Service Coverage Ratio shall be as determined by the Administrative Agent, based upon the most recent reports submitted by Borrower pursuant to Section 8.01 (or, if the most recent report has not been submitted pursuant to such section, based on such other information as the Administrative Agent shall determine in its reasonable discretion), which determination shall be conclusive in the absence of manifest error.  Such calculations shall be adjusted, for any periods following a release of a Project in accordance with Section 2.09, to exclude from such calculation the Adjusted Net Operating Income attributable to the Project which was released and the DSCR Debt Service attributable to the portion of the Outstanding Principal Amount paid in connection with the release of such Project.  For purposes of calculating Debt Service Coverage Ratio pursuant to (i) Section 8.01(c) the Borrower shall use annualized Adjusted Net Operating Income as stated in the quarterly reports prepared and submitted by Borrower pursuant to Section 8.01(c) and (ii) Section 8.01(e) (which calculation shall be for the trailing three (3) month period), the Borrower shall use annualized Adjusted Net Operating Income as stated in the monthly reports prepared and submitted by Borrower pursuant to Section 8.01(e).  For purposes of calculating Debt Service Coverage Ratio pursuant to Section 10.03(c), Adjusted Net Operating Income and DSCR Debt Service shall be projected for a period of one year in accordance with Section 10.03(c)(iii).

 

“Debt Yield” shall mean the ratio expressed as a percentage of (a) Adjusted Net Operating Income for the applicable period to (b) the Outstanding Principal Amount as of the date of determination.  Except for purposes of calculating Debt Yield pursuant to Section 10.03(c) as set forth below, Adjusted Net Operating Income shall be annualized and calculated on the Net Operating Income for the trailing three (3) month period preceding the date of calculation, adjusted to reflect the results of operations for an annualized basis.  The Debt Yield shall be as determined by the Administrative Agent, and based upon the most recent reports submitted by Borrower pursuant to Section 8.01 (or, if the most recent report has not been submitted pursuant to such section, based on such other information as the Administrative Agent shall determine in its reasonable discretion), which determination shall be conclusive in the absence of manifest error.  Such calculations shall be adjusted, for any periods following a release of a Project in accordance with Section 2.09, to exclude from such calculation the Adjusted Net Operating Income attributable to the Project which was released and the portion of the Outstanding Principal Amount paid in connection with the release of such Project.  For purposes of calculating Debt Yield pursuant to (i) Section 8.01(c) the Borrower shall use annualized Adjusted Net Operating Income as stated in the quarterly reports prepared and submitted by Borrower pursuant to Section 8.01(c) and (ii) Section 8.01(e) (which calculation shall be for the trailing three (3) month period), the Borrower shall use annualized Adjusted Net Operating Income as stated in the monthly reports prepared and submitted by Borrower pursuant to Section 8.01(e). For purposes of calculating Debt Yield pursuant to Section 10.03(c), Adjusted Net Operating Income shall be projected for a period of one year in accordance with Section 10.03(c)(iv).

 

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Deed of Trust” shall mean each Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing or Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, as applicable, and substantially in the form of Exhibit D-1 and Exhibit D-2 attached hereto, to be executed, dated and delivered by the Borrower to the Administrative Agent (on behalf of and for the benefit of the Lenders) on the Closing Date, securing the obligations identified therein, as each such deed of trust may be Modified and in effect from time to time.

 

“Default” shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

 

“Depository Bank” shall mean, at any time, the depository bank which is party to the Cash Trap Account Security Agreement, the Project-Level Account Security Agreement or a Controlled Account Agreement.

 

“Disbursement Request” shall have the meaning assigned to such term in Section 11.01(c)(iii).

 

“Dollars” and “$” shall mean lawful money of the United States of America.

 

“DSCR Debt Service” shall mean, for any period, an amount equal to the payment of interest which would be required under the Notes delivered by the Borrower based on the Outstanding Principal Amounts under such Notes as of the end of such period and the All-in-Rate at such time.  All such calculations shall be subject to the approval of the Administrative Agent.  For purposes of Section 10.03, the calculation of DSCR Debt Service shall be projected for a one year period in accordance with Section 10.03(c)(iii).  For the purpose of Section 2.10, the calculation of DSCR Debt Service shall be projected for a one year period based upon the sum of (i) one-year LIBO Rate as of the date of determination and (ii) the Applicable Margin for Eurodollar Loans, unless the Borrower, or an Other Swap Pledgor, has entered into a Hedge Agreement that is in compliance with Section 8.19 and has been pledged to the Administrative Agent for the benefit of the Lenders pursuant to Section 8.19 for the one-year period following the First Call Date or the one-year period following the Second Call Date, then the All-in-Rate based on such Hedge Agreement shall be used.

 

“Eligible Assignee” means any of (i) a commercial bank organized under the Laws of the United States, or any state thereof, and having (x) total assets in excess of $25,000,000,000 and (y) a combined capital and surplus of at least $1,000,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization of Economic Cooperation and Development (“OECD”), or a political subdivision of any such country, and having (x) total assets in excess of $25,000,000,000 and (y) a combined capital and surplus of at least $1,000,000,000, provided that such bank is acting through a branch or agency located in the United States or in the country in which it is organized or another country which is also a member of OECD; (iii) a life insurance company organized under the Laws of any state of the United States, or organized under the Laws of any country which is a member of OECD and licensed as a life insurer by any state within the United States and having (x) admitted assets of at least $25,000,000,000 and (y) a combined capital and surplus of at least $1,000,000,000; (iv) any Person described in Schedule 1.01(5); or (v) an Approved Fund having (1) total assets of at least $25,000,000,000 and (2) a net worth of at least $1,000,000,000; provided that any such Person meeting the requirements of (i) through (v) (or its holding company) shall also have a long-term senior unsecured indebtedness rating of BBB- or better by S&P (if rated by S&P) and Baa3 or better by Moody’s (if rated by Moody’s) at the time an interest in the Loans is assigned to it.

 

“Environmental Claim” shall mean, with respect to any Person, any written request for information by a Governmental Authority, or any written notice, notification, claim, administrative, regulatory or judicial action, suit, judgment, demand or other written communication by any Person or Governmental Authority alleging or asserting liability with respect to the Borrower or the Projects, whether for damages, contribution, indemnification, cost recovery, compensation, injunctive relief, investigatory, response, Remediation, damages to natural resources, personal injuries, fines or penalties arising out of, based on or resulting from (i) the presence, Use or Release into the environment of any Hazardous Substance originating at or from, or otherwise affecting, the Projects, (ii) any fact, circumstance, condition or occurrence forming the basis of any violation, or alleged violation, of any Environmental Law by the Borrower or otherwise affecting the health, safety or environmental condition of the Projects or (iii) any alleged injury or threat of injury to the environment by the Borrower or otherwise affecting the Projects.

 

“Environmental Indemnity” means that certain Environmental Indemnity Agreement covering the Projects by the Borrower and Guarantor in favor of the Administrative Agent and each of the Lenders substantially in the form of Exhibit E attached hereto, to be executed, dated and delivered to the Administrative Agent (on behalf of the Lenders) on the Closing Date, as the same may be Modified and in effect from time to time.

 

“Environmental Laws” shall mean any and all Applicable Laws relating to the regulation or protection of the environment or the Release or threatened Release of Hazardous Substances into the indoor or outdoor environment, including ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the Use of Hazardous Substances; provided, however, that solely for purposes of the Environmental Indemnity, “Environmental Laws” shall not include the California Environmental Quality Act or statutes, laws, regulations or orders which relate to zoning or otherwise regulating the permissible uses of land or permissible structures to be developed thereon.

 

“Environmental Liens” shall have the meaning assigned thereto in Section 8.11(a).

 

“Environmental Losses” shall mean any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including, but not limited to, strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of Remediation (whether or not performed voluntarily), amounts paid in settlement, foreseeable and unforeseeable consequential damages, litigation costs, reasonable attorneys’ fees and expenses, engineers’ fees, environmental consultants’ fees, and investigation costs (including, but not limited to, costs for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards relating to Hazardous Substances, Environmental Claims, Environmental Liens and violation of Environmental Laws.  Notwithstanding the foregoing, “Environmental Losses” shall not include any loss resulting from diminution in value of any Project suffered by any Lender if the Lenders shall have been paid in full all amounts payable by the Borrower under this Agreement and the other Loan Documents to which the Borrower is a party or shall have otherwise realized all such amounts upon or prior to foreclosure of the collateral for the Loans; provided, that, subject to the provisions of Section 8 of the Environmental Indemnity, nothing contained in this sentence shall limit any claim for a loss (otherwise included within the term “Environmental Losses” as defined herein) suffered by the Administrative Agent, any Lender or any Affiliate as a result of a claim for the diminution in value of the interest of any Person (other than the interest of the Administrative Agent, any Lender or any Affiliate of the Administrative Agent or any Lender) in any Project (including the interest of any ground lessor, tenant, easement holder or other third party, but excluding any Person who has purchased or acquired the Borrower’s interest in such Project by foreclosure or deed-in-lieu of foreclosure or any time thereafter) or the diminution in value of any other property made against the Administrative Agent, any such Lender or any Affiliate by any other Person as a result of the Administrative Agent, any Lender or any Affiliate succeeding to the ownership of any Project through foreclosure or other exercise of remedies (but not as a result of any contractual obligation incurred by the Administrative Agent, any Lender or any Affiliate subsequent to or in connection with its acquisition of the ownership of a Project).

 

“Environmental Reports” shall mean, collectively, each environmental survey and assessment report prepared for the Administrative Agent relating to each Project listed on Schedule 1.01(6) attached hereto; each such environmental report shall include a certification by the engineer (i) that such engineer has obtained and examined the list of prior owners, (ii) has made an on-site physical examination of the applicable Project and (iii) has made a visual observation of the surrounding areas and has found no evidence of the presence of toxic or Hazardous Substances, or of past or present Hazardous Substances activities that have not been remediated in accordance with Environmental Laws or are not subject to an operation and maintenance program.  The Administrative Agent acknowledges receipt of copies of the Environmental Reports.

 

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with any Borrower Party or the Operating Partnership, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 (b), (c), (m) or (o) of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan which is subject to Title IV of ERISA (other than an event for which the thirty (30) day notice period is waived); (b) the failure with respect to any Plan to pay the “minimum required contribution” (as defined in Section 430 of the Internal Revenue Code or Section 303 of ERISA), unless waived; (c) the determination that any Plan is considered an at-risk plan or a plan in endangered to critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; (d) the incurrence by a Borrower Party or the Operating Partnership or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan which is subject to Title IV of ERISA; (e) the receipt by any Borrower Party or the Operating Partnership or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans which are subject to Title IV of ERISA or to appoint a trustee to administer any such Plan; (f) the incurrence by a Borrower Party or the Operating Partnership or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan which is subject to Title IV of ERISA or Multiemployer Plan; (g) the receipt by a Borrower Party or the Operating Partnership or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Borrower Party or the Operating Partnership or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h) any action or omission which would cause the Borrower’s assets to constitute “plan assets” for purposes of ERISA or the Code.

 

“ERISA Funding Rules” means the rules regarding minimum required contributions (including any installment payment thereof) to Plans, as set forth in Section 412 of the Internal Revenue Code and Section 302 of ERISA, with respect to plan years ending prior to the effective date of the Pension Protection Act of 2006, and thereafter, as set forth in Sections 412, 430, 431, 432 and 436 of the Internal Revenue Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Eurodollar Loans” shall mean the portions of the Outstanding Principal Amount that bear interest based on a “LIBO Rate”.

 

“Eurohypo” shall mean Eurohypo AG, New York Branch.

 

“Event of Default” shall have the meaning assigned to such term in Article XII.

 

“Excess Cash” shall mean with respect to any calendar month, the amount by which the sum of Operating Income actually received during such calendar month plus amounts actually paid during such month to or for the account of the Borrower or Other Swap Pledgor by the counterparty under and pursuant to the Hedge Agreement (but only on account of any “regular” payments due thereunder (and not on account of any default or termination thereunder or any obligation to deliver collateral pursuant thereto)) exceeds the sum of (i) Operating Expenses actually paid during such month plus (ii) the sum of interest payments on the Loans and other amounts due and payable under the Loan Documents plus amounts actually paid during such month by the Borrower or Other Swap Pledgor to the counterparty under and pursuant to the Hedge Agreement (but only on account of any “regular” payments due thereunder (and not on account of any default or termination thereunder or any obligation to deliver collateral pursuant thereto)) in each case, to the extent actually paid during such month; provided, however, that for purposes of determining Excess Cash, Operating Expenses shall exclude any amounts due or accrued for Insurance Premiums, Real Estate Taxes, Approved Capital Expenditures or Approved Leasing Expenditures, except for amounts actually paid in cash during the relevant month for Insurance Premiums, Real Estate Taxes and, if approved in accordance with the provisions of Article XI, Approved Capital Expenditures or Approved Leasing Expenditures (and the Borrower may utilize its Operating Income in such month to pay for such Insurance Premiums, Real Estate Taxes and, if approved in accordance with the provisions of Article XI, Approved Capital Expenditures or Approved Leasing Expenditures).  For the avoidance of doubt, it is understood that the calculation of Excess Cash for any month shall be based upon the cash method of accounting notwithstanding references to GAAP or the imputation of any income or expense item that is not actually received or paid in such month in the definitions of “Operating Income” and “Operating Expenses.”  Notwithstanding the provisions set forth in the definition of “Operating Expenses” relating to the treatment of reserves specifically required under this Agreement and amounts paid from such reserves for purposes of that definition, for purposes of the calculation of Excess Cash, the deposit of sums into any such specifically-required reserve (but not the expenditure and release of sums from any such reserve) shall be treated as an expense.

 

“Excess Hedge Agreement” shall have the meaning assigned to such term in Section 8.19(a).

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent and any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 5.07), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 5.06(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 5.06(a).

 

“Existing Hedge Agreement” shall have the meaning assigned to such term in Section 8.19(a).

 

“Extraordinary Capital or Leasing Expenditures” shall have the meaning assigned to such term in Section 11.01(b).

 

“Federal Funds Rate” shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/1000 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or if such day is not a Business Day, for the immediately preceding Business Day) on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/1000 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” means that certain letter agreement, dated as of the date of this Agreement, between the Borrower and the Administrative Agent with respect to certain fees payable by the Borrower in connection with the Commitments, as the same may be Modified from time to time.

 

“First Call Date” shall have the meaning assigned to such term in Section 2.10.

 

“Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United States of America, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“GAAP” shall mean generally accepted accounting principles applied on a basis consistent with those that, in accordance with Section 1.02(a) and, except as otherwise provided in this Agreement, are to be used in making the calculations for purposes of determining compliance with this Agreement.

 

“General Assignment” shall mean that certain Assignment of Contracts, Government Approvals and Other Project Documents substantially in the form of Exhibit F attached hereto, to be executed, dated and delivered by the Borrower to the Administrative Agent (on behalf of the Lenders) on the Closing Date, as the same may be Modified and in effect from time to time.

 

“Government Approval” shall mean any action, authorization, consent, approval, license, ruling, permit, tariff, rate, certification, exemption, filing or registration by or with any Governmental Authority, including all licenses, permits, allocations, authorizations, approvals and certificates obtained by or in the name of, or assigned to, the Borrower and used in connection with the ownership, construction, operation, use or occupancy of the Projects, including building permits, certificates of occupancy, zoning and planning approvals, business licenses, licenses to conduct business, and all such other permits, licenses and rights.

 

“Governmental Authority” shall mean any governmental department, commission, board, bureau, agency, regulatory authority, instrumentality, judicial or administrative body, federal, state or local, foreign or domestic, having jurisdiction over the matter or matters in question.

 

“Ground Lease” shall mean that certain Ground Lease dated May 8, 1984, by and between Borrower (as “Ground Lessee”), as the successor in interest to Douglas Emmett Realty Fund 1997, a California limited partnership (“DERF 1997”), the successor in interest to British & Continental Development Corporation and Borrower (as “Ground Lessor”), as the successor in interest to DERF 1997, the successor in interest to Martha L. Richman, as Trustee of the M.L. Richman Survivor’s Trust, Martha L. Richman, as Trustee of the L.G. Richman GST Non-Exempt Marital Trust, Judy Richman, as Trustee of the Judy L. Richman Trust; Mark Richman, as Trustee of the Mark J. Richman Trust; Mark Richman, as Trustee of the Aliza L. Richman Trust; Mark Richman, as Trustee of the Ilana N. Richman Trust; and Mark Richman, as Trustee of the Michael Richman Trust, collectively, as successor in interest to Lester G, Richman and Francis S. Richman, as amended by First Amendment to Ground Lease, dated August 20, 1984, Second Amendment to Ground Lease, dated October 18, 1985; Letter Agreement dated May 24, 1989; Assignment of Right of First Refusal dated June 14, 1989; and Settlement Agreement dated December 8, 1999.

 

“Guarantee” shall mean a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business.  The terms “Guarantee” and “Guaranteed” used as a verb shall have a correlative meaning.

 

“Guarantor” shall mean Douglas Emmett Properties, LP, a Delaware limited partnership.

 

“Guarantor Documents” shall mean the Limited Indemnity and Guarantee and, to the extent the Guarantor is obligated thereunder, the Environmental Indemnity.

 

“Hazardous Substance” shall mean, collectively, (a) any petroleum or petroleum products, flammable materials, explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, Mold, and transformers or other equipment that contain polychlorinated biphenyls (“PCB’s”), (b) any chemicals or other materials or substances that are now or hereafter become defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar import under any Environmental Law and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Law.

 

“Hedge Agreement” shall mean, the Existing Hedge Agreement, and any Swap Agreement or Swap Agreements between the Borrower or Other Swap Pledgor and one or more financial institutions providing for the transfer or mitigation of interest risks with respect to the Loans, either generally or under specific contingencies, as the same may be Modified and in effect from time to time in accordance with Section 8.19.

 

“Hedge Agreement Pledge” shall mean that certain Assignment, Pledge and Security Agreement substantially in the form of Exhibit G-1 or G-2, as applicable, attached hereto, to be executed, dated and delivered by the Borrower or Other Swap Pledgor to the Administrative Agent (on behalf of the Lenders) in accordance with Section 8.19 and at any other time the Borrower elects or is required to enter into, or cause to be delivered, a Hedge Agreement, covering the Borrower’s or Other Swap Pledgor’s right, title and interest in and to any such Hedge Agreement, as the same may be Modified and in effect from time to time.

 

“Hedging Termination Date” shall mean the date which is six months prior to the fifth (5th) anniversary of the Closing Date.

 

“Improvements” shall have the meaning assigned to such term in the Recitals.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others or performance of obligations, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations under or in respect of Swap Agreements and (k) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Parties” shall mean the Administrative Agent, the Arranger, the Affiliates of the Administrative Agent, the Arranger, and each Lender and each of the foregoing parties’ respective directors, officers, employees, attorneys, agents, successors and assigns.

 

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

 

“Information” has the meaning assigned to such term in Section 14.24.

 

“Insurance Premiums” shall have the meaning assigned to such term in Section 8.05(b).

 

“Insurance Proceeds” shall mean all insurance proceeds, damages, claims and rights of action and the right thereto under any insurance policies relating to the Projects.

 

“Insurance Threshold Amount” shall have the meaning assigned to such term in Section 10.01(b).

 

“Interest Period” shall mean, at all times following the Stub Interest Period, with respect to any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or Converted from a Base Rate Loan or (in the event of a Continuation) the last day of the immediately preceding Interest Period for such Loan and ending on the numerically corresponding day in the first, second, third, sixth or (but only if available from all Lenders) twelfth calendar month thereafter, as the Borrower may select as provided in Section 4.05; provided that, (i) except for the Stub Interest Period, each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; (ii) each Interest Period that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the immediately preceding Business Day); (iii) except for the Stub Interest Period, no Interest Period shall have a duration of less than one month and, if the Interest Period for any Eurodollar Loan would otherwise be a shorter period (other than for the Stub Interest Period), such Loan shall bear interest at the Base Rate plus the Applicable Margin for Base Rate Loans; (iv) in no event shall any Interest Period extend beyond the Maturity Date; and (v) there may be no more than seven (7) separate Interest Periods in respect of Eurodollar Loans outstanding from each Lender at any one time.  The first Interest Period shall be the period commencing on October 4, 2010 and ending on (but not including) the first calendar day of November, 2010.

 

“Interest Rate Hedge Period” shall have the meaning assigned to such term in Section 8.19(a).

 

“Investment” shall mean, for any Person:  (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days arising in connection with the sale of inventory or supplies by such Person in the ordinary course of business; (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of any Swap Agreement (other than the Hedge Agreement or any Excess Hedge Agreement).

 

“Lease Approval Package” shall have the meaning assigned to such term in Section 9.09(b)(iii).

 

“Lease Information Summary” shall have the meaning assigned to such term in Section 9.09(b)(iii).

 

“Leases” shall mean, collectively, all leases and other agreements or arrangements with or assumed by the Borrower as landlord for the use or occupancy of all or any portion of any of the Projects, including any signage thereat, now in effect or hereafter entered into (including lettings, subleases, licenses, concessions, tenancies and other occupancy agreements with or assumed by the Borrower as landlord covering or encumbering all or any portion of any of the Projects), together with any Guarantees, Modifications of the same, and all additional remainders, reversions and other rights and estates appurtenant thereto.

 

“Leasing Affidavit” shall have the meaning assigned to such term in Section 6.01(p).

 

“Lender” shall have the meaning assigned to such term in the preamble.

 

“LIBO Rate” shall mean, for any Interest Period for any Eurodollar Loan, the rate per annum appearing on Reuters Screen LIBOR01 Page (formerly operated as Page 3750 of the Dow Jones Markets Service (Telerate)) (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m. London time on the date two (2) Business Days prior to the first day of such Interest Period as the rate for Dollar deposits having a term comparable to such Interest Period and in an amount comparable to the amount of the applicable Eurodollar Loan, provided that if such rate does not appear on such page as of the date of determination, or if such page shall cease to be publicly available at such time, or if the information contained on such page, in the sole judgment of the Administrative Agent shall cease accurately to reflect the rate offered by leading banks in the London interbank market or if the information contained on such page, in the sole but reasonable judgment of the Administrative Agent shall cease accurately to reflect the rate offered by leading banks in the London interbank market, the LIBO Rate shall be based on the rate reported by any publicly available source of similar market data selected by the Administrative Agent that, in its sole but reasonable judgment, accurately reflects such rate offered by leading banks in the London interbank market.

 

“Lien” shall mean, with respect to any Property (including the Projects), any mortgage, deed of trust, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property.  For purposes of this Agreement and the other Loan Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.

 

“Limited Indemnity and Guarantee” shall mean that certain Limited Indemnity and Guarantee in the form of Exhibit B attached hereto, to be executed, dated and delivered by Guarantor to the Administrative Agent (on behalf of the Lenders) on the Closing Date as the same may be Modified and in effect from time to time.

 

“Limited Purpose Entity” shall mean a limited partnership or limited liability company which at all times on and after the date hereof, unless otherwise approved in writing by the Administrative Agent:

 

 

 

(a) is not engaged and will not engage in any business unrelated to the acquisition, development, ownership, holding, sale, leasing, transfer, exchange, management or operation of the Projects;

 

(b) does not have and will not have any assets other than those related to a Project;

 

(c) if such entity is a limited partnership, has as its only general partner an entity which is a Limited Purpose Entity formed as a Delaware limited liability company (which means that such general partner is (i) organized solely for the purpose of acting as a general partner of the limited partnership that owns the Projects and (ii) not engaged and will not engage in any business unrelated to acting as the general partner of the limited partnership that owns the Projects);

 

(d) has not incurred and will not incur any Indebtedness other than (i) its Obligations under the Loan Documents, (ii) unsecured trade payables and other operational debt which are incurred, paid and processed in the ordinary course of business consistent with past practice and are not evidenced by a note, (iii) tenant improvement allowances or similar concessions granted to Tenants pursuant to Approved Leases or Modifications of Approved Leases permitted by the Loan Documents (iv) its obligations under the Ground Lease, and (v) such other Indebtedness as shall be permitted by the Loan Documents (including, without limitation, Indebtedness described in clause (e) below);

 

(e) has not and will not assume or guarantee or become obligated for the debts of any other Person or hold out its credit as being available to satisfy the obligations of any other Person except for its obligations under the Loan Documents, and except for (i) payment or performance bonds, guarantees, indemnitees or other assurances in connection with the performance of tenant improvements required or permitted by Approved Leases, (ii) lease takeover arrangements in connection with a new Approved Lease or the Modification of an Approved Lease permitted under the Loan Documents and (iii) customary types of indemnities or other assurances with respect to existing seller liabilities the existence or incurrence of which are not in violation of this Agreement or the other Loan Documents that may be required by the buyer or the title company in connection with the sale of a Project;

 

(f) has not and will not acquire obligations or securities of its members or shareholders or any other Affiliate; and

 

(g) except for its obligations under the Loan Documents or as otherwise permitted by the Loan Documents, has not pledged and will not pledge its assets for the benefit of any other Person.

 

 

“Limiting Regulation” shall mean any law or regulation of any Governmental Authority, or any interpretation, directive or request under any such law or regulation (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or Governmental Authority or monetary authority charged with the interpretation or administration thereof, or any internal bank policy resulting therefrom (applicable to loans made in the United States of America) which would or could in any way require a Lender to have the approval right contained in the last paragraph of Section 9.03.

 

“Loan” and “Loans” shall have the respective meanings assigned to such terms in Section 2.01 with reference to the extensions of credit provided to the Borrower hereunder.

 

“Loan Documents” shall mean, collectively, this Agreement, the Notes, the Security Documents, the Environmental Indemnity, the Guarantor Documents and each other agreement, instrument or document (excluding any Hedge Agreement or Excess Hedge Agreement) required to be executed and delivered in connection with the Loans, together with any Modifications thereof.

 

“Loan-to-Value Ratio” means the ratio of the Outstanding Principal Amount as of the date of determination divided by the aggregate sum of the Appraised Values of all of the Projects, as determined by the most recent Appraisal of each Project approved by the Administrative Agent.

 

“Loan Transactions” shall have the meaning assigned to such term in Section 4.04.

 

“Losses” shall have the meaning assigned to such term in Section 14.04.

 

“Major Default” shall mean (i) any Event of Default; (ii) any Default arising from the failure to make any payment on account of interest to any Lender required under the Loan Documents or any fees payable to the Administrative Agent under the Fee Letter, in each case on or before the due date therefor; and (iii) any other Default written notice of which has been delivered by the Administrative Agent to the Borrower unless, in the case of this clause (iii), the Borrower has provided written notice to the Administrative Agent, within seven (7) days after notice of such Default has been delivered to the Borrower, stating that the Borrower shall undertake to cure such Default on or prior to the expiration of the applicable cure period therefor, if any, set forth in the definition of the term “Event of Default” (and setting forth the steps that the Borrower intends to take in order to effectuate such cure), and the Administrative Agent shall not have provided notice to the Borrower within five (5) Business Days after receipt of such notice from the Borrower, setting forth the Administrative Agent’s determination, in its reasonable discretion, that the steps set forth in the notice from the Borrower are not likely to result in the timely cure of such default.  Notwithstanding the foregoing, for purposes of Sections 13.08, 14.07(b)(i)(A) and 14.07(b)(ii)(A), a Major Default of the type described in clause (ii) above shall not be deemed to “exist” unless the Borrower has received notice of such Major Default and has failed to cure such Major Default within five (5) Business Days.

 

“Major Lease” shall mean one or more Leases to the same tenant or its Affiliates covering an aggregate of the lesser of (i) twenty percent (20%) of the rentable square footage of any Project or (ii) 30,000 rentable square feet or more.

 

“Material Adverse Effect” shall mean a material adverse effect, as determined by the Administrative Agent, in its reasonable judgment and discretion, on (a) any Project or the business, operations, financial condition, liabilities or capitalization of the Borrower, (b) the ability of the Borrower or any other Borrower Party or the Operating Partnership to pay or perform (or cause to be performed) its respective material obligations under any of the Loan Documents to which it is a party, including the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith, (c) the Administrative Agent’s Liens in any of the collateral securing the Loans or the priority of any such Liens, (d) the validity or enforceability of any of the Loan Documents or (e) the rights and remedies of the Lenders and the Administrative Agent under any of the Loan Documents.

 

“Maturity Date” shall mean the earliest of (a) the Stated Maturity Date or (b) the date as to any Loans on which the Outstanding Principal Amounts under the Notes evidencing such Loans are accelerated or automatically become due and payable pursuant to the terms of the Notes or any other Loan Document.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 14.25.

 

“Modifications” shall mean any amendments, supplements, modifications, renewals, replacements, consolidations, severances, substitutions and extensions thereof from time to time; “Modify”, “Modified”, or related words shall have meanings correlative thereto.

 

“Mold” shall mean any microbial or fungus contamination or infestation in any Project of a type which could reasonably be anticipated (after due inquiry and investigation) to pose a risk to human health or the environment or could reasonably be anticipated (after due inquiry and investigation) to negatively impact the value of such Project in any material respect.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Named Principals” shall mean Dan A. Emmett, Christopher H. Anderson, Kenneth M. Panzer and Jordan L. Kaplan.

 

“Net Operating Income” shall mean, for any period, the excess, if any, of Operating Income for such period over Operating Expenses for such period.

 

“Net Proceeds” shall have the meaning assigned to such term in Section 10.03(b).

 

“Net Proceeds Deficiency” shall have the meaning assigned to such term in Section 10.03(h).

 

“Notes” shall mean, collectively, each Note and each other promissory note hereafter executed by the Borrower to the order of any of the Lenders evidencing such Lender’s respective Commitment and Loans, as such notes may be Modified or substituted and in effect from time to time.  Subject to such modifications thereto as may be deemed necessary by the Administrative Agent to reflect the Applicable Margin applicable to such Notes, and subject to the provisions of Section 14.30, each of the Notes shall be substantially in the form of Exhibit H attached hereto.

 

“Obligations” means all obligations, liabilities and indebtedness of every nature of the Borrower from time to time owing to the Administrative Agent or any Lender under or in connection with this Agreement, the Notes or any other Loan Document to which the Borrower is a party, including principal, interest, fees (including fees of counsel), and expenses whether now or hereafter existing under the Loan Documents to which the Borrower is a party.

 

“OECD” has the meaning assigned to such term in the definition of “Eligible Assignee”.

 

“One Westwood Project” shall have the meaning assigned to such term in Recital A.

 

“Operating Expenses” shall mean, for any period, all expenditures, computed in accordance with GAAP (but without taking into account expense or loss resulting from the accounting standards or requirements set forth in SFAS 141(R)), of whatever kind or nature relating to the ownership, operation, maintenance, repair or leasing of the Projects that are incurred on a regular monthly or other periodic basis, including (a) allocated amounts on account of Insurance Premiums and Real Estate Taxes, prorated on an annual basis, (b) management fees at an imputed rate of one and on-half percent (1.5%) of Operating Income (which for purposes of this clause (b) shall exclude any Rents from Leases which are not Approved Leases) for such period and (c) imputed capital expenditure in an amount equal to a prorated portion of an annual amount equal to $0.20 per square foot ($.05 per square foot per quarter); provided, however, that Operating Expenses shall not include (i) depreciation, amortization and other non-cash charges or capital expenditures (except as provided above), (ii) leasing commissions, tenant improvement allowances or other expenditures incurred for tenant improvements, (iii) any deposits to cash reserves (if any) required to be maintained under the Loan Documents (except if and to the extent any sums are withdrawn therefrom to pay (and are actually used to pay) expenses which otherwise constitute Operating Expenses without duplication), (iv) any payment or expense for which the Borrower was or is to be reimbursed by any third party if the receipt of the related reimbursement payment is required to be excluded in the calculation of Operating Income, (v) any payment payable by the Borrower or any Other Swap Pledgor under the Hedge Agreement, (vi) any changes in value of derivative contracts or of the Projects, and (vii) any principal, interest or other debt service payable with respect to the Loans.  Operating Expenses shall be determined on an annualized basis for purposes of Section 2.10 and on a projected annual basis for purposes of Section 10.03(c)(iv); provided, however, that Operating Expenses annualized based on relevant quarterly results will be normalized to fairly present such annualized expenses.

 

“Operating Income” shall mean, for any period, all regular ongoing income, computed in accordance with GAAP (but without taking into account any treatment of Rent on a straight-line amortization basis over the term of a lease that would otherwise be required by GAAP or any income or gain resulting from the accounting standards or requirements set forth in SFAS 141(R)), during such period from the ownership or operation, or otherwise arising in respect, of the Projects, including (a) all amounts payable to the Borrower by any Person as Rents under Leases, (b) business interruption proceeds and rent loss insurance proceeds (except with respect to any Leases that have been terminated as of the date of computation as a result of any Casualty Event or Taking) and (c) all other amounts which are included in the Borrower’s financial statements as operating income of the Projects, including, receipts from leases and parking agreements, concession fees and charges, other miscellaneous operating revenues, but excluding any extraordinary income, including, without limitation, (i) any Condemnation Awards or Insurance Proceeds (other than business interruption and rent loss proceeds as aforementioned), (ii) any item of income otherwise includable in Operating Income but paid directly to a Person other than the Borrower, its representative or its Affiliate (except, in each case, to the extent the Borrower receives monetary credit for such payment from the recipient thereof or such item is treated as an income item to the Borrower, in accordance with GAAP), (iii) security deposits and earnest money deposits received from tenants until forfeited or applied in accordance with their Leases, (iv) lease buyout payments made by tenants in connection with any surrender, cancellation or termination of their Leases, (v) any disbursements to the Borrower from the Cash Trap Account (it being understood that nothing set forth in this clause (v) shall prevent the receipt of funds that have been deposited into the Cash Trap Account from being treated as Operating Income when received to the extent such receipt otherwise constitutes Operating Income as provided in the definition thereof), (vi) any changes in value of derivative contracts or of the Projects, and (vii) any payment payable to the Borrower or any Other Swap Pledgor under the Hedge Agreement.  Operating Income shall be determined on an annualized basis for purposes of Section 2.10 and a projected annual basis for purposes of Section 10.03(c).

 

“Operating Partnership” shall mean Douglas Emmett Properties LP, a Delaware limited partnership.

 

“Organizational Documents” shall mean (a) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and any amendments thereto, (b) for any limited liability company, the articles of organization and any certificate relating thereto and the limited liability company (or operating) agreement of such limited liability company, and any amendments thereto, and (c) for any partnership (general or limited), the certificate of limited partnership or other certificate pertaining to such partnership and the partnership agreement of such partnership (which must be a written agreement), and any amendments thereto.

 

“Other Charges” shall mean all ground rents, maintenance charges, impositions other than Real Estate Taxes, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Projects, now or hereafter levied or assessed or imposed against the Projects or any part thereof, other than Excluded Taxes.

 

“Other Swap Pledgor” shall mean (i) any Qualified Successor Entity to whom a Project is transferred pursuant to Section 9.03(a)(iii), (ii) any entity that qualifies under clause (I) of the definition of Qualified Successor Entity, and/or (iii) the REIT, the Operating Partnership or any REIT Subsidiary.

 

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery, ownership or enforcement of, or otherwise with respect to, any Loan Document.

 

“Outstanding Principal Amount” shall mean the outstanding principal amount of the Loans at any point in time after giving effect to any repayment thereof pursuant to Sections 2.06, 2.07, 2.09, 2.10 and 3.01 or other applicable provisions of this Agreement.

 

“Participant” shall have the meaning assigned to such term in Section 14.07(c)(i).

 

“Payment Date” shall mean the first Business Day of each calendar month.  The first Payment Date shall be November 1, 2010.

 

“Payor” shall have the meaning assigned to such term in Section 4.06.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Investments” shall mean:  (a) direct obligations of the United States of America, or of any agency thereof, or obligations guaranteed as to principal and interest by the United States of America, or by any agency thereof, in either case maturing not more than ninety (90) days from the date of acquisition thereof; (b) certificates of deposit issued by any bank or trust company organized under the laws of the United States of America or any state thereof and having capital, surplus and undivided profits of at least $500,000,000 and having a senior unsecured credit rating of A or A1 or better by S&P or Moody’s, respectively, maturing not more than ninety (90) days from the date of acquisition thereof; and (c) commercial paper rated A-1 or P-1 or better by S&P or Moody’s, respectively, maturing not more than ninety (90) days from the date of acquisition thereof; in each case so long as the same (i) provide for the payment of principal and interest (and not principal alone or interest alone) and (ii) are not subject to any contingency regarding the payment of principal or interest.

 

“Permitted Liens” shall mean for each Project:  (a) any Lien created by the Loan Documents, (b) Liens for Real Estate Taxes not yet delinquent and Liens for Other Charges imposed by any Governmental Authority not yet due or delinquent, (c) rights of existing and future tenants under Approved Leases as tenants only, (d) Permitted Title Exceptions that constitute Liens, (e) utility and other easements entered into by the Borrower in the ordinary course of business having no adverse impact on the occupation, use, enjoyment, operation, value or marketability of any Project and approved in advance in writing by the Administrative Agent in its reasonable discretion, (f) any Lien for the performance of work or the supply of materials affecting any Project unless the Borrower fails to discharge such Lien by payment or bonding (in accordance with statutory bonding requirements the effect of which is to release such Lien from the affected Project and to limit the Lien claimant’s rights to a recovery on the bond) on or prior to the date that is the earlier of (i) thirty (30) days after the date of filing of such Lien and (ii) the date on which the Project or the Borrower’s interest therein is subject to risk of sale, forfeiture, termination, cancellation or loss, (g) any Lien consisting of the rights of a lessor under equipment leases which are entered into in compliance with Sections 9.02(e) and 9.04(d), and (h) any other title and survey exceptions (not referred to in clauses (a) through (g) above) affecting the Projects as the Administrative Agent may approve in advance in writing and in its sole discretion.

 

“Permitted Title Exceptions” shall mean as to any Project, the outstanding liens, easements, restrictions, security interests and other exceptions to title set forth in the policy of title insurance insuring the lien of the Deed of Trust encumbering such Project approved by the Administrative Agent.

 

“Person” shall mean any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

 

“Pfandbrief Transfer” shall have the meaning assigned to such term in Section 14.07(e).

 

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) as defined in Section 3(2) of ERISA, and in respect of which any Borrower Party or its ERISA Affiliates or the Operating Partnership is (or, if such plan were terminated, would, if the Plan were subject to Title IV of ERISA, under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Policy” and “Policies” shall have the respective meanings assigned to such terms in Section 8.05(b).

 

“Post-Default Rate” shall mean a rate per annum equal to five percent (5%) plus the Base Rate as in effect from time to time plus the Applicable Margin for Base Rate Loans, provided that, with respect to principal of a Eurodollar Loan, the “Post-Default Rate” shall be the greater of (a) five percent (5%) plus the interest rate for such Loan as provided in Section 3.02(a)(ii) and (b) the rate provided for above in this definition; provided, however, that in no event shall the Post-Default Rate exceed the Maximum Rate.

 

“Principal Office” shall mean the office of Eurohypo, located on the date hereof at 1114 Avenue of the Americas, New York, New York, or such other office as the Administrative Agent shall designate upon ten (10) days’ prior notice to the Borrower and the Lenders.

 

“Principals” shall mean any other Person holding ten percent (10%) or more of the shares, partnership interests, membership interests, or other voting or beneficial interests in Borrower’s Manager.

 

“Prior Project Owner Affiliate” shall mean an Affiliate (which for purposes of this definition, the proviso at the end of the defined term “Affiliate” shall not apply) of the Borrower that previously owned a Project.

 

“Project” shall have the meaning assigned to such term in the Recitals.

 

“Project-Level Account” shall have the meaning assigned to such term in the applicable Project-Level Account Security Agreement.

 

“Project-Level Account Security Agreement” shall mean, collectively (if more than one), each Project-Level Account Security Agreement, by and among the Borrower, the Administrative Agent (on behalf of the Lenders) and the Depository Bank, substantially in the form of Exhibit I attached hereto, delivered on the Closing Date, as the same may be Modified and in effect from time to time.

 

“Property” shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

 

“Property Condition Report” shall mean, collectively, those certain property condition reports for each Project prepared for the Administrative Agent and listed on Schedule 1.01(7) attached hereto.  The Administrative Agent acknowledges receipt of copies of the foregoing Property Condition Reports.

 

“Property Management Agreement” shall mean, collectively, (a) each Property Management Agreement between the Borrower and the Property Manager listed on Schedule 1.01(8) attached hereto and (b) any other property management and/or leasing agreement entered into with a Property Manager appointed in accordance with the definition of Property Manager contained in this Section 1.01, as the same shall be Modified in accordance with the provisions of this Agreement.

 

“Property Manager” shall mean Douglas Emmett Management, LLC, a Delaware limited liability company, or, with respect to the Bishop Square Project, Douglas Emmett Management Hawaii, LLC, a Delaware limited liability company, or such successor manager and/or leasing agent as shall be reasonably approved by the Administrative Agent or otherwise permitted without such approval pursuant to Section 9.15 or Section 14.31.

 

“Property Manager’s Consent” shall mean a Property Manager’s Consent and Subordination of Property Management Agreement substantially in the form of Exhibit J attached hereto, to be executed, dated and delivered by (a) the Property Manager and the Borrower to the Administrative Agent (on behalf of the Lenders) on the Closing Date and (b) any other Property Manager to the Administrative Agent (on behalf of the Lenders) prior to its appointment as Property Manager, as such agreements may be Modified and in effect from time to time.

 

“Proportionate Share” shall mean, with respect to each Lender, the percentage set forth opposite such Lender’s name on Schedule 1.01(4) attached hereto under the caption “Proportionate Share” or in the Assignment and Assumption (in accordance with the terms of this Agreement) pursuant to which such Lender became a party hereto, in any case, as such percentage may be Modified in the most recent Assignment and Assumption (in accordance with the terms of this Agreement) to which such Lender is a party.  The aggregate Proportionate Shares of all Lenders shall equal one hundred percent (100%).

 

“Proposed Lender” shall have the meaning assigned to such term in Section 5.07.

 

“Qualified Successor Entity” shall have the meaning set forth in Section 9.03(a)(iii).

 

“Real Estate Taxes” shall mean all real estate taxes and all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges, all charges for utilities and all other public charges whether of a like kind or different nature, imposed upon or assessed against the Borrower, the Projects or any part thereof or upon the revenues, rents, issues, income and profits of the Projects or arising in respect of the occupancy, use or possession thereof.

 

“Register” shall have the meaning assigned to such term in Section 14.07(b)(iv).

 

“Regulations A, D, T, U and X” shall mean, respectively, Regulations A, D, T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be Modified and in effect from time to time.

 

“Regulatory Change” shall mean, with respect to any Lender, any change after the Closing Date in federal, state or foreign law or regulations (including Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks including such Lender of or under any federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof.

 

“REIT” shall mean Douglas Emmett, Inc., a Maryland corporation.

 

“REIT Subsidiary” shall mean any directly or indirectly wholly-owned Subsidiary of the REIT or the Operating Partnership.

 

“Rejecting Lender” shall have the meaning set forth in Section 9.03(c).

 

“Related Entity” shall mean, as to any Person, (a) any other Person which directly or indirectly owns fifty-one percent (51%) or more of the partnership, membership or other ownership interests of such Person and directly or indirectly controls such Person; (b) any other Person into which, or with which, such Person is merged, consolidated or reorganized, or which is otherwise a successor to such Person by operation of law, or which acquires all or substantially all of the assets of such Person; (c) any other Person which is a successor to the business operations of such Person and engages in substantially the same activities; or (d) any other Person in which a Person described in clauses (b) and (c) of this definition directly or indirectly owns fifty-one (51%) or more of the partnership, membership or other ownership interests of such Person and directly or indirectly controls such Person.  As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

 

“Related Party” shall mean:

 

(i)           any family member of any Named Principal; or

 

(ii)           any trust, corporation, partnership, limited liability company or other entity, in which any Named Principal and/or such other persons referred to in the immediately preceding clause (i) have a controlling interest.

 

“Release” shall mean any release, spill, emission, leaking, pumping, injection, pouring, dumping, deposit, disposal, discharge, dispersal, leaching, seeping or migration into the indoor or outdoor environment, including the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata.

 

“Remediation” shall mean, without limitation, any investigation, site monitoring, response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance, any actions to prevent, cure or mitigate any Release of any Hazardous Substance, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances.  “Remediate” shall have a correlative meaning.

 

“Rents” shall mean all rents (whether denoted as base rent, advance rent, minimum rent, percentage rent, additional rent or otherwise), issues, income, royalties, profits, revenues, proceeds, bonuses, deposits (whether denoted as security deposits or otherwise), termination fees, rejection damages, buy-out fees and any other fees made or to be made in lieu of rent to the Borrower, any award made hereafter to the Borrower in any court proceeding involving any tenant, lessee, licensee or concessionaire under any of the Leases in any bankruptcy, insolvency or reorganization proceedings in any state or federal court, and all other payments, rights and benefits of whatever nature from time to time due to the Borrower under the Leases (including any Leases with respect to signage), including (i) rights to payment earned under the Leases, (ii) any payments or rights to payment with respect to parking facilities or other facilities in any way contained within or associated with the Projects, and (iii) all other income, consideration, issues, accounts, profits or benefits of any nature arising from the possession, use and operation of the Projects.

 

“Requesting Lender” shall have the meaning assigned to such term in Section 5.07.

 

“Required Lenders” shall mean the Lenders holding at least sixty-six and two-thirds percent (66.67%) of the aggregate Outstanding Principal Amount of the Loans.

 

“Required Payment” shall have the meaning assigned to such term in Section 4.06.

 

“Reserve Requirement” shall mean, for any Interest Period for any Eurodollar Loan, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against “Eurocurrency liabilities” (as such term is used in Regulation D).  Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change with respect to (i) any category of liabilities that includes deposits by reference to which the LIBO Rate is to be determined as provided in the definition of “LIBO Rate” in this Section 1.01 or (ii) any category of extensions of credit or other assets that includes Eurodollar Loans.

 

“Restoration” shall have the meaning assigned to such term in Section 10.01(a).

 

“Restoration Consultant” shall have the meaning assigned to such term in Section 10.03(e).

 

“Restoration Retainage” shall have the meaning assigned to such term in Section 10.03(f).

 

“Restricted Payment” shall mean all distributions of the Borrower (in cash, Property or other obligations) on, or other payments or distributions on account of (or the setting apart of money for a sinking or other analogous fund for) the purchase, redemption, retirement or other acquisition of, any portion of any Equity Interest in the Borrower or of any warrants, options or other rights to acquire any such Equity Interest.

 

“Rollover Breakage Costs” shall have the meaning assigned to such term in Section 2.08.

 

“Saltair/San Vicente Project” shall have the meaning assigned to such term in Recital A.

 

“Santa Monica Square Project” shall have the meaning assigned to such term in Recital A.

 

“Second Call Date” shall have the meaning assigned to such term in Section 2.10.

 

 “Security Accounts” shall mean, collectively, the Cash Trap Account, the Project-Level Account and any Controlled Account.

 

“Security Documents” shall mean, collectively, the Deed of Trust, the Hedge Agreement Pledge, the Cash Trap Account Security Agreement, the Project-Level Account Security Agreement, the Controlled Account Agreement, the General Assignment and such other security documents as the Administrative Agent may reasonably request on behalf of and for the benefit of the Lenders and all Uniform Commercial Code financing statements required by this Agreement, the Deed of Trust, the Hedge Agreement Pledge, the Cash Trap Account Security Agreement, the Project-Level Account Security Agreement, the Controlled Account Agreement, the General Assignment or any other security document the Administrative Agent may reasonably request to be filed with respect to the applicable security interests on behalf of and for the benefit of the Lenders.

 

“Security Trustee” shall have the meaning assigned to such term in Section 14.07(e).

 

“SFAS 141(R)” shall mean Statement of Financial Accounting Standards 141(R) issued by the Financial Accounting Standards Board and any revision, modification, supplement or replacement thereof.

 

“Significant Casualty Event” shall have the meaning assigned to such term in Section 10.01(b).

 

“SNDA Agreement” shall mean (i) the form of Subordination, Non-Disturbance, and Attornment Agreement attached hereto as Exhibit K, (ii) any form attached to a Major Lease currently in effect or which has been approved by the Administrative Agent pursuant to the terms of this Agreement or (iii) such other form as is reasonably satisfactory to the Administrative Agent.

 

“Solvent” shall mean, when used with respect to any Person, that at the time of determination: (i) the fair saleable value of its assets is in excess of the total amount of its liabilities (including contingent liabilities); (ii) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; (iii) it is then able and expects to be able to pay its debts (including contingent debts and other  commitments) as they mature; and (iv) it has capital sufficient to carry on its business  as conducted and as proposed to be conducted.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

 

“Stated Maturity Date” shall mean the date that is seven (7) years from the expiration of the Stub Interest Period, subject to the terms and conditions of Section 2.10.

 

“Stub Interest Period” shall mean the period commencing on the Closing Date and ending on (but not including) the first calendar day of the first month following the Closing Date (or if such day is not a Business Day, the next Business Day thereafter).

 

“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, limited liability company, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, limited liability company, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

 

“Swap Agreement” means any agreement (whether one or more) with respect to any swap, forward, future or derivative transaction or option or similar agreement (including, without limitation, any cap or collar) involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.  For purposes hereof, the credit exposure at any time of any Person under a Swap Agreement to which such Person is a party shall be determined at such time in accordance with the standard methods of calculating credit exposure under similar arrangements as reasonably prescribed from time to time by the Administrative Agent, taking into account (a) potential interest rate movements, (b) the respective termination provisions, (c) the notional principal amount and term of such Swap Agreement and (d) any provisions providing for the netting of amounts  payable by and to a Person thereunder (or simultaneous payments of amounts by and to such Person).

 

“Syndication” shall have the meaning assigned to such term in Section 14.26.

 

“Taking” means a taking or voluntary conveyance during the term hereof of all or part of any Project or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of, any condemnation or other eminent domain proceeding by any Governmental Authority affecting such project or any portion thereof whether or not the same shall have actually been commenced.

 

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 

“Third Party Counterparty” shall have the meaning assigned to such term in Section 8.19(a).

 

“Third Party Hedge Agreement” shall have the meaning assigned to such term in Section 8.19(c).

 

“Title Company” shall mean Chicago Title Insurance Company and any one or more reinsurers identified on Schedule 1.01(9) attached hereto; provided, however, that (i) in no event shall the amount insured by any such title insurer exceed the limits shown on Schedule 1.01(9) and (ii) any reinsurance shall be subject to direct access agreements from such reinsurers.

 

“Title Policy” shall have the meaning assigned to such term in Section 6.01(k).

 

“Trading with the Enemy Act” shall mean 50 U.S.C. App. 1 et seq.

 

“Transactions” shall mean, collectively, (a) the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents to which it is a party, the borrowing of the Loans and the use of the proceeds thereof and (b) the execution, delivery and performance by the other Borrower Parties of the other Loan Documents to which they are a party and the performance of their obligations thereunder.

 

“Transfer” shall mean any transfer, sale, assignment, mortgage, encumbrance, pledge or conveyance, whether voluntary or involuntary.

 

“Transferred Interest” shall have the meaning assigned to such term in Section 14.07(e).

 

“Transferring Lender” shall have the meaning assigned to such term in Section 14.07(e).

 

“Type” shall have the meaning assigned to such term in Section 1.03.

 

“Uniform Commercial Code” shall mean the Uniform Commercial Code of the State of California, except with respect to those circumstances in which the Uniform Commercial Code of the State of California shall require the application of the Uniform Commercial Code of another state, in which case, for purposes of such circumstances, the “Uniform Commercial Code” shall mean the Uniform Commercial Code of such other state.

 

“Use” shall mean, with respect to any Hazardous Substance, the generation, manufacture, processing, distribution, handling, use, treatment, recycling or storage of such Hazardous Substance or transportation to or from the property of such Person of such Hazardous Substance.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan.

 

1.02 Accounting Terms and Determinations

 

.

 

(a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time.

 

(b) Without first obtaining the Administrative Agent’s consent, the Borrower will not change the last day of its fiscal year from December 31, or the last days of the first three fiscal quarters in each of its fiscal years.

 

1.03 Types of Loans

 

.  Loans hereunder are distinguished by “Type”.  The “Type” of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type.

 

1.04 Terms Generally

 

.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time Modified (subject to any restrictions on such Modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) whenever this Agreement provides that any consent or approval will not be “unreasonably withheld” or words of like import, the same shall be deemed to include within its meaning that such consent or approval will not be unreasonably delayed or conditioned.

 

ARTICLE II.

 

 

COMMITMENTS, LOANS, NOTES AND PREPAYMENTS

 

2.01 Loans

 

.  Each Lender severally agrees, on the terms and conditions of this Agreement, to make a loan (each such loan being a “Loan” and collectively, the “Loans”) on a non-revolving basis to the Borrower in Dollars on the Closing Date in a principal amount equal to but not exceeding the amount of the Commitment of such Lender.  After the Closing Date, the Borrower may Convert all or a portion of the Outstanding Principal Amount of one Type of Loan into another Type of Loan (as provided in Section 2.05) or Continue one Type of Loan as the same Type of Loan (as provided in Section 2.05), subject in all cases to the limit on the number of Interest Periods that may be outstanding at any one time as set forth in the definition of “Interest Period”.

 

2.02 Funding of Loans

 

.  On the Closing Date, each Lender shall make available from its Applicable Lending Office the amount of the Loan to be made by it on such date to the Administrative Agent as specified by the Administrative Agent, in immediately available funds, for account of the Borrower.  The amount so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to the Borrower in immediately available funds, for the uses and purposes identified on a sources and uses statement approved by the Administrative Agent and the Borrower.

 

2.03 Several Obligations

 

.  The failure of any Lender to make any Loan to be made by it on the date specified therefor shall not relieve any other Lender of its obligation to make its Loan on such date, but neither any Lender nor the Administrative Agent shall be responsible for the failure of any other Lender to make a Loan to be made by such other Lender.  The amounts payable by the Borrower at any time hereunder and under the Note to each Lender shall be a separate and independent debt.  It is understood and agreed that the Closing hereunder shall not occur unless each of the Lenders shall have funded the amount of the Loan to be made by it.

 

2.04 Notes

 

.

 

(a) Notes.  The Loan made by each Lender shall be evidenced by its Note.

 

(b) Substitution, Exchange and Subdivision of Notes.  No Lender shall be entitled to have its Note substituted or exchanged for any reason, or subdivided for promissory notes of lesser denominations, except (i) in connection with a permitted assignment of all or any portion of such Lender’s Commitment, Loan and Note pursuant, and subject to the terms and conditions of, Section 14.07(b) (and, if requested by any Lender in connection with such permitted assignment, the Borrower agrees to so exchange any such Note provided the original Note subject to such exchange has been delivered to the Borrower) or (ii) as provided in Section 14.30 with respect to severance of Notes if elected by Eurohypo, provided the original Note severed, split, divided or otherwise replaced pursuant to Section 14.30 has been delivered to the Borrower.

 

(c) Loss, Theft, Destruction or Mutilation of Notes.  In the event of the loss, theft or destruction of any Note, upon the Borrower’s receipt of a reasonably satisfactory indemnification agreement executed in favor of the Borrower by the holder of such Note, or in the event of the mutilation of any Note, upon the surrender of such mutilated Note by the holder thereof to the Borrower, the Borrower shall execute and deliver to such holder a replacement Note in lieu of the lost, stolen, destroyed or mutilated Note.

 

2.05 Conversions or Continuations of Loans

 

.

 

(a) Subject to Section 4.04, the Borrower shall have the right to Convert Loans of one Type into Loans of another Type or Continue Loans of one Type as Loans of the same Type, at any time or from time to time; provided that:  (i) the Borrower shall give the Administrative Agent notice of each such Conversion or Continuation as provided in Section 4.05; (ii) Eurodollar Loans may be Converted only on the last day of an Interest Period for such Loans unless the Borrower complies with the terms of Section 5.05 and (iii) subject to Sections 5.01(a) and 5.03, any Conversion or Continuation of Loans shall be pro rata among the Lenders.  Notwithstanding the foregoing, and without limiting the rights and remedies of the Administrative Agent and the Lenders under Article XII, in the event that any Event of Default exists, the Administrative Agent may (and at the request of the Required Lenders shall) suspend the right of the Borrower to Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan for so long as such Event of Default exists, in which event all Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) into, or Continued as, as the case may be, Base Rate Loans.  In connection with any such Conversion, a Lender may (at its sole discretion) transfer a Loan from one Applicable Lending Office to another.

 

(b) Notwithstanding anything to the contrary contained in this Agreement, at any time that a Hedge Agreement is in effect, the Borrower shall have the right to choose only an Interest Period which is the same as the Interest Rate Hedge Period, provided that the foregoing shall only apply to a Hedge Agreement that is required by Section 8.19(a) of this Agreement.

 

2.06 Prepayment

 

.

 

(a) Prepayment of the Loans.  Upon not less than ten (10) days’ prior written notice to the Administrative Agent, the Borrower may prepay the Loans, in whole or in part, in minimum increments of One Million Dollars ($1,000,000) except as otherwise provided by Section 2.06(c), subject to the following:

 

(i) any such prepayment shall be accompanied by the amount of interest theretofore accrued but unpaid in respect of the principal amount so prepaid, in accordance with Section 2.08;

 

(ii) except as provided below, any such prepayment (except as a result of a Casualty Event or Taking or any prepayment made pursuant to Section 10.03(j) or Section 14.25)) shall be accompanied by a prepayment premium equal to the following percentage of the principal amount so prepaid:

 

	
If the prepayment occurs during the following period:

	
The percentage is as follows:

	
During the period from the Closing Date to and including the date which occurs twelve (12) months after the Closing Date

	
2.00%

	
During the period from the day immediately following the date which occurs twelve (12) months after the Closing Date to and including the date which occurs twenty-four (24) months after the Closing Date

	
1.00%

	
Thereafter

	
0.00%

 

and

 

(iii) such prepayment shall be accompanied by any amounts payable to a Lender pursuant to Section 5.05 as a result of such prepayment while a Eurodollar Loan is in effect, in accordance with Section 2.08.

 

If the Loans are paid or prepaid in whole or in part for any reason (including acceleration of the Loans or because the Loans automatically become due and payable in accordance with Section 12.02(a), other than any prepayment made pursuant to Section 14.25) at any time, the Borrower shall pay to the Administrative Agent (on behalf of the Lenders) the amount(s) described in clauses (i), (ii), as applicable, and (iii), of the immediately preceding sentence.

 

(b) Treatment of Prepayments.  Except for any mandatory prepayment made pursuant to Section 2.07 and any prepayment made under Sections 2.06(c) and 2.09, and notwithstanding when such prepayment is made, each partial prepayment of the Loans shall be applied to reduce the Allocated Loan Amounts pro-rata in accordance with the Allocated Loan Amount for each Project.

 

(c) Prepayment Upon Release of Projects.  Notwithstanding anything to the contrary contained in this Section 2.06, any prepayment made in connection with the release in accordance with the terms contained in Section 2.09 of any one or more of the Projects may be made at any time upon not less than ten (10) days’ prior written notice to the Administrative Agent, and without reference to the minimum One Million Dollars ($1,000,000) increment requirements of Section 2.06(a), but subject to payment of any applicable prepayment premium under clause (ii) of Section 2.06(a) and compliance with the provisions set forth in clause (iii) of Section 2.06(a) above, and the applicable provisions set forth in Section 2.09.

 

(d) Acknowledgments Regarding Prepayment Premium.  The prepayment premiums required by this Section 2.06 are acknowledged by the Borrower to be partial compensation to the Lenders for the costs of reinvesting the proceeds of the Loans and for the loss of the contracted rate of return on the Loans and shall be due in accordance with the terms of this Section 2.06 upon any prepayment of the Loans, including any prepayment occurring after an acceleration resulting from a violation of the provisions restricting Transfers set forth in this Agreement.  Furthermore, the Borrower acknowledges that the loss that may be sustained by the Lenders as a result of such a prepayment by the Borrower is not susceptible of precise calculation, and the prepayment premium represents the good faith effort of the Borrower and the Lenders to compensate the Lenders for such loss and the parties’ reasonable estimate of such loss, and is not a penalty.  By initialing this provision where indicated below, the Borrower waives any rights it may have under California Civil Code Section 2954.10, or any successor statute, and the Borrower confirms that the Lenders’ agreement to make the Loans at the interest rate and on the other terms set forth herein constitutes adequate and valuable consideration, given individual weight by the Borrower, for the prepayment provisions set forth in this Section 2.06.

 

_______________

 

Borrower’s Initials

 

2.07 Mandatory Prepayments

 

.  If a Casualty Event or Taking shall occur with respect to any Project, the Borrower, upon the Borrower’s or the Administrative Agent’s receipt of the applicable Insurance Proceeds or Condemnation Awards, shall prepay the Loan, if required by the provisions of Article X, on the dates and in the amounts specified therein without premium, or, if, pursuant to Section 10.03(j), the Administrative Agent applies Net Proceeds to repay the Loans without premium (but, in each case, such repayments are subject to the provisions of Sections 2.08 and 5.05) but, if the portion of the Outstanding Principal Amount consisting of Base Rate Loans is less than the amount of Insurance Proceeds or Condemnation Awards received, or Net Proceeds retained, as applicable, then the amounts so applied to prepay the Loans shall be applied first to prepay in full the Base Rate Loans without premium and then, at the instruction of the Borrower (provided no Event of Default is then continuing), such Insurance Proceeds, Condemnation Awards or Net Proceeds, as applicable, shall be held in a Controlled Account by the Administrative Agent and applied, until Eurodollar Loans shall have matured, in which case, such Insurance Proceeds, Condemnation Awards or Net Proceeds held in the Controlled Account shall be applied in repayment of such Eurodollar Loans on the next Payment Date or successive Payment Dates until all such funds have been so applied to prepay the Loan (and in such case the amount so held shall continue to bear interest at the rate(s) provided in this Agreement until so applied to prepay the Loan).  Nothing in this Section 2.07 shall be deemed to limit any obligation of the Borrower under the Deeds of Trust or any other Security Document, including any obligation to remit to the Cash Trap Account, Project-Level Account, or a Controlled Account pursuant to the Deeds of Trust or any of the other Security Documents the Insurance Proceeds, Condemnation Awards or other compensation received in respect of any Casualty Event or Taking.

 

2.08 Interest and Other Charges on Prepayment

 

.  If the Loans are prepaid, in whole or in part, pursuant to Section 2.06 or 2.07, each such prepayment shall be made together with (a) the accrued and unpaid interest on the principal amount prepaid, and (b) any amounts payable to a Lender pursuant to Section 5.05 as a result of such prepayment while an Adjusted LIBO Rate is in effect (provided the Borrower is notified of such amount or an estimate thereof), including, without limitation, any such amounts that may result from a prepayment other than on the last day of an Interest Period for a Eurodollar Loan the Interest Period of which has been automatically Continued pursuant to Section 4.05 during any period on which a prepayment date has been postponed in accordance with the provisions set forth below in this Section 2.08; provided, however, that any such prepayment shall be applied first, to the prepayment of any portions of the Outstanding Principal Amount that are Base Rate Loans and, second, to the prepayment of any portions of the Outstanding Principal Amount that are Eurodollar Loans applying such sums first to Eurodollar Loans of the shortest maturity so as to minimize Rollover Breakage Costs (as defined below); provided further, however, that if an Event of Default exists, the Administrative Agent may distribute such payment to the Lenders for application in such manner as it or the Required Lenders, subject to Section 4.02, may determine to be appropriate.  Each prepayment pursuant to Section 2.06 shall be made on the prepayment date specified in the notice of prepayment delivered pursuant to Section 4.05, unless such notice is revoked (or the date of prepayment is postponed) by a further written notice (which may be delivered by the Borrower by facsimile to the Administrative Agent).  Any notice revoking a notice of prepayment (or postponing a previously-specified prepayment date) shall be delivered not less than one (1) Business Day prior to the date of prepayment specified in the notice of prepayment; provided, however, in the event that the Borrower revokes or postpones such notice during the last three (3) Business Days of any Interest Period for a Eurodollar Loan, and provided that the Borrower has not elected to Convert such Eurodollar Loan into a Base Rate Loan pursuant to Section 2.05, the Borrower acknowledges that losses, costs and expenses for which the Borrower is responsible pursuant to Section 5.05(b) shall include, without limitation, losses, costs and expenses that may subsequently result from the early repayment, termination, cancellation or failure of the Borrower to borrow any Eurodollar Loan that was to have been automatically continued pursuant to Section 4.05 (“Rollover Breakage Costs”).

 

2.09 Release of Projects

 

.  Except as set forth in this Section 2.09, or unless the Obligations have been paid in full, the Borrower shall have no right to obtain the release of any Project from the Lien of the Loan Documents, and no repayment or prepayment of any portion of the Loans shall cause, give rise to a right to require, or otherwise result in, the release of the Lien of the Deed of Trust on any Project or any other collateral securing the Loans.  Any release upon payment of the Obligations in full shall be in accordance with the provisions of the Deeds of Trust governing releases.

 

(a) Release of Projects.  At any time following the Closing Date, the Borrower on one or more occasions may obtain, and the Administrative Agent, on behalf of the Lenders, shall take such actions as are necessary to effectuate pursuant to this Section 2.09(a), the release of the entirety of any Project from the Lien of the applicable Deed of Trust (and related Loan Documents) thereon and the release of the Borrower’s obligations under the Loan Documents with respect to such Project (other than those which expressly survive repayment, including, but not limited to, those set forth in the Environmental Indemnity), upon satisfaction of each of the following conditions:

 

(i) The Borrower shall submit to the Administrative Agent (on behalf of the Lenders), by 3:00 P.M., New York City time, at least ten (10) days (except as provided below) prior to the date of the proposed release, written notice of its election to obtain such release (which notice shall include a certification by an Authorized Officer of the Borrower that the proposed release complies with all of the conditions set forth in this Section 2.09(a)), together with the form or forms for a release of Lien and related Loan Documents (or, in the case of a Deed of Trust, a request for reconveyance) for such Project for execution by the Administrative Agent, which the Administrative Agent shall execute on behalf of the Lenders and deliver to the Borrower for recordation upon satisfaction of all conditions set forth in this Section 2.09(a).  Such release shall be in a form appropriate in each jurisdiction in which the applicable Project is located and reasonably satisfactory to the Administrative Agent and its counsel.  Any notice of a proposed release of a Project pursuant to this Section 2.09(a) may be revoked (or the date proposed for such release may be postponed) by a further written notice (which may be delivered by the Borrower by facsimile to the Administrative Agent).  Any notice revoking a proposed release (or postponing the date for a proposed release) shall be delivered not less than one (1) Business Day prior to the date of such release specified in the notice of release; provided, however, in the event that the Borrower revokes or postpones such notice during the last three (3) Business Days of the Interest Period for any Eurodollar Loan, and provided that the Borrower has not elected to Convert such Eurodollar Loan into a Base Rate Loan pursuant to Section 2.05, the Borrower acknowledges that the losses, costs and expenses for which the Borrower shall be responsible under Section 5.05(b) shall include applicable Rollover Breakage Costs, if any.  Notwithstanding the foregoing, if the Appraisals or updates of Appraisals of the Projects obtained in connection with the closing of the Loans or obtained in accordance with the provisions of the Loan Documents were obtained more than six (6) months prior to the date of the proposed release, then the Borrower shall provide Administrative Agent with its notice of election to obtain such release at least forty-five (45) days prior to the proposed release and upon receipt of such notice, Administrative Agent shall promptly inform the Lenders of such notice and if required by the Required Lenders within ten (10) days of receipt of the notice of the proposed release, order and thereafter obtain new Appraisals or updated Appraisals for the Projects (other than the Project proposed to be released) and notify the Borrower within such ten (10) day period of the election of the Required Lenders to obtain such new Appraisals or updated Appraisals.  Such Appraisals or updated Appraisals shall be at Borrower’s sole cost and expense and shall be used to determine the Appraised Values of the Projects for purposes of calculating the Loan-to-Value Ratio as set forth in clause (v) below);

 

(ii) The Borrower shall remit to the Administrative Agent for the account of the Lenders an amount equal to one hundred ten percent (110%) of the Allocated Loan Amount for the applicable Project (for application to the principal balance of the Loans), plus any applicable prepayment premium payable in connection with such prepayment pursuant to clause (ii) of Section 2.06(a).  The minimum One Million Dollar ($1,000,000) increment requirements of Section 2.06(a) shall not apply to a prepayment of the Loans made in accordance with this Section 2.09(a);

 

(iii) The Borrower shall pay to the Administrative Agent for the account of the Lenders all sums, including, but not limited to, interest payments and principal payments, if any, that are then due and payable under the Notes, this Agreement, the applicable Deed of Trust and the other Loan Documents, and all costs due pursuant to Section 5.05 and clause (viii) of this Section 2.09(a) (it being agreed that accrued interest on the principal amount to be paid pursuant to clause (ii) of this Section 2.09(a) shall not be due and payable in connection with such release (unless such accrued interest is otherwise due and payable), but shall be due and payable on the next Payment Date);

 

(iv) After giving effect to such release, the Borrower shall be in compliance with all covenants relating to its status as a Limited Purpose Entity (which condition must be satisfied and confirmed in the certification referred to in clause (i) above);

 

(v) Immediately following such release the Loan-To-Value Ratio as calculated for all of the Projects based on the Appraised Values for such Projects set forth in the most recent Appraisals or updated Appraisals obtained for the Projects (other than the Project proposed to be released), then securing the Loans other than the Project proposed to be released (and assuming for purposes of such calculation that the Outstanding Principal Amount shall have been reduced by the principal amount payable with respect to the Project to be released in accordance with clause (ii) of this Section 2.09(a)), shall not exceed sixty percent (60%); provided, however, in the event that the required Loan-to-Value Ratio is not met, then Borrower may, in order to satisfy the condition in this clause, pay down the Outstanding Principal Balance of the Loans in an amount such that the required Loan-to-Value Ratio is achieved (subject to the provisions of Section 2.06(a)(i) and Section 5.05, as supplemented by the provisions of Section 2.06(b));

 

(vi) After giving effect to such release and the payment of principal required to be made in connection therewith, the Outstanding Principal Amount of the Loans (unless the Loans shall be repaid in full) shall not be less than $200,000,000;

 

(vii) No Default or Event of Default exists at the time of the Borrower’s request or on the date of the proposed release or after giving effect thereto (other than a Default or Event of Default that would be cured by effectuating such release); and

 

(viii) The Borrower shall pay all costs and expenses (including, but not limited to, reasonable legal fees and disbursements, escrow and trustee fees, costs for title insurance endorsements required by the Administrative Agent to confirm the continued priority and coverage of the Liens in favor of the Lenders on the Projects not being released and other out-of-pocket costs and expenses) incurred by the Administrative Agent in connection with such release.

 

It is understood and agreed that no such release shall impair or otherwise adversely affect the Liens, security interests and other rights of the Administrative Agent or the Lenders under the Loan Documents not being released (or as to the parties to the Loan Documents and Projects subject to the Loan Documents not being released).

 

(b) Any Project released from the Lien of a Deed of Trust and the other Loan Documents pursuant to this Section 2.09 shall, effective upon such release, no longer be considered a “Project” for purposes of this Agreement or the other Loan Documents (including, without limitation, the definition of “Limited Purpose Entity”), except for purposes of those indemnification obligations and other covenants which, by their terms, expressly survive any such release.

 

2.10 Call Date.  Notwithstanding anything to the contrary contained in this Agreement, (i) the Outstanding Principal Amount under all Notes shall become automatically due and payable on the fifth (5th) anniversary of the expiration of the Stub Interest Period (the “First Call Date”) if (a) the Borrower shall not have delivered written notice (the “First Call Notice”) to the Administrative Agent not more than one hundred twenty (120) days and not less than thirty (30) days prior to the First Call Date of its intent to extend the Loans until the sixth (6th) anniversary of the expiration of the Stub Interest Period, (b) on or prior to the First Call Date the Borrower has not paid to the Administrative Agent in accordance with the Fee Letter for the benefit of the Lenders an extension fee equal to ten (10) basis points (0.10%) times the Outstanding Principal Amount under all Notes as of the First Call Date, (c) on the First Call Date a Default or an Event of Default exists, (d) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the First Call Date, that the Debt Service Coverage Ratio for all the Projects then securing the Loans equals or exceeds 1.15:1.00, or (e) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the First Call Date, that the Debt Yield equals or exceeds eight percent (8.0%); provided, however, in the event that the required Debt Yield or Debt Service Coverage Ratio is not met, then the Borrower may, in order to satisfy the condition in clauses (d) and (e), pay down the Outstanding Principal Balance of the Loans, in an amount such that the required Debt Yield and Debt Service Coverage Ratio is achieved (subject to the provisions of Section 2.06(a)(i) and the provisions of Section 5.05, as supplemented by the provisions of Section 2.06(b)); and (ii) the Outstanding Principal Amount under all Notes shall become automatically due and payable on the sixth (6th) anniversary of the expiration of the Stub Interest Period (the “Second Call Date”) if (a) the Borrower shall not have delivered written notice (the “Second Call Notice”) to the Administrative Agent not more than one hundred twenty (120) days and not less than thirty (30) days prior to the Second Call Date of its intent to extend the Loans until the seventh (7th) anniversary of the expiration of the Stub Interest Period, (b) on or prior to the Second Call Date the Borrower has not paid to the Administrative Agent in accordance with the Fee Letter for the benefit of the Lenders an extension fee equal to ten (10) basis points (0.10%) times the Outstanding Principal Amount under all Notes as of the Second Call Date, (c) on the Second Call Date a Default or an Event of Default exists, (d) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the Second Call Date, that the Debt Service Coverage Ratio for all the Projects then securing the Loans equals or exceeds 1.15:1.00, or (e) the Borrower shall not have demonstrated, to the reasonable satisfaction of the Administrative Agent, as of the Second Call Date, that the Debt Yield equals or exceeds eight percent (8.0%); provided, however, in the event that the required Debt Yield or Debt Service Coverage Ratio is not met, then the Borrower may, in order to satisfy the condition in clauses (d) and (e), pay down the Outstanding Principal Balance of the Loans, in an amount such that the required Debt Yield and Debt Service Coverage Ratio is achieved (subject to the provisions of Section 2.06(a)(i) and the provisions of Section 5.05, as supplemented by the provisions of Section 2.06(b)).

 

ARTICLE III.

 

 

PAYMENTS OF PRINCIPAL AND INTEREST

 

3.01 Repayment of Loans

 

.  The Borrower hereby promises to pay to the Administrative Agent for the account of each Lender the principal amount of such Lender’s outstanding Loans to the Borrower, together with accrued and unpaid interest, any applicable fees and all other amounts due under the Loan Documents with respect to such Loans, which amounts, to the extent not previously paid, shall, without notice, demand or other action, be due and payable on the Maturity Date.

 

3.02 Interest

 

.

 

(a) The Borrower hereby promises to pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of each Loan (which may be Base Rate Loans and/or Eurodollar Loans) made by such Lender for the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full if paid in the time and manner provided for in Section 4.01, at the following rates per annum:

 

(i) during such periods as such Loan is a Base Rate Loan, the Base Rate plus the Applicable Margin; and

 

(ii) during such periods as such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Adjusted LIBO Rate for such Loan for such Interest Period plus the Applicable Margin.

 

(b) Accrued interest on each Loan shall be payable (i) monthly in arrears on each Payment Date for all interest accrued through but not including the relevant Payment Date and (ii) in the case of any Loan, upon the payment or prepayment thereof (except as expressly provided in Section 2.09(a)(iii)) or the Conversion of such Loan to a Loan of another Type (but only on the principal amount so paid, prepaid or Converted), except that interest payable hereunder at the Post-Default Rate shall be payable from time to time on demand.

 

(c) Notwithstanding anything to the contrary contained herein, including, without limitation, the Borrower’s obligation to repay the Loans no later than the Maturity Date, after the Maturity Date and during any period when an Event of Default exists, the Borrower shall pay to the Administrative Agent for the account of each Lender interest at the applicable Post-Default Rate on the outstanding principal amount of any Loan made by such Lender, any interest payments thereon not paid when due and on any other amount due and payable by the Borrower hereunder, under the Notes and any other Loan Documents.

 

(d) At least two (2) Business Days prior to the determination of any interest rate provided for herein or any change therein, the Administrative Agent shall give notice thereof to the Lenders to which such interest is payable and to the Borrower, but the failure of the Administrative Agent to provide such notice shall not affect the Borrower’s obligation for the payment of interest on the Loans or give rise to any liability of any Lender.

 

(e) In addition to any sums due under this Section 3.02, the Borrower shall pay to the Administrative Agent for the account of the Lenders a late payment premium in the amount of four percent (4%) of (i) any payments of principal under the Loans not made when due (other than payments of principal due on the Maturity Date), and (ii) any payments of interest or other sums under the Loans not made when due, provided, in each case, that such payments are not made within the earlier of (A) two (2) Business Days after the Borrower receives written notice from the Administrative Agent of Borrower’s failure to make such payment when due and (B) five (5) days after the date the same became due, which late payment premium shall be due with any such late payment or upon demand by the Administrative Agent.  Such late payment charge represents the reasonable estimate of the Borrower, the Administrative Agent and the Lenders of a fair average compensation for the loss that may be sustained by the Lenders due to the failure of the Borrower to make timely payments.  Such late charge shall be paid without prejudice to the right of the Administrative Agent and the Lenders to collect any other amounts provided herein or in the other Loan Documents to be paid or to exercise any other rights or remedies under the Loan Documents.

 

(f) Reserved.

 

3.03 Project-Level Account

 

.  The Borrower shall, and shall cause the Property Manager to (a) deposit all Rents from the Projects, and all amounts received by the Borrower or the Property Manager constituting Rent or other revenue or sums of any kind from the Projects, into the applicable Project-Level Account for such Project in accordance with the Project-Level Account Security Agreement and (b) upon an Event of Default, and upon written request of the Administrative Agent, deliver irrevocable written instructions to all tenants under Leases to deliver all Rents payable thereunder directly to the applicable Project-Level Account for such Project.  The Borrower shall not maintain any checking, money market or other deposit accounts for the deposit and holding of any revenues or sums derived from the ownership or operation of the Projects other than the Project-Level Account (except for such replacement or additional deposit accounts in which the Administrative Agent shall have been granted, pursuant to a written instrument in form and substance satisfactory to the Administrative Agent, a first priority security interest on the terms provided herein, in which case the “Project-Level Account” referred to herein shall include such replacement or additional account), other than (i) accounts into which funds initially deposited in a Project-Level Account have been, or may be, transferred in compliance with the relevant Project-Level Account Security Agreement and (ii) any Cash Trap Account or Controlled Account required hereunder.

 

ARTICLE IV.

 

 

PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.

 

4.01 Payments

 

.

 

(a) Payments by the Borrower.  Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrower under this Agreement, the Notes and any other Loan Document, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Administrative Agent at the Administrative Agent’s Account, not later than 3:00 p.m., New York City time, on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).

 

(b) Application of Payments.  The Borrower may, at the time of making each payment under this Agreement, any Note or any other Loan Document for the account of any Lender (if such payment is not comprised solely of interest), specify to the Administrative Agent (which shall so notify the intended recipient(s) thereof) the Loans or other amounts to which such payment is to be applied (and in the event that the Borrower fails to so specify, or if an Event of Default exists, the Administrative Agent may apply such payment to amounts then due to the Lenders, subject to Section 4.02, pro rata in accordance with their Proportionate Share and, thereafter, may apply any remaining portion of such payment in such manner as it or the Required Lenders, subject to Section 4.02, may determine to be appropriate).  To the extent that the Borrower has the right pursuant to this Section 4.01(b) to designate the obligations to which a payment made by the Borrower under the Loan Documents is to be applied, the Borrower shall exercise such rights in such a manner as shall result in the application of such payment to the designated obligation in a manner that will result in each Lender receiving its pro rata share of the amount so paid by the Borrower on account of the designated obligation in proportion to the respective amounts then due and payable on account of the designated obligation to all Lenders entitled to payment of the designated obligation.  Notwithstanding the foregoing and to avoid any potential ambiguity between this provision and Section 2.06, nothing in the foregoing sentence is intended to modify or supersede Section 2.06.

 

(c) Payments Received by the Administrative Agent.  Each payment received by the Administrative Agent under this Agreement, any Note or any other Loan Document for account of any Lender shall be paid by the Administrative Agent promptly to such Lender (and in any event, the Administrative Agent shall use commercially reasonable efforts to pay such sums to such Lender on the same Business Day such sums are received by the Administrative Agent provided the Administrative Agent has actually received such sums prior to 3:00 p.m. on such Business Day), in immediately available funds, for account of such Lender’s Applicable Lending Office for the Loan or other obligation in respect of which such payment is made.  In the event that the Administrative Agent fails to make such payment to such Lender within one (1) Business Day of receipt, subject to any delays resulting from force majeure, then such Lender shall be entitled to interest from the Administrative Agent at the Federal Funds Rate from the date that such payment should have been paid by the Administrative Agent to such Lender until the Administrative Agent makes such payment.

 

(d) Extension to Next Business Day.  If the due date of any payment under this Agreement or any Note would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension.

 

4.02 Pro Rata Treatment

 

.  Except to the extent otherwise provided herein:  (a) each borrowing from the Lenders under Section 2.01 shall be made from the Lenders on a pro rata basis according to the amounts of their respective Commitments; (b) except as otherwise provided in Section 5.04, Eurodollar Loans having the same Interest Period shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans (in the case of Conversions and Continuations of Loans); (c) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Lenders on a pro rata basis in accordance with the respective unpaid principal amounts of the Loans held by them; and (d) each payment of interest on Loans by the Borrower shall be made for the account of the Lenders on a pro rata basis in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders.  Notwithstanding anything to the contrary contained in this Agreement or in any of the other Loan Documents, all payments received by the Administrative Agent on account of interest, principal (including, without limitation, prepayments), fees or other amounts which are required under this Agreement to be paid to the Lenders pro rata, or in accordance with their respective Proportionate Shares, shall be paid to the Lenders pro rata in proportion to the respective amounts of interest, principal, fees or other amounts, as applicable, then due and payable to all Lenders pursuant to the Loan Documents.

 

4.03 Computations

 

.  Interest on all Loans shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

 

4.04 Minimum Amounts

 

.  Except for (a) mandatory prepayments made pursuant to Section 2.07, 8.19(g), 10.03(j) or 14.25 of this Agreement or Section 7.08 of the Deed of Trust, (b) Conversions or prepayments made pursuant to Section 5.04, and (c) prepayments made pursuant to Section 2.06, Section 2.09 or Section 2.10 (which shall be governed by such Sections) each borrowing, Conversion, Continuation and partial prepayment of principal other than made pursuant to Section 2.09 or Section 2.10 (collectively, “Loan Transactions”) of Loans shall be in an aggregate amount at least equal to $1,000,000 (Loan Transactions of or into Loans of different Types or Interest Periods at the same time hereunder shall be deemed separate Loan Transactions for purposes of the foregoing, one for each Type or Interest Period); provided that if any Loans or borrowings would otherwise be in a lesser principal amount for any period, such Loans shall be Base Rate Loans during such period.  Notwithstanding the foregoing, the minimum amount of $1,000,000 shall not apply to Conversions of lesser amounts into a tranche of Loans that has (or will have upon such Conversion) an aggregate principal amount exceeding such minimum amount and one Interest Period.

 

4.05 Certain Notices

 

.  Notices by the Borrower to the Administrative Agent regarding Loan Transactions and the selection of Types of Loans and/or of the duration of Interest Periods shall be effective only if received by the Administrative Agent not later than 3:00 PM, New York City time, on the date which is the number of calendar days or Business Days, as applicable, prior to the date of the proposed Loan Transaction specified immediately below:

	
Notice

	
Number of Days Prior

	
Optional Prepayment

	
10 calendar days

	
Conversions into, Continuations as, or borrowings in Base Rate Loans

	
3 Business Days

	
Conversions into, Continuations as, borrowings in, or changes in duration of Interest Periods for, Eurodollar Loans

	
3 Business Days (prior to first day of next applicable Interest Period for such Conversion, Continuation or change)

 

Notices of the selection of Types of Loans and/or of the duration of Interest Periods shall be irrevocable.  Each notice of a Loan Transaction shall specify the amount (subject to Section 4.04), Type, and Interest Period of such proposed Loan Transaction, and the date (which shall be a Business Day) of such proposed Loan Transaction.  Notices for Conversions and Continuations shall be in the form of Exhibit L attached hereto.  Each such notice specifying the duration of an Interest Period shall specify the portion of the Loans to which such Interest Period is to relate.  The Administrative Agent shall within one (1) Business Day of receipt of such notice notify the Lenders of the contents of each such notice.  If the Borrower fails to select (i) the Type of Loan or (ii) the duration of any Interest Period for any Eurodollar Loan within the time period (i.e., three (3) Business Days prior to the first day of the next applicable Interest Period) and otherwise as provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will automatically be continued as a Eurodollar Loan as of the last day of the then current Interest Period for such Loan, with such Eurodollar Loan having an Interest Period of one month, and the Borrower shall be deemed to have provided to the Administrative Agent three (3) Business Days prior to the first day of such Interest Period a duly completed and unqualified notice requesting such Continuation in the form of Exhibit L.

 

4.06 Non-Receipt of Funds by the Administrative Agent

 

.  Unless the Administrative Agent shall have been notified by a Lender or the Borrower (each, for purposes of this Section 4.06, a “Payor”) prior to the date on which such Payor is to make payment to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be made by such Payor hereunder or (in the case of the Borrower) a payment to the Administrative Agent for the account of one or more of the Lenders hereunder (such payment being herein called a “Required Payment”), which notice shall be effective upon receipt, that such Payor does not intend to make such Required Payment to the Administrative Agent, the Administrative Agent may assume that such Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date; and, if such Payor has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment from the Administrative Agent shall, on demand, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date (the “Advance Date”) such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (a) the Federal Funds Rate for such day in the case of payments returned to the Administrative Agent by any of the Lenders or (b) the applicable interest rate due hereunder with respect to payments returned by the Borrower to the Administrative Agent and, if such recipient(s) shall fail to promptly make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from such Payor, together with interest at the same rates as aforesaid; provided that if neither the recipient(s) nor such Payor shall return the Required Payment to the Administrative Agent within one (1) Business Day (five (5) days in the case the Borrower is the Payor) of the Advance Date, then, retroactively to the Advance Date, such Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment as follows:

 

(i) if the Required Payment shall represent a payment to be made by the Borrower to the Administrative Agent for the benefit of the Lenders, the Borrower and the recipient(s) shall each be obligated to pay interest retroactively to the Advance Date in respect of the Required Payment at the Post-Default Rate (without duplication of the obligation of the Borrower under Section 3.02 to pay interest on the Required Payment at the Post-Default Rate), it being understood that the return by the recipient(s) of the Required Payment to the Administrative Agent shall not limit such obligation of the Borrower under Section 3.02 to pay interest at the Post-Default Rate in respect of the Required Payment, and it being further understood that to the extent the Administrative Agent actually receives from the Borrower any such interest at the Post-Default Rate on such Required Payment, such amount so received shall be credited against the amount of interest (if any) payable by the applicable recipient(s), and

 

(ii) if the Required Payment shall represent proceeds of a Loan to be made by the Lenders to the Borrower, such Payor and the Borrower shall each be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment pursuant to whichever of the rates specified in Section 3.02 is applicable to the Type of such Loan, it being understood that the return by the Borrower of the Required Payment to the Administrative Agent shall not limit any claim that the Borrower may have against such Payor in respect of such Required Payment and shall not relieve such Payor of any obligation it may have hereunder or under any other Loan Documents to the Borrower and no advance by the Administrative Agent to the Borrower under this Section 4.06 shall release any Lender of its obligation to fund such Loan except as set forth in the following sentence.  If any such Lender shall thereafter advance any such Required Payment to the Administrative Agent, together with interest on such Required Payment as provided herein, such Required Payment shall be deemed such Lender’s applicable Loan to the Borrower and shall be advanced by the Administrative Agent to the Borrower to the extent the Borrower has remitted the Required Payment and such interest to the Administrative Agent.

 

4.07 Sharing of Payments, Etc

 

.

 

(a) Sharing.  If any Lender shall obtain payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any other Loan Document through the exercise (subject to the provisions of Section 14.10) of any right of set-off, banker’s lien or counterclaim or similar right or otherwise (other than from the Administrative Agent as provided herein), and, as a result of such payment, such Lender shall have received a greater percentage of the principal of or interest on the Loans or such other amounts then due and payable hereunder or thereunder by the Borrower to such Lender than the percentage received by any other Lender, it shall promptly turn over to the Administrative Agent (for distribution by the Administrative Agent to the other Lenders in accordance with the terms of this Agreement) any such payment on account of the Loans held by it in excess of its ratable portion of payments on account of the Loans obtained by all the Lenders, or if approved by all the Lenders, promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans or such other amounts, respectively, owing to such other Lenders (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal of and/or interest on the Loans or such other amounts, respectively, owing to each of the Lenders.  To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored.

 

(b) Consent by the Borrower.  The Borrower agrees that any Lender so purchasing such a participation (or direct interest) may exercise (subject, as among the Lenders, to Section 14.10) all rights of set-off, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation.

 

(c) Rights of Lenders; Bankruptcy.  Nothing contained herein shall require any Lender to exercise any right of set-off, banker’s lien or counterclaim or similar right or otherwise or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower.  If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.07 applies, then such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 4.07 to share in the benefits of any recovery on such secured claim.

 

ARTICLE V.

 

 

YIELD PROTECTION, ETC.

 

5.01 Additional Costs

 

.

 

(a) Costs of Making or Maintaining Eurodollar Loans.  The Borrower shall pay directly to each Lender from time to time such amounts as such Lender may determine to be necessary to compensate such Lender for any costs that such Lender determines are attributable to its making or maintaining of any Eurodollar Loans, or its obligation to make any Eurodollar Loans, hereunder, or, subject to the following provisions of this Article V, any reduction in any amount receivable by such Lender hereunder in respect of any of such Eurodollar Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), provided such Additional Costs result from any Regulatory Change that:

 

(i) shall subject any Lender (or its Applicable Lending Office for any of such Eurodollar Loans) to any tax, duty or other charge in respect of such Eurodollar Loans or its Note or changes the basis of taxation of any amounts payable to such Lender under this Agreement or its Note in respect of any of such Eurodollar Loans (other than Excluded Taxes); or

 

(ii) imposes or Modifies any reserve, special deposit or similar requirements (other than the Reserve Requirement utilized in the determination of the Adjusted LIBO Rate for such Eurodollar Loan) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, any Lender (including any of such Eurodollar Loans or any deposits referred to in the definition of “LIBO Rate” in Section 1.01), or any commitment of such Lender (including the Commitment of such Lender hereunder); or

 

(iii) imposes any other condition affecting this Agreement or the Note of any Lender (or any of such extensions of credit or liabilities) or its Commitment.

 

If any Lender requests compensation from the Borrower under this Section 5.01(a) or Section 5.01(b), the Borrower may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect or until the Borrower notifies such Lender that the Borrower is lifting such suspension (in which case the provisions of Section 5.04 shall be applicable), provided that such suspension shall not affect the right of such Lender to receive the compensation so requested for so long as any Eurodollar Loan remains in effect.

 

(b) Costs Attributable to Regulatory Change or Risk-Based Capital Guidelines.  Without limiting the effect of the provisions of this Section 5.01 (but without duplication), the Borrower shall pay to each Lender for such Lender’s own account from time to time on request such amounts as such Lender may determine to be necessary to compensate such Lender (or, without duplication, the bank holding company or other legal entity of which such Lender is a subsidiary) for any costs that it determines are attributable to the maintenance of its Eurodollar Loans hereunder by such Lender (or any Applicable Lending Office or such bank holding company or other legal entity), pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) of any Governmental Authority (i) following any Regulatory Change with respect to such law, regulation, interpretation, directive or request resulting in such costs or (ii) implementing any risk-based capital guideline or other requirement of capital (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) hereafter issued by any Governmental Authority implementing at the national level Basel II, in respect of its Commitment or its Eurodollar Loans (such compensation to include an amount equal to any reduction of the rate of return on assets or equity of such Lender (or any Applicable Lending Office or such bank holding company or other legal entity) to a level below that which such Lender (or any Applicable Lending Office or such bank holding company or other legal entity) could have achieved but for such law, regulation, interpretation, directive or request).

 

(c) Notification and Certification.  Each Lender shall notify the Borrower of any event occurring after the date hereof entitling such Lender to compensation under subsections (a) or (b) of this Section 5.01 (setting forth in reasonable detail the basis of such determination) as promptly as practicable, but in any event within sixty (60) days, after such Lender obtains actual knowledge thereof; provided that (i) if any Lender fails to give such notice within sixty (60) days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable pursuant to this Section 5.01 in respect of any costs resulting from such event, be entitled to payment under this Section 5.01 only for costs incurred from and after the date sixty (60) days prior to the date that such Lender does give such notice and (ii) each Lender shall designate a different Applicable Lending Office (if applicable) for the Eurodollar Loans of such Lender affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of such Lender, be disadvantageous to such Lender.  Each Lender shall furnish to the Borrower a certificate setting forth the basis and amount of each request by such Lender for compensation under subsection (a) or (b) of this Section 5.01.  Determinations and allocations by any Lender for purposes of this Section 5.01 of the effect of any Regulatory Change pursuant to subsection (a) or (b) of this Section 5.01, or of the effect of capital maintained pursuant to subsection (b) of this Section 5.01, on its costs or rate of return of maintaining Eurodollar Loans or its obligation to make Eurodollar Loans, or on amounts receivable by it in respect of Eurodollar Loans, and of the amounts required to compensate such Lender under this Section 5.01, as set forth in the certificate of the Lender, shall be prima facie evidence of the accuracy of the determinations and calculations contained or asserted therein.  Notwithstanding anything to the contrary contained herein, it shall be a condition to the Borrower’s obligation to pay compensation under subsections (a) or (b) of this Section 5.01 that such compensation requirements are also being imposed on substantially all other similar classes or categories of commercial loans or commitments of such Lender similarly affected by the Regulatory Change and the other guidelines and requirements referred to in this Section 5.01.

 

5.02 Limitation on Eurodollar Loans

 

.  Anything herein to the contrary notwithstanding, if, on or prior to the determination of any LIBO Rate for any Interest Period for any Eurodollar Loan:

 

(a) after making reasonable efforts, the Administrative Agent determines, which determination shall be conclusive absent manifest error, that quotations of interest rates for the relevant deposits referred to in the definition of “LIBO Rate” in Section 1.01 are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Eurodollar Loans as provided herein; or

 

(b) the Administrative Agent determines, which determination shall be conclusive absent manifest error, that, as a result of circumstances arising after the Closing Date, the relevant rates of interest referred to in the definition of “LIBO Rate” in Section 1.01 upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely adequate to cover the cost to such Lenders of making or maintaining Eurodollar Loans for such Interest Period;

 

then the Administrative Agent shall give the Borrower and each Lender prompt notice thereof and, so long as such condition remains in effect, the Lenders shall be under no obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Eurodollar Loans in accordance with Sections 2.06 and 2.07 or, in accordance with Section 2.05, Convert such Eurodollar Loans into Base Rate Loans or other Eurodollar Loans in amounts and maturities which are still being provided.  Notwithstanding the foregoing, (i) if the applicable conditions under clauses (a) or (b) of this Section 5.02 affect only a portion of the Eurodollar Loans, the balance of the Eurodollar Loans may continue as Eurodollar Loans and (ii) if the applicable conditions under clauses (a) and (b) of this Section 5.02 only affect certain Interest Periods, the Borrower, subject to the terms and conditions of this Agreement, may elect to have Eurodollar Loans with such other Interest Periods.

 

5.03 Illegality

 

.  Notwithstanding any other provision of this Agreement, if it becomes unlawful for any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder (and, in the sole opinion of such Lender, the designation of a different Applicable Lending Office would either not avoid such unlawfulness or would be disadvantageous to such Lender), then such Lender shall promptly notify the Borrower thereof (with a copy to the Administrative Agent) and such Lender’s obligation to make or Continue, or to Convert portions of its Loan of any other Type into, Eurodollar Loans shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans (in which case the provisions of Section 5.04 shall be applicable).

 

5.04 Treatment of Affected Loans

 

.  If the obligation of any Lender to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Sections 5.01 or 5.03, then such Lender’s Eurodollar Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in the case of a Conversion resulting from a circumstance described in Section 5.03, on such earlier date as such Lender may specify to the Borrower with a copy to the Administrative Agent) and, unless and until either (a) such Lender gives notice as provided below that the circumstances specified in Sections 5.01 or 5.03 that gave rise to such Conversion no longer exist or (b) the Borrower, in the case of Section 5.01, ends any suspension by the Borrower:

 

(a) to the extent that such Lender’s Eurodollar Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s Eurodollar Loans shall be applied instead to its Base Rate Loans; and

 

(b) all portions of its Loan that would otherwise be made or Continued by such Lender as Eurodollar Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be Converted into Eurodollar Loans shall remain as Base Rate Loans.

 

If such Lender gives notice to the Borrower with a copy to the Administrative Agent that the circumstances specified in Section 5.01 or 5.03 that gave rise to the Conversion of such Lender’s Eurodollar Loans pursuant to this Section 5.04 no longer exist (which notice such Lender agrees to give promptly upon such circumstances ceasing to exist) or the Borrower terminates its applicable suspension at a time when Eurodollar Loans made by other Lenders are outstanding, such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the extent necessary so that, after giving effect thereto, all Base Rate and Eurodollar Loans are allocated among the Lenders ratably (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

 

5.05 Compensation

 

.  The Borrower shall pay to the Administrative Agent for account of each Lender, upon the request of such Lender through the Administrative Agent, such amount as shall be sufficient to compensate it for any loss, cost or expense that such Lender reasonably determines is attributable to:

 

(a) any payment, mandatory or optional prepayment or Conversion of a Eurodollar Loan made by such Lender for any reason (including the acceleration of the Loans pursuant to Article XII) on a date other than the last day of the Interest Period for such Loan;

 

(b) any failure by the Borrower for any reason to prepay a Eurodollar Loan pursuant to a notice of prepayment given in accordance with Section 2.06 (or any notice timely given postponing the date for prepayment given in accordance with Section 2.08), unless such notice is timely revoked pursuant to a notice of revocation given in accordance with Section 2.08; or

 

(c) the assignment of any Eurodollar Loan other than on the last day of the applicable Interest Period as a result of a request by the Borrower pursuant to Section 5.07.

 

Without limiting the effect of the preceding provisions, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest that otherwise would have accrued on the principal amount so paid, prepaid, Converted or not borrowed for the period from the date of such payment, prepayment, Conversion or failure to borrow to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan that would have commenced on the date specified for such borrowing) at the applicable Adjusted LIBO Rate for such Loan provided for herein over (ii) the amount of interest that such Lender would earn on such principal amount for such period if such Lender would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Lender), or if such Lender shall not, or shall cease to, make such bids, the equivalent rate, as reasonably determined by such Lender, derived from Reuters Screen LIBOR01 Page (formerly operated as Page 3750 of the Dow Jones Markets Service (Telerate)) or other publicly available source as described in the definition of “LIBO Rate” in Section 1.01, plus, in the case of Section 5.05(c), the amount of interest for such period paid to such Lender pursuant to Section 5.07.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.05 shall be delivered to the Borrower and shall be prima facie evidence of the accuracy of the determinations and calculations contained or asserted therein.  The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.  Any payment due to any of the Lenders pursuant to this Section 5.05 shall be deemed additional interest under such Lender’s Note.

 

5.06 Taxes

 

.

 

(a) Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.06) the Administrative Agent and each Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b) Payment of Other Taxes by the Borrower.  In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c) Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.06) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be prima facie evidence of the accuracy of the determinations and calculations contained or asserted therein.

 

(d) Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e) Foreign Lenders.  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.  Until such documentation is provided, the Borrower shall be entitled to take all actions that are required to comply with Applicable Laws with respect to payments payable hereunder on account of Loans made to the Borrower by any Foreign Lender who has not complied with the requirements of this Section 5.06(e), and such actions shall not constitute a Default or an Event of Default.

 

(f) Refunds.  If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 5.06, provided no Major Default or Event of Default exists, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 5.06 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This Section 5.06(f) shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

 

5.07 Replacement of Lenders

 

.  If any Lender requests compensation pursuant to Section 5.01 or 5.06, or any Lender’s obligation to Continue Loans of any Type, or to Convert Loans of any Type into the other Type of Loan, shall be suspended pursuant to Section 5.01 or 5.03 (any such Lender requesting such compensation, or whose obligations are so suspended, being herein called a “Requesting Lender”), the Borrower, upon five (5) Business Days notice to such Requesting Lender and the Administrative Agent, may require that such Requesting Lender transfer all of its right, title and interest under this Agreement and such Requesting Lender’s Note and its interest in the other Loan Documents to an Eligible Assignee (a “Proposed Lender”) identified by the Borrower that is satisfactory to the Administrative Agent in its sole discretion (i) if such Proposed Lender agrees to assume all of the obligations of such Requesting Lender hereunder, and to purchase all of such Requesting Lender’s Loan hereunder for consideration equal to the aggregate outstanding principal amount of such Requesting Lender’s Loan, together with interest thereon to the date of such purchase (to the extent not paid by the Borrower), and satisfactory arrangements are made for payment to such Requesting Lender of all other amounts accrued and payable hereunder to such Requesting Lender as of the date of such transfer (including any fees accrued hereunder and any amounts that would be payable under Section 5.05 as if all of such Requesting Lender’s Loan were being prepaid in full on such date) and (ii) if such Requesting Lender has requested compensation pursuant to Section 5.01 or 5.06, such Proposed Lender’s aggregate requested compensation, if any, pursuant to Section 5.01 or 5.06 with respect to such Requesting Lender’s Loan is lower than that of the Requesting Lender.  Subject to the provisions of Section 14.07(b), such Proposed Lender shall be a “Lender” for all purposes hereunder.  Without prejudice to the survival of any other agreement of the Borrower hereunder the agreements of the Borrower contained in Sections 5.01, 5.06, 14.03 and 14.04 (without duplication of any payments made to such Requesting Lender by the Borrower or the Proposed Lender) shall survive for the benefit of such Requesting Lender under this Section 5.07 with respect to the time prior to such replacement.

 

ARTICLE VI.

 

 

CONDITIONS PRECEDENT

 

6.01 Conditions Precedent to Effectiveness of Loan Commitments

 

.  The effectiveness of the Commitments and the obligation of the Lenders to make the Loans are subject to the conditions precedent that, on or prior to the Closing Date, (i) the Administrative Agent shall have received each of the documents (duly executed and completed by the part(y)(ies) thereto and acknowledged when applicable) referred to below in this Section 6.01, (ii) each of the other conditions listed below in this Section 6.01 is satisfied, the satisfaction of each of such conditions to be satisfactory to the Administrative Agent (and to the extent specified below, to each Lender) in form and substance (or any such condition shall have been waived in accordance with Section 14.05), (iii) all of the representations and warranties of the Borrower (without giving effect to any qualification therein which limits any such representations and warranties to the “knowledge” or “best knowledge” of the Borrower or any other Borrower Party) shall be true and correct on the Closing Date, (iv) the Liens granted by the Security Documents shall have attached and been perfected, with the priority as required pursuant to the terms hereof or thereof (or, in the case of the Liens encumbering the Projects, the Title Policies insuring the effectiveness and priority of such Liens shall have been unconditionally delivered to the Administrative Agent in accordance with the closing instructions delivered on its behalf), and (v) no Default or Event of Default shall exist or shall result therefrom.

 

(a) Agreement.  From each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

 

(b) Notes.  The Notes for each Lender.

 

(c) Deed of Trust.  Each Deed of Trust, in form for recording.

 

(d) Environmental Indemnity.  The Environmental Indemnity.

 

(e) Project-Level Account Security Agreement.  The Project-Level Account Security Agreement.

 

(f) General Assignment.  The General Assignment.

 

(g) Property Manager’s Consent.  Each Property Manager’s Consent.

 

(h) Other Loan Documents.  The Guarantor Documents and all other Loan Documents.

 

(i) Opinion of Counsel to the Borrower Parties.  (i) A favorable written opinion, dated the Closing Date, of Cox, Castle & Nicholson LLP, counsel to the Borrower and furnishing such opinions at the Borrower’s request on behalf of the other Borrower Parties and Guarantor, and covering such matters relating to the Borrower Parties and Guarantor, this Agreement, the other Loan Documents, and the Transactions as the Administrative Agent for the benefit of the Lenders shall reasonably request, and (ii) a favorable opinion of Administrative Agent-approved local counsel to the Borrower in Hawaii, as to the matters specific to Hawaii law pertaining to the Bishop Square Project and such other matters relating to the Borrower Parties, this Agreement, the other Loan Documents, and the Transactions as the Administrative Agent shall reasonably request.  The Borrower hereby requests such counsel to deliver such opinion to the Lenders and the Administrative Agent.

 

(j) Organizational Documents.  Copies of (i) the Certificate of Incorporation, Certificate of Formation, Certificate of Limited Partnership or similar formation document of each of the Borrower Parties and Guarantor, certified by the Secretary of State of the state of formation of such Person as of a recent date, (ii) the other Organizational Documents of each of the Borrower Parties and Guarantor certified by any Authorized Officer on behalf of the Borrower Party, (iii) the applicable resolutions of each of the Borrower Parties authorizing the execution and delivery of the Loan Documents to which they are a party, in each case certified by an Authorized Officer on behalf of the Borrower Party or the Guarantor as of the date of this Agreement as being accurate and complete, all in form and substance satisfactory to the Administrative Agent and its counsel, (iv) certificates signed by an Authorized Officer on behalf of the applicable Person certifying the name, incumbency and signature of each individual authorized to execute the Loan Documents to which such Person is a party and the other documents or certificates to be delivered pursuant hereto or thereto, on which the Administrative Agent and the Lenders may conclusively rely unless a revised certificate is similarly so delivered in the future, and (v) good standing certificates with respect to each Borrower Party and Guarantor that is organized under the laws of any state of the United States of America from such state and good standing certificates and authority to conduct business with respect to the Borrower, Guarantor, the Borrower’s Member and the Borrower’s Manager from the State of California and, in the case of the Borrower, the State of Hawaii.

 

(k) Title Insurance; Priority.  An ALTA policy or policies (or signed, fully effective pro forma policy or policies issued pursuant to a “New York-style” closing) of title insurance for each Project satisfactory to the Administrative Agent (collectively, the “Title Policy”), together with evidence of the payment of all premiums due thereon, issued by the Title Company (i) each insuring the Administrative Agent for the benefit of the Lenders in an amount equal to the aggregate amount of the Commitments in effect on the Closing Date (with a tie-in endorsement satisfactory to the Administrative Agent) that the Borrower is lawfully seized and possessed of a valid and subsisting fee simple (or other applicable) interest in each of the Projects subject to no Liens other than Permitted Title Exceptions and (ii) providing such other affirmative insurance and endorsements as the Administrative Agent may require in each case as approved by the Administrative Agent.  In addition, the Borrower shall have paid to the Title Company all expenses and premiums of the Title Company in connection with the issuance of such policies and all recording and filing fees payable in connection with recording the Deeds of Trust and the filing of the Uniform Commercial Code financing statements related thereto in the appropriate offices.

 

(l) Survey.  An “as-built” survey of each Project, each satisfactory to the Administrative Agent in form and content and made by a registered land surveyor satisfactory to the Administrative Agent, each survey showing, among other things through the use of course bearings and distances, (i) all easements and roads or rights of way (including all access to public roads) and setback lines, if any, affecting the Improvements and that the same are unobstructed or any such obstructions are acceptable to the Administrative Agent; (ii) the dimensions of all existing buildings and distance of all material Improvements from the lot lines; (iii) no encroachments by improvements located on adjoining property that are not acceptable to the Administrative Agent; and (iv) such additional information which may be reasonably required by the Administrative Agent.  Each said survey shall be dated a date reasonably satisfactory to the Administrative Agent, bear a proper certificate substantially in the form of Exhibit M attached hereto by the surveyor in favor of the Administrative Agent (on behalf of the Lenders) and the Title Company and include the legal description of the relevant Project.

 

(m) Certificates of Occupancy.  Copies of permanent and unconditional certificates of occupancy permitting the fully functioning operation and occupancy of the Projects and of such other permits necessary for the use and operation of the Projects issued by the respective Governmental Authorities having jurisdiction over the Projects, together with such other evidence as may be requested by the Administrative Agent with respect to the compliance of the Projects with zoning requirements.

 

(n) Insurance.  A copy of the insurance policies required by Section 8.05 or certificates of insurance with respect thereto, such policies or certificates, as the case may be, to be in form and substance, and issued by companies, acceptable to the Administrative Agent and its insurance consultant and otherwise in compliance with the terms of Section 8.05, together with evidence of the payment of all premiums therefor.

 

(o) Environmental Report.  The Environmental Reports.

 

(p) Leases.  (i) An affidavit for each Project (collectively, the “Leasing Affidavit”) of an Authorized Officer of the Borrower certifying that except as disclosed in the estoppel certificates delivered to the Administrative Agent for the benefit of the Lenders prior to the Closing Date, that certain Aged Delinquencies report dated September 28, 2010, provided to the Administrative Agent for such Project, or the rent rolls delivered to the Administrative Agent pursuant to Section 7.22, (A) each tenant lease listed in the Leasing Affidavit is in full force and effect; (B) the tenant lease summaries provided by the Borrower to the Administrative Agent are true and correct and, as to all matters contained therein relating to rent, term, termination rights, options to renew, extend or expand, rights of first refusal or offer, tenant improvement allowances, security deposits and other credit enhancements, insurance, tax and operating expense recovery, and obligations with respect to subordination, non-disturbance and attornment, complete in all material respects, and such summaries do not fail to disclose any material term of any Lease which would adversely affect the obligation of the tenant thereunder to pay rent or perform any of its other material obligations for the entire term thereof consistent with the terms disclosed in such summary and the rent rolls delivered to the Administrative Agent pursuant to Section 7.22; (C) no defaults exist under any of the Leases (other than the Major Leases) by any party (including any guarantor) thereto that, individually or in the aggregate with respect to all such defaults, would result in a Material Adverse Effect and, to the knowledge of the Borrower, no material default exists under any of the Major Leases; and (D) to the Borrower’s knowledge, no event which would result in a material adverse change in the financial condition, operations or business of one or more tenants under Major Leases has occurred which the Borrower has determined would adversely affect the ability of such tenant to pay its rent and perform its other material obligations under such Major Lease and (ii) the standard office lease form and retail lease form (as approved by the Administrative Agent) to be used for the Projects.

 

(q) Estoppels.   Estoppel certificates in form and substance satisfactory to the Administrative Agent from tenants covering at least fifty percent (50%) of all the leased space in the Projects.  For purposes of this requirement, it is agreed that the form tenant estoppels required by any applicable Approved Lease shall be acceptable to the Administrative Agent and, with respect to estoppel certificates provided for leased space in the Bishop Square Project, the form of tenant estoppels the Borrower used in connection with its acquisition of the Bishop Square Project shall be acceptable to Administrative Agent.

 

(r) Minimum Net Operating Income.  Borrower shall have demonstrated to the Administrative Agent’s satisfaction that the Projects will generate Adjusted Net Operating Income during the twelve (12) calendar month period following the Closing Date in a minimum annual amount acceptable to the Administrative Agent and the Lenders.

 

(s) Non-Foreign Status.  A certificate by an Authorized Officer certifying the Borrower’s tax identification number and the fact that Borrower is not a foreign person under the Code.

 

(t) UCC Searches.  Uniform Commercial Code searches with respect to the Borrower, the Borrower’s Member and the Borrower’s Manager as required by the Administrative Agent.

 

(u) Appraisal.  The Appraisals for each Project (i) indicating an Appraised Value for each of the Projects, such that the Allocated Loan Amount for each Project shall not exceed sixty percent (60%) of the Appraised Value of such Project, and (ii) confirming that the aggregate amount of the Commitments in effect on the Closing Date shall not exceed sixty percent (60%) of the combined Appraised Values of all the Projects.

 

(v) Property Management and Leasing Agreements.  The Property Management Agreement and all brokerage and/or leasing agreements affecting the Projects and certified by an Authorized Officer to be true, correct and complete in all respects.

 

(w) Financial Statements.  Copies of the most recent publicly available Form 10-K and Form 10-Q of the REIT and opening balance sheet and cash flow projections for the Borrower, and a certificate dated the Closing Date and signed by an Authorized Officer on behalf of the Borrower stating that (i) such financial statements of the REIT and opening balance sheet of the Borrower are true, complete and correct in all material respects and (ii) no event that could reasonably be expected to have a Material Adverse Effect has occurred since the date of such financial statements, all of the foregoing to be satisfactory to the Administrative Agent and each Lender in their reasonable discretion.

 

(x) Approved Annual Budget.  A copy of the Annual Budget for each Project for the current calendar year or other budgetary information for each Project (e.g., ARGUS runs) satisfactory to Administrative Agent.

 

(y) Property Condition Report.  A survey of the physical condition of the Projects prepared by a licensed engineer selected by the Administrative Agent and in accordance with the Administrative Agent’s scope and otherwise acceptable to the Administrative Agent in all respects.

 

(z) Project-Level Accounts.  Each of the Project-Level Accounts shall have been established pursuant to the terms of this Agreement and any other Loan Document.

 

(aa) Seismic Report.  A seismic report for each Project prepared by a firm of licensed engineers selected by the Administrative Agent and prepared in accordance with the Administrative Agent’s scope for such reports and otherwise acceptable to the Administrative Agent in all respects.

 

(bb) Fees and Expenses.  The Borrower shall have paid (i) all fees then due and payable to the Administrative Agent (including fees payable for the account of the Lenders) pursuant to the Fee Letter, (ii) any other fees then due to the Administrative Agent, Eurohypo or the Arranger and (iii) any fees and expenses due to the Administrative Agent or the Arranger pursuant to Section 14.03, including the reasonable fees and expenses of Morrison & Foerster LLP, counsel to the Administrative Agent and Eurohypo and the reasonable fees and expenses of Bickerton Lee Dang & Sullivan, LLP, local Hawaii counsel to the Administrative Agent.

 

(cc) Organizational Chart and Background Checks.  The Borrower shall have delivered to the Administrative Agent an organizational chart reflecting the ownership of the direct and indirect equity interests in the Borrower and Guarantor, including the percentage of ownership interest of the Persons shown thereon.  The Administrative Agent shall have obtained satisfactory background and “know-your-customer” checks of the Borrower and the Operating Partnership.

 

(dd) Borrower’s Interest.  The Projects shall have been transferred to the Borrower pursuant to conveyance documents satisfactory to the Administrative Agent, and the Borrower’s interest in the Projects shall have been approved by the Administrative Agent.

 

(ee) Other Documents.  Such other documents as the Administrative Agent may reasonably request.

 

ARTICLE VII.

 

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders as of the date hereof that:

 

7.01 Organization; Powers

 

.  Each of the Borrower Parties is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.  The Borrower Parties are each qualified to do business and are in good standing in the State of California, and the Borrower is qualified to do business and is in good standing in the State of Hawaii.

 

7.02 Authorization; Enforceability

 

.  The Transactions applicable to each Borrower Party or the Guarantor are within such Borrower Party’s or the Guarantor’s respective organizational powers and have been duly authorized by all necessary organizational action under their respective Organizational Documents.  This Agreement and the other Loan Documents have been duly executed and delivered by the Borrower Parties party thereto and each of the Loan Documents to which a Borrower Party is a party when delivered will constitute, a legal, valid and binding obligation of the Borrower Party, enforceable against the Borrower Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).  Each of the Guarantor Documents has been duly executed and delivered by Guarantor and each of the Guarantor Documents when delivered will constitute, a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

7.03 Government Approvals; No Conflicts

 

.  The Transactions (a) do not require any Government Approvals of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been obtained or made and are in full force and effect and (ii) filings and recordings in respect of the Liens created pursuant to the Security Documents, (b) will not violate any Applicable Law applicable to any of the Borrower Parties or the Organizational Documents of any of the Borrower Parties, (c) will not violate or result in a default under any material indenture, agreement or other instrument binding upon any of the Borrower Parties, or give rise to a right thereunder to require any payment to be made by any of the Borrower Parties, and (d) except for the Liens created pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of any of the Borrower Parties.

 

7.04 Financial Condition

 

.  The Borrower has heretofore furnished to the Administrative Agent certain financial statements of the REIT and the opening balance sheet of the Borrower.  All such financial statements of the REIT are complete and correct in all material respects and fairly present the financial condition of the REIT as of the applicable respective dates of such financial statements, all in accordance with GAAP.  The opening balance sheet of the Borrower is complete and correct in all material respects and fairly represents the assets and liabilities of the Borrower, as of the applicable date of such opening balance sheet, all in accordance with sound accounting practices.  The Borrower has no Indebtedness (other than security deposits and tenant improvement allowances under the Leases that are described in the tenant lease summaries provided by the Borrower to the Administrative Agent and that are in amounts and on terms consistent with market terms and in the ordinary course of business), material contingent liabilities, material liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as disclosed on Schedule 7.04 attached hereto as referred to or reflected or provided for in said balance sheet and except for Real Estate Taxes and Other Charges that are not yet delinquent, none of which would result in the violation by the Borrower of its obligations under Section 8.03 to maintain its status as a Limited Purpose Entity.  Since the applicable dates of such financial statements of the REIT, except as disclosed in Schedule 7.04 attached hereto, there has been no event that could reasonably be expected to have a Material Adverse Effect.

 

7.05 Litigation

 

.  Except as disclosed in Schedule 7.05 hereto, there are no legal or arbitral proceedings, or any proceedings by or before any Governmental Authority or agency of which the Borrower, Borrower’s Member, Borrower’s Manager or the Operating Partnership has received written notice, now pending or (to the knowledge of the Borrower) threatened in writing against the Borrower, the Projects, the Borrower’s Member or Borrower’s Manager except for those which (a) (subject to applicable deductibles or self-insurance) are fully covered by insurance maintained by or for the Borrower, the Borrower’s Member or the Borrower’s Manager or (b) involve uninsured claims that do not exceed $75,000 individually, or in the aggregate for all such claims.

 

7.06 ERISA

 

.  Neither the Borrower, the Borrower’s Member, the Operating Partnership nor any of their ERISA Affiliates has established any Plan which would cause the Borrower, the Borrower’s Member, the Operating Partnership or any of their ERISA Affiliates to be subject to ERISA and none of the Borrower’s, the Borrower’s Member’s, the Operating Partnership’s nor any of their ERISA Affiliate’s assets constitutes or will constitute “plan assets” of one or more Plans.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  Each Plan established by a Borrower Party or the Operating Partnership and, to the knowledge of the Borrower Parties or the Operating Partnership, each of its ERISA Affiliates and each Multiemployer Plan, is in compliance with, the applicable provisions of ERISA, the Code and any other Applicable Law.  The Borrower, the Operating Partnership, and each of their ERISA Affiliates have met all applicable requirements under the ERISA Funding Rules with respect to each Plan, and no waiver of the minimum funding standards under the ERISA Funding Rules has been applied for or obtained.

 

7.07 Taxes

 

.  Each of the Borrower Parties and the Operating Partnership has timely filed or timely caused to be filed (or obtained effective extensions for filing) all tax returns and reports required to have been filed by it and has paid or caused to be paid all Taxes required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and (a) for which the Borrower Party, the REIT and the Operating Partnership has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

7.08 Investment and Holding Company Status

 

.  None of the Borrower Parties is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company”, or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company”, as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

 

7.09 Environmental Matters

 

.  Except for matters expressly and specifically set forth in the Environmental Reports or the Property Condition Reports or matters disclosed in Schedule 7.09 or Schedule 8.11 attached hereto, to the Borrower’s knowledge:

 

(a) The Borrower and each Project is in compliance with all applicable Environmental Laws, except where the failure to comply with such laws is not reasonably likely to result in a Material Adverse Effect.

 

(b) There is no Environmental Claim of which the Borrower, any Prior Project Owner Affiliate, or Guarantor has received written notice pending, or to the Borrower’s knowledge, threatened in writing, and no penalties arising under Environmental Laws have been assessed, against the Borrower, any Prior Project Owner Affiliate, or Guarantor, any Project or, to the Borrower’s knowledge, against any Person whose liability for any Environmental Claim the Borrower or the Borrower’s Member has or may have retained or assumed either contractually or by operation of law, and none of the Borrower, Prior Project Owner Affiliate or Guarantor has received written notice of any investigation or review relating to any Project which is pending or, to the knowledge of the Borrower, threatened in writing by any Governmental Authority, citizens group, employee or other Person with respect to any alleged failure by the Borrower, the Borrower’s Member or any Project to have any environmental, health or safety permit, license or other authorization required under, or to otherwise comply with, any Environmental Law or with respect to any alleged liability of the Borrower or the Borrower’s Member for any Use or Release of any Hazardous Substances.

 

(c) There have been no past, and there are no present, Releases of any Hazardous Substance that could reasonably be anticipated to form the basis of any Environmental Claim against the Borrower, the Borrower’s Member, any Project or, to the knowledge of the Borrower, against any Person whose liability for any Environmental Claim the Borrower or the Borrower’s Member has or may have retained or assumed either contractually or by operation of law.

 

(d) To the Borrower’s knowledge, there is no Release of Hazardous Substances migrating to any Project which could require Remediation or require the Borrower to provide notice to any Governmental Authority.

 

(e) There is not present at, on, in or under any Project, PCB-containing equipment, asbestos or asbestos containing materials, underground storage tanks or surface impoundments for Hazardous Substances, lead in drinking water (except in concentrations that comply with all Environmental Laws), or lead-based paint (except in compliance with all applicable Environmental Laws).

 

(f) No Liens are presently recorded with the appropriate land records under or pursuant to any Environmental Law with respect to any Project and, to the Borrower’s knowledge no Governmental Authority has been taking or is in the process of taking any action that could subject any Project to Liens under any Environmental Law.

 

(g) The Borrower has provided to the Administrative Agent’s environmental consultant prior to the Closing Date true and correct copies of all materials, environmental reports and other documents pertaining to the Projects requested by the consultant and in the Borrower’s possession or control.

 

7.10 Organizational Structure

 

.  The Borrower has heretofore delivered to the Administrative Agent a true and complete copy of the Organizational Documents of each Borrower Party.  The sole member of the Borrower is the Operating Partnership.

 

7.11 Subsidiaries

 

.  The Borrower does not have any Subsidiaries.

 

7.12 Title

 

.  On the Closing Date, the Borrower will own and on such date will have good, indefeasible and insurable fee simple title to the portion of the Projects consisting of real property free and clear of all Liens, other than Permitted Title Exceptions.  On the Closing Date, the Borrower will own or (in compliance with Section 9.04(d)) lease and will have good title to all other portions of the Project free and clear of all Liens, other than Permitted Title Exceptions and rights of equipment lessors under equipment leases currently in effect which comply with the requirements set forth in Sections 9.02(g) and 9.04(d).  There are no outstanding options to purchase, rights of first offer to purchase or rights of first refusal to purchase affecting the Projects.

 

7.13 No Bankruptcy Filing

 

.  Neither the Borrower, the Borrower’s Member nor the Operating Partnership is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and neither the Borrower, the Borrower’s Member nor the Operating Partnership has knowledge of any Person contemplating the filing of any such petition against the Borrower, the Borrower’s Member, the Operating Partnership or the Borrower’s Manager.

 

7.14 Executive Offices; Places of Organization

 

.  The location of the Borrower’s, the Borrower’s Member’s and the Borrower’s Manager’s principal place of business and chief executive office is the address identified in the “Address for Notices” area beneath the Borrower’s name on the Borrower’s signature page to this Agreement, except to the extent changed in accordance with Section 9.07.  Each of the Borrower and Guarantor was organized in the State of Delaware.

 

7.15 Compliance; Government Approvals

 

.  Except as expressly set forth in the Property Condition Report for each Project, the Environmental Reports, or the seismic reports delivered for the Projects pursuant to Section 6.01(aa), the Borrower, each Project and the Borrower’s use thereof and operations thereat comply in all material respects with all Applicable Laws.  All material Government Approvals necessary under Applicable Law in connection with the operation of the Projects as contemplated by the Loan Documents have been duly obtained, are in full force and effect, are not subject to appeal, are held in the name of the Borrower (or in the name of an Affiliate of the Borrower that previously owned a Project) and are free from conditions or requirements compliance with which could reasonably be expected to have a Material Adverse Effect or which the Borrower does not reasonably expect to be able to satisfy.  To the best knowledge of the Borrower, there is no proceeding pending or threatened in writing that seeks, or may reasonably be expected, to rescind, terminate, Modify or suspend any such Government Approval.  Except for business licenses and other licenses or permits that are not specifically applicable to the Projects, the Borrower has no reason to believe that the Administrative Agent, acting for the benefit of the Lenders, will not be entitled, without undue expense or delay, to the benefit of each such Government Approval upon the exercise of remedies under the Security Documents.

 

7.16 Condemnation; Casualty

 

.  To the Borrower’s knowledge, no Taking has been commenced or is presently contemplated with respect to all or any portion of any Project or for the relocation of roadways providing access to any Project.  No Casualty Event of any material nature that has not been substantially repaired has occurred with respect to any Project.

 

7.17 Utilities and Public Access; No Shared Facilities

 

.  Each Project has adequate rights of access to public ways and is served by adequate electric, gas, water, sewer, sanitary sewer and storm drain facilities.  All public utilities necessary to the use and enjoyment of each Project as intended to be used and enjoyed are located in the public right-of-way abutting each Project except as otherwise shown on the survey of such Project provided to the Administrative Agent.

 

7.18 Solvency

 

.  On the Closing Date and after and giving effect to the Loans occurring on the Closing Date, and the disbursement of the proceeds of such Loans pursuant to the Borrower’s instructions, each Borrower Party is and will be Solvent.

 

7.19 Foreign Person

 

.  None of the Borrower, the Operating Partnership nor the Borrower’s Member is a “foreign person” within the meaning of Section 1445(f)(3) of the Code.

 

7.20 No Joint Assessment; Separate Lots

 

.  The Borrower has not suffered, permitted or initiated the joint assessment of any Project with any other real property constituting a separate tax lot.

 

7.21 Security Interests and Liens

 

.  The Security Documents create (and upon recordation of the Deeds of Trust, filing of the applicable financing statements in the appropriate filing offices and the execution and delivery by the Depository Bank of control agreements with respect to any pledged deposit accounts there will be perfected as to any portion of such collateral consisting of the deposit account itself and the securities entitlements thereto), as security for the Obligations, valid, enforceable, perfected and first priority security interests in and Liens on all of the respective collateral intended to be covered thereunder, in favor of the Administrative Agent as administrative agent for the ratable benefit of the Lenders, subject to no Liens other than the Permitted Title Exceptions and rights of equipment lessors under equipment leases currently in effect which comply with the requirements set forth in Sections 9.02(g) and 9.04(d), except as enforceability may be limited by applicable insolvency, bankruptcy, reorganization, moratorium or other laws affecting creditors’ rights generally, or general principles of equity, whether such enforceability is considered in a proceeding in equity or at law.  Other than in connection with any future change in the Borrower’s or Other Swap Pledgor’s name or the location in which the Borrower or Other Swap Pledgor is organized or registered, no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than the filing of continuation statements and Notices of Intent to Preserve Security Interests in accordance with the Uniform Commercial Code and the California Civil Code.  A financing statement covering all property covered by any Security Document that is subject to a Uniform Commercial Code financing statement has been filed and/or recorded, as appropriate, (or irrevocably delivered to the Administrative Agent or a title agent for such recordation or filing) in all places necessary to perfect a valid first priority security interest with respect to the rights and property that are the subject of such Security Document to the extent governed by the Uniform Commercial Code and to the extent such security can be perfected by such filing.

 

7.22 Leases

 

.  Except as disclosed in the estoppel certificates delivered to the Administrative Agent prior to the Closing Date, in those certain Aged Delinquencies reports for each Project dated September 28, 2010, provided to the Administrative Agent prior to the Closing Date, or (as to items (2) through (10) below) the rent rolls for each Project attached hereto as Schedule 7.22, with respect to the Leases (which term, for the purposes of this Section 7.22 is limited to tenant leases): (1) the rent rolls attached hereto as Schedule 7.22 are true, correct and complete and the Leases referred to thereon are all valid and in full force and effect; (2) the Leases (including Modifications thereto) are in writing, and there are no oral agreements with respect thereto; (3) the copies of each of the Leases (if any) delivered to the Administrative Agent are true, correct and complete in all material respects and have not been Modified (or further Modified); (4) the lease summaries delivered to the Administrative Agent are true and correct in all material respects and, as to all matters contained therein relating to rent, term, termination rights, options to renew, extend or expand, rights of first refusal or offer, tenant improvement allowances, security deposits and other credit enhancements, insurance, tax and operating expense recovery, and obligations with respect to subordination, non-disturbance and attornment, complete in all material respects, and such summaries do not fail to disclose any material term of any Lease which would materially impact the obligation of the tenant thereunder to pay rent or perform any of its other material obligations for the entire term thereof as disclosed in such summary and the rent rolls attached hereto as Schedule 7.22; (5) to the Borrower’s knowledge, no defaults exist under any of the Leases (other than the Major Leases) by any party (including any guarantor) thereto that, individually or in the aggregate with respect to all such defaults would result in a Material Adverse Effect and, to the knowledge of the Borrower, no material default exists under any of the Major Leases; (6) the Borrower has no knowledge of any presently effective notice of termination or notice of default given by any tenant with respect to any Major Lease or under any other Leases that individually or in the aggregate could be reasonably expected to result in a Material Adverse Effect; (7) the Borrower has not made any presently effective assignment or pledge of any of the Leases, the rents or any interests therein except to the Administrative Agent; (8) no tenant or other party has an option or right of first refusal to purchase all or any portion of any Project; (9) except as disclosed in the lease summaries delivered by the Borrower to the Administrative Agent, no tenant has the right to terminate its lease prior to expiration of the stated term of such Lease (except as a result of a casualty or condemnation); and (10) no tenant has prepaid more than one month’s rent in advance (except for bona fide security deposits and estimated payments of operating expenses, taxes and other pass-throughs paid by tenants pursuant to their Leases not prepaid more than one month prior to the date such estimated payments are due).

 

7.23 Insurance

 

.  The Borrower has in force, and has paid (in each case to the extent now due and payable) the Insurance Premiums in respect of, all of the insurance required by Section 8.05.

 

7.24 Physical Condition

 

.  Except as expressly and specifically described and disclosed in the Property Condition Reports for the Projects, the seismic reports delivered for the Projects pursuant to Section 6.01(aa), the Environmental Reports for the Projects and the capital improvement schedules contained in the 2010 budgets for the Projects previously delivered to the Administrative Agent, and except for the work described in Schedule 8.21, to the Borrower’s knowledge, each Project, including all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, is in good condition, order and repair in all material respects; to the Borrower’s knowledge, there exists no structural or other material defects or damages in any Project, whether latent or otherwise, and the Borrower has not received written notice from any insurance company or bonding company of any defects or inadequacies in any Project, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.  Notwithstanding the provisions of Section 12.01(c), if any representation or warranty contained in this Section 7.24 is untrue at any time with respect to any Project, such Default or Event of Default may be cured if the Borrower, within the cure period set forth in Section 12.01(r), performs such acts as are sufficient to cause this representation and warranty to be true by the end of such cure period.

 

7.25 Flood Zone

 

.  Except as may be disclosed on the survey of the Project, or any flood zone certification delivered by the Borrower to the Administrative Agent prior to the Closing Date, no portion of any Project is located in a flood hazard area as designated by the Federal Emergency Management Agency or, if in a flood zone, flood insurance is maintained therefor in full compliance with the provisions of Section 8.05(a)(i).

 

7.26 Management Agreement

 

.  The Property Management Agreement is the only management and/or leasing agreement related to each Project, and is in full force and effect with no default or event of default existing thereunder, and the copy of the Property Management Agreement delivered to the Administrative Agent is a true, correct and complete copy.

 

7.27 Boundaries

 

.  Except as may be disclosed on the surveys delivered pursuant to Section 6.01(l) and in the Title Policy, to the Borrower’s knowledge: (i) none of the Improvements is outside the boundaries of any Project (or building restriction or setback lines applicable thereto); (ii) no improvements on adjoining properties encroach upon any Project; and (iii) no Improvements encroach upon or violate any easements or (in any respect which would have a Material Adverse Effect) any other encumbrance upon any Project.

 

7.28 Illegal Activity

 

.  No portion of any Project has been purchased with proceeds of any illegal activity and no part of the proceeds of the Loans will be used in connection with any illegal activity.

 

7.29 Permitted Liens

 

.  None of the Permitted Title Exceptions or Permitted Liens individually or in the aggregate will have a Material Adverse Effect.

 

7.30 Foreign Assets Control Regulations, Etc

 

.  Neither the execution and delivery of the Notes and the other Loan Documents by the Borrower Parties or the Operating Partnership nor the use of the proceeds of the Loan, will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the Anti-Terrorism Order or any enabling legislation or executive order relating to any of the same.  Without limiting the generality of the foregoing, no Borrower Party or the Operating Partnership or any of their respective Subsidiaries (a) is or will become a blocked person described in Section 1 of the Anti-Terrorism Order or (b) knowingly engages or will engage in any dealings or transactions or be otherwise associated with any person who is known or who (after such inquiry as may be required by Applicable Law) should be known to the Borrower Party or the Operating Partnership or such Subsidiary to be such a blocked person.

 

7.31 Defaults

 

.  No Default exists under any of the Loan Documents.

 

7.32 Other Representations

 

.  All of the representations in this Agreement and the other Loan Documents by the Borrower and its Affiliates are true, correct and complete in all material respects as of the date hereof.

 

7.33 True and Complete Disclosure

 

.  The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Borrower Parties or the Operating Partnership to the Administrative Agent or any Lender in connection with the negotiation, preparation or delivery of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant hereto or thereto, do not contain any untrue statement of material fact or omit to state any material fact known to the Borrower necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.  All written information furnished after the date hereof by any Borrower Party or the Operating Partnership to the Administrative Agent and the Lenders in connection with this Agreement and the other Loan Documents and the Transactions will, to the Borrower’s knowledge, be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified.  There is no fact presently known to the Borrower or the Borrower’s Manager that could reasonably be anticipated to have a Material Adverse Effect that has not been disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Administrative Agent or the Lenders for use in connection with the Transactions.

 

7.34 Ground Lease.  The Borrower has heretofore delivered to the Administrative Agent a true, correct and complete copy of the Ground Lease and the Ground Lease has not been further Modified.  The Ground Lease is in full force and effect and the Borrower is not in default thereunder.  There has been no merger of the leasehold estate under the Ground Lease with the fee estate in the land affected thereby.

 

7.35 For Own Account

 

.  The Loans have been requested by the Borrower, and the proceeds of the Loans shall be utilized by the Borrower, for its own account.

 

7.36 Non-Foreign Status

 

.  The Borrower represents and warrants to the Lenders that under the Code (a) the Borrower’s tax identification number is 38-3814359, and (b) the Operating Partnership’s tax identification number is 20-3213411.

 

ARTICLE VIII.

 

 

AFFIRMATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with the Lenders and the Administrative Agent that, so long as any Commitment or Loan is outstanding and until payment in full of all amounts payable by the Borrower hereunder:

 

8.01 Information

 

.  The Borrower shall deliver to the Administrative Agent (for delivery to the Lenders in accordance with the terms of this Agreement):

 

(a) Within the earlier of (x) one hundred (100) days after the end of each fiscal year of the Borrower’s operation of the Projects or (y) five (5) Business Days after the annual Form 10-K of the REIT becomes publicly available, the Borrower shall furnish to the Administrative Agent the following:  (i) the annual Form 10-K of the REIT, (ii) an annual summary of operating results for each of the Projects for such year, (iii) a comparison of actual results to budget for each of the Projects for such year, (iv) the operating budget for each of the Projects for the fiscal year then under way, (v) an unaudited balance sheet and income statement for such year for the Borrower (which may be consolidated provided that such financial statements contain notes identifying each item on such financial statements that is attributable to the Borrower or the Projects) and (vi) an updated rent roll for each of the Projects; provided, however, that if the Borrower or the REIT elects (or is required pursuant to GAAP) to have the Borrower’s financials reported on an unconsolidated basis, then within one hundred (100) days after the end of each fiscal year of the Borrower, the Borrower shall, in addition to the other items set forth in this clause (a), furnish to the Administrative Agent the audited annual financial statement of the Borrower, which financial statements shall contain a balance sheet and income statement of the Borrower;

 

(b) Within the earlier of (x) fifty (50) days after the end of each calendar quarter (which shall instead be based on the REIT’s fiscal quarter) or (y) five (5) Business Days after the Form 10-Q of the REIT for such fiscal quarter becomes publicly available (or, in the case of the fourth quarter of each fiscal year, within the time period required by Section 8.01(a) above), the Borrower shall furnish to the Administrative Agent the following:  (i) the most recent Form 10-Q of the REIT, (ii) a summary of operating results for each of the Projects as of the end of the current quarter for the year-to-date, (iii) a comparison of actual results to budget for each of the Projects as of the end of the current quarter for the year-to-date, (iv) an unaudited balance sheet and income statement for the Borrower as of the end of the current quarter for the year-to-date (which may be consolidated provided that such financial statements contain notes identifying each item on such financial statements that is attributable to the Borrower or the Projects) and (v) an updated rent roll for each of the Projects;

 

(c) at the time of the delivery of each of the financial statements provided for in subsection (a) and subsection (b) of this Section 8.01, a certificate of an Authorized Officer on behalf of the Borrower, certifying (i) such respective financial statements and reports as being true, correct, and complete in all material respects; (ii) that such officer has no knowledge, except as specifically stated, of any Default or if a Default has occurred, specifying the nature thereof in reasonable detail and the action which the Borrower is taking or proposes to take with respect thereto; (iii) that the Borrower is in compliance with the restrictions on Indebtedness set forth in Section 9.04; and (iv) containing a calculation in such reasonable detail as is acceptable to the Administrative Agent setting forth the Operating Income, Operating Expenses, Net Operating Income, Adjusted Net Operating Income, the Debt Service Coverage Ratio and Debt Yield, in each case collectively with respect to the Projects and the Loans, for the most recent calendar quarter;

 

(d) from time to time, within fifteen (15) days after request therefor, such other information regarding the financial condition, operations, business or prospects of the Borrower, the Projects, the other Borrower Parties, or the Bankruptcy Parties as the Administrative Agent may reasonably request, including, without limitation, if there is a material variation in the application of accounting principles as further described herein (i) a description in reasonable detail of any material variation between the application of accounting principles employed in the preparation of any annual or quarterly financial statement under Section 8.01 and the application of accounting principles employed in the preparation of the immediately preceding annual or quarterly financial statements and (ii) reasonable estimates of the difference between such statements arising as a consequence thereof;

 

(e) within ten (10) Business Days after the end of each calendar month during a Cash Trap Trigger Period, (i) an operating statement (showing monthly activity), with such detail and in a form reasonably satisfactory to the Administrative Agent, showing (A) Operating Income, Operating Expenses, Net Operating Income, and Adjusted Net Operating Income, in each case with respect to each Project individually and in each case collectively with respect to the Projects, and (B) DSCR Debt Service and Debt Yield, in each case collectively with respect to the Projects and the Loans, and the Borrower’s calculation of Excess Cash for such month; (ii) the computations of Debt Service Coverage Ratio, for the most recent three (3) month period, as calculated as of the end of the most recent calendar month; (iii) the computations of Debt Yield, for the most recent three (3) month period, as calculated as of the end of the most recent calendar month; and (iv) a reconciliation of the results for such month and year-to-date as compared to the Approved Annual Budget for such period;

 

(f) [reserved]; and

 

(g) within forty-five (45) days of the commencement of each of the third anniversary and the sixth anniversary of the expiration of the Stub Interest Period (solely for the purpose to comply with Basel II or another banking regulation applicable to the Administrative Agent and/or any Lender), new Appraisals of each Project, which Appraisals shall be obtained at the Borrower’s sole cost and expenses; provided, however, that the Administrative Agent shall endeavor to minimize the costs of such Appraisals.  The Administrative Agent may, at its option, commission one or more new and/or updated Appraisals of each Project from time to time after the Closing Date; provided, however, that Borrower shall only be required to reimburse the Administrative Agent for such new and updated Appraisals if an Event of Default exists, if required by applicable banking laws or if such Appraisals are being obtained in connection with a request for a release of a Project pursuant to Section 2.09.

 

Any reports, statements or other information required to be delivered under this Agreement (other than the Form 10-K and Form 10-Q of the REIT, which may be delivered in paper or electronic form) shall be delivered (1) in paper form, (2) on a diskette, and (3) if requested by the Administrative Agent and within the capabilities of the Borrower’s data systems without change or modification thereto, in electronic form and prepared using a Microsoft Word for Windows or WordPerfect for Windows files (which files may be prepared using a spreadsheet program and saved as word processing files).

 

8.02 Notices of Material Events

 

.  The Borrower shall give to the Administrative Agent prompt written notice after becoming aware of any of the following:

 

(a) the occurrence of any Default or Event of Default, including a description of the same in reasonable detail;

 

(b) the commencement (or threatened commencement in writing) of all material legal or arbitral proceedings whether or not covered by insurance policies maintained by or for the Borrower, the Borrower’s Member or the Borrower’s Manager in accordance herewith (it being understood that any monetary claims asserted in any proceeding which, individually or in the aggregate, exceeds $3,000,000 shall be deemed material), and of all proceedings by or before any Governmental Authority of a material nature, and any material development in respect of such legal or other proceedings, affecting any of the Borrower Parties or any Project;

 

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of (i) the Borrower Parties or any of their ERISA Affiliates (excluding the Operating Partnership) in an aggregate amount exceeding $250,000 or (ii) the Operating Partnership or any of its ERISA Affiliates in an aggregate amount exceeding $5,000,000;

 

(d) promptly after the Borrower knows or has reason to believe any default has occurred by the Borrower or tenant under any Major Lease or the Borrower has received a written notice of default from the tenant under any Major Lease, a notice of such default;

 

(e) copies of any material notices or documents pertaining to or related to the Projects or the Borrower received from any Governmental Authority; and, with respect to Major Leases only, any notices received asserting a material default by the landlord under such lease, or relating to an assignment of the lease by the tenant, or a subletting of all or substantially all of the premises thereunder, or the vacation of all or a material portion of the premises by the tenant, or a change in control of the tenant, or an election by the tenant to terminate the lease or any other event or condition which, as reasonably determined by the Borrower, would impact the obligation of the tenant thereunder to pay rent or perform any of its other material obligations for the entire term thereof as previously disclosed to the Administrative Agent;

 

(f) notice of any Taking threatened in writing; or the occurrence of any Casualty Event resulting in damage or loss in excess of $500,000; and

 

(g) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section 8.02 shall be accompanied by a statement of an Authorized Officer of the Borrower setting forth, in reasonable detail, the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

8.03 Existence, Etc

 

.  The Borrower will, and will cause each other Borrower Party and the Operating Partnership to, preserve and maintain its legal existence and all material rights, privileges, licenses and franchises necessary for the maintenance of its existence and the conduct of its affairs.  The Borrower shall, at all times, maintain its status as a Limited Purpose Entity.

 

8.04 Compliance with Laws; Adverse Regulatory Changes

 

.

 

(a) The Borrower shall comply in all material respects (subject to such more stringent requirements as may be set forth elsewhere herein) with all Applicable Laws.  The Borrower shall maintain in full force and effect all required Government Approvals and shall from time to time obtain all Government Approvals as shall now or hereafter be necessary under Applicable Law in connection with the operation or maintenance of the Projects and shall comply, in all material respects, with all such Government Approvals and keep them in full force and effect.  Without limiting the foregoing, the Borrower shall use commercially reasonable efforts to transfer all Governmental Approvals not in the name of the Borrower as of the Closing Date (and to the extent permitted under Applicable Law) into the name of the Borrower in the ordinary course of business.  Upon request from time to time, the Borrower shall promptly furnish a true, correct and complete copy of each such Government Approval to the Administrative Agent.  The Borrower shall, unless otherwise approved by the Administrative Agent in writing, use its reasonable efforts to contest any proceedings before any Governmental Authority and to resist any proposed adverse changes in Applicable Law to the extent that such proceedings or changes are directed specifically toward any Project or could reasonably be expected to have a Material Adverse Effect, but only to the extent that Borrower deems such action to be in the best interests of the affected Project in the exercise of its business judgment.

 

(b) [Reserved.]

 

(c) The Borrower, at its own expense, may contest by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, the validity or application of any Applicable Law, and shall provide the Administrative Agent with notice of any such contest of a material nature, provided that:

 

(i) [Reserved];

 

(ii) the Borrower shall pay any outstanding fines, penalties or other payments under protest unless such proceeding shall suspend the collection of such items;

 

(iii) such proceeding shall be permitted under and be conducted in accordance with the applicable provisions of any other instrument governing the contest of such Applicable Laws to which the Borrower or any such Project is subject and shall not constitute a default thereunder;

 

(iv) no part of or interest in any Project (or the Borrower’s interest therein) will be in danger of being sold, forfeited, terminated, canceled or lost during the pendency of the proceeding;

 

(v) such proceeding shall not subject the Borrower, the Administrative Agent or any Lender to criminal or civil liability (other than civil liability of the Borrower as to which adequate security has been provided pursuant to clause (vi) below);

 

(vi) unless paid under protest, the Borrower shall have furnished such security as may be required in the proceeding, or as may be reasonably requested by the Administrative Agent, to insure the payment of any such items, together with all interest and penalties thereon, which shall not be less than one hundred ten percent (110%) of the maximum liability of the Borrower as reasonably determined by the Administrative Agent; and

 

(vii) the Borrower shall promptly upon final determination thereof pay the amount of such items, together with all costs, interest and penalties.

 

8.05 Insurance

 

.

 

(a) The Borrower shall obtain and maintain, or cause to be maintained, for the benefit of the Borrower, the Administrative Agent and the Lenders, insurance for each Project providing at least the following coverages:

 

(i) comprehensive all risk insurance (A) in an amount equal to one hundred percent (100%) of the full replacement cost (less deductible amounts provided for herein), which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing an agreed amount endorsement with respect to the Improvements and personal property at each Project waiving all co-insurance provisions (if applicable); (C) providing for no deductible in excess of Seventy-Five Thousand Dollars ($75,000) for all such insurance coverage; and (D) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of each Project shall at any time constitute legal non-conforming structures or uses.  In addition, the Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area”, flood hazard insurance in an amount equal to the lesser of (1) the Outstanding Principal Amount of the Notes or (2) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended or such greater amount as the Administrative Agent shall require; and (z) subject to Sections 8.05(a)(xi) and (xii), coverage for terrorism, terrorist acts and earthquake; provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms (other than with respect to deductibles and self-insurance) consistent with the comprehensive all risk insurance policy required under this subsection (i);

 

(ii) commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Project, such insurance (A) to be on the so-called “occurrence” form with an occurrence limit of not less than One Million and No/100 Dollars ($1,000,000) and an aggregate limit of not less than Two Million and No/100 Dollars ($2,000,000); (B) to continue at not less than the aforesaid limit until required to be changed by the Administrative Agent by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; (4) blanket contractual liability for all legal contracts; and (5) contractual liability covering the indemnities contained in the Loan Documents to the extent the same is available;

 

(iii) business income insurance (A) with loss payable to the Administrative Agent (on behalf of the Lenders); (B) covering all risks required to be covered by the insurance provided for in subsection (i) above for a period commencing at the time of loss for such length of time as it takes to repair or replace with the exercise of due diligence and dispatch; (C) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and personal property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that the Project is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; and (D) if there is a separate sublimit for business income insurance, such sublimit shall be not less than one hundred percent (100%) of the projected gross income from the Project for a period of eighteen (18) months.  The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on the Borrower’s reasonable estimate of the gross income from the Project for the succeeding eighteen (18) month period.  All proceeds payable to the Administrative Agent pursuant to this subsection (iii) shall be held by the Administrative Agent and shall be applied to debt service that is due and payable under the Notes with the amount in excess of such debt service during the period of business interruption held in a Controlled Account and available for release to the Borrower upon the completion of the restoration of the Project provided no Major Default or Event of Default then exists; provided, however, that nothing herein contained shall be deemed to relieve the Borrower of its obligations to pay the obligations secured by the Loan Documents on the respective dates of payment provided for in the Notes and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such business income insurance;

 

(iv) at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if or to the extent the coverage specified herein is not provided through the other insurance maintained by or for the benefit of the Borrower, (A) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (i) above written in a so-called builder’s risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above, (3) including permission to occupy the Project, and (4) with an agreed amount endorsement waiving co-insurance provisions;

 

(v) workers’ compensation, subject to the statutory limits of the state in which the Project is located, and employer’s liability insurance with a limit of at least One Million and No/100 Dollars ($1,000,000) per accident and per disease per employee, and One Million and No/100 Dollars ($1,000,000) for disease aggregate in respect of any work or operations on or about the Project, or in connection with the Project or its operation (if applicable);

 

(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by the Administrative Agent on terms consistent with the commercial property insurance policy required under subsection (i) above;

 

(vii) umbrella liability insurance in addition to primary coverage in an amount not less than One Hundred Million and No/100 Dollars ($100,000,000) per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and subsections (viii) and (ix) below and if the general liability policy does not contain a per location aggregate endorsement, the umbrella liability shall contain a drop down provision in the event the underlying aggregates are reduced or exhausted;

 

(viii) motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000) (if applicable);

 

(ix) if applicable to a particular Project, so-called “dramshop” insurance or other liability insurance required in connection with the sale by the Borrower of alcoholic beverages;

 

(x) insurance against employee dishonesty in an amount not less than one (1) month of Operating Income from the Project and with a deductible not greater than Ten Thousand and No/100 Dollars ($10,000.00) (if applicable);

 

(xi) such coverages with respect to terrorism and terrorist acts as are then being maintained by prudent owners of institutionally owned “Class A” office buildings in the market where the Projects are located as reasonably determined by the Borrower and the Administrative Agent; it being acknowledged and agreed that the Administrative Agent and the Lenders have accepted the Borrower’s existing coverages, deductibles and self-insurance limits in effect on the Closing Date with respect to terrorism and terrorist acts;

 

(xii) such coverages with respect to earthquake as are then being maintained by prudent owners of institutionally owned “Class A” office buildings in the market where the Projects are located as reasonably determined by the Borrower and the Administrative Agent; it being acknowledged and agreed that the Administrative Agent and the Lenders have accepted the Borrower’s existing coverages, deductibles and self-insurance limits in effect on the Closing Date with respect to earthquake; and

 

(xiii) upon sixty (60) days’ notice, such other reasonable insurance and in such reasonable amounts as the Administrative Agent from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Project located in or around the region in which the Project is located.

 

(b) All insurance provided for in Section 8.05(a) shall be obtained under valid and enforceable policies (collectively, the “Policies” or in the singular, the “Policy”) and, to the extent not specified above, shall be subject to the approval of the Administrative Agent as to deductibles, loss payees and insureds.  Within ninety (90) days after the Closing Date, the Borrower shall furnish to the Administrative Agent copies of the current Policies.  Not less than fifteen (15) days prior to the expiration dates of the Policies theretofore furnished to the Administrative Agent, certificates of insurance or other evidence reasonably satisfactory to the Administrative Agent evidencing the Policies, accompanied by evidence satisfactory to the Administrative Agent of payment of the premiums then due thereunder (the “Insurance Premiums”), shall be delivered by the Borrower to the Administrative Agent, and within ninety (90) days after the expiration date of the Policies, the Borrower shall provide to the Administrative Agent copies of the new Policies; provided, however, that no Event of Default shall result from the Borrower’s failure to deliver or cause to be delivered such certificates or other evidence unless (i) on or prior to the expiration date of the applicable Policy, the Administrative Agent shall not have obtained certificates or other evidence satisfactory to it confirming that the Policies required hereunder shall have been extended for an additional period or shall have been replaced for an additional period with replacement Policies that comply with the requirements set forth in this Section 8.05 and (ii) on or prior to the fifth (5th) Business Day after the expiration of such expiring Policy, the Administrative Agent shall not have received certificates of insurance evidencing the extension of the existing Policies or replacement Policies for an additional period accompanied by evidence satisfactory to the Administrative Agent of payment of the Insurance Premiums then due thereunder.

 

(c) Each Policy shall (i) include permission by the insurer for the parties to the transaction to waive all rights of subrogation against each other; (ii) to the extent such provisions are reasonably obtainable, provide that such insurance shall not be impaired or invalidated by virtue of (1) any act, failure to act or negligence of, or violation of declarations, warranties or conditions contained in such policy by, the Borrower, the Administrative Agent, the Lenders or any other named insured, additional insured, or loss payee, except for the willful misconduct of the Administrative Agent or the Lenders knowingly in violation of the conditions of such Policy or (2) any foreclosure or other proceeding or notice of sale relating to the Projects; (iii) be subject to a deductible, if any, not greater than $10,000 (except as otherwise specifically provided in or permitted by Section 8.05(a)); (iv) contain an endorsement providing that none of the Administrative Agent, the Lenders or the Borrower shall be, or shall be deemed to be, a co-insurer with respect to any risk insured by such Policy; (v) include effective waivers by the insurer of all claims  for insurance premiums against any loss payees, additional insureds and named insureds (other than the Borrower Parties); (vi) provide that if all or any part of such Policy shall be canceled or terminated, or shall expire, the insurer will forthwith give notice thereof to each named insured, additional insured and loss payee and that no cancellation, termination, expiration, reduction in amount of, or material change (other than an increase) in, coverage thereof shall be effective until at least thirty (30) days after receipt by each named insured, additional insured and loss payee of written notice thereof; and (vii) provide that the Administrative Agent and other Lenders or their Affiliates that are named insureds shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.

 

(d) If any such Insurance Proceeds required to be paid to the Administrative Agent are instead made payable to the Borrower, the Borrower hereby appoints the Administrative Agent as its attorney-in-fact, irrevocably and coupled with an interest, to endorse and/or transfer any such payment to the Administrative Agent (on behalf of the Lenders).

 

(e) Except as otherwise provided by the terms of the blanket insurance policies maintained by the Borrower and/or its Affiliates with respect to the Borrower and the Projects as of the Closing Date, or comparable blanket policies that may be obtained by the Borrower and/or its Affiliates after the Closing Date, any blanket insurance Policy shall specifically allocate to the Projects the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Projects in compliance with the provisions of Section 8.05(a).

 

(f) All Policies of insurance provided for or contemplated by Section 8.05(a) shall be primary coverage and, except for the Policy referenced in Section 8.05(a)(v), shall name the Borrower as the insured and the Administrative Agent (on behalf of the Lenders) and its successors and/or assigns as the additional insured (or in the case of property insurance, as the “mortgagee”), as its interests may appear, and in the case of property damage, boiler and machinery, flood, earthquake and terrorism insurance, shall contain a standard non-contributing mortgagee endorsement in favor of the Administrative Agent providing that the loss thereunder shall be payable to the Administrative Agent on behalf of the Lenders.  The Borrower shall not procure or permit any of its constituent entities to procure any other insurance coverage which would be on the same level of payment as the Policies or would adversely impact in any way the ability of the Administrative Agent or the Borrower to collect any proceeds under any of the Policies.  All polices must EXACTLY state the following: Eurohypo AG, New York Branch, its successors and assigns, 1114 Avenue of the Americas, New York, NY 10036 Attn: Director of Portfolio Operations.

 

(g) Without limiting the obligations of the Borrower under the foregoing provisions of this Section 8.05, if at any time the Administrative Agent is not in receipt of written evidence that all insurance required hereunder is in full force and effect, the Administrative Agent shall have the right, without notice to the Borrower, to take such action as the Administrative Agent deems necessary to protect its and the Lenders’ interests in the Projects, including, without limitation, the obtaining of such insurance coverage as the Administrative Agent in its sole discretion deems appropriate and all premiums incurred by the Administrative Agent in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by the Borrower to the Administrative Agent upon demand and until paid shall be secured by the Deed of Trust and shall bear interest at the Post-Default Rate.

 

(h) In the event of foreclosure of the Deed of Trust or other transfer of title to any Project in extinguishment in whole or in part of the obligations thereunder, all right, title and interest of the Borrower in and to the Policies that are not blanket Policies then in force concerning such Project and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or the Administrative Agent or other transferee in the event of such other transfer of title.

 

(i) The Polices shall be issued by financially sound and responsible insurance companies authorized to do business in the state in which the Projects are located and be approved by the Administrative Agent.  The insurance companies shall have (i) a general policy and claims paying ability rating of A or better and a financial class of IX or better (and, as to the coverages for terrorism, terrorist acts and earthquake, except with respect to earthquake insurance coverage which is in place and approved by the Administrative Agent as of the Closing Date, a general policy and claims paying ability rating of A minus or better and a financial class of VII or better) by A.M. Best Company, Inc.; provided, however, that the Borrower shall be permitted to maintain (at levels other than the primary layer of insurance) up to twenty percent (20%) of the total required all-risk insurance coverage required under subsection 8.05(a)(i) with insurance companies having a general policy and claims paying ability rating of less than A and a financial class of less than IX provided such companies have at least a general policy and claims paying ability rating of A minus or better and a financial class of VII or better, provided such insurance companies are also issuing earthquake coverage to the Borrower or (ii) an investment grade rating for claims paying ability of “AA” by S&P or the equivalent rating by one or more credit rating agencies approved by the Administrative Agent.

 

8.06 Real Estate Taxes and Other Charges

 

.

 

(a) Subject to the provisions of subsection (b) of this Section 8.06, and the last sentence of this subsection (a), the Borrower shall pay all Real Estate Taxes and Other Charges now or hereafter levied or assessed or imposed against each Project or any part thereof before fine, penalty, interest or cost attaches thereto.  Subject to the provisions of subsection (b) of this Section 8.06, upon the request of the Administrative Agent, the Borrower shall furnish to the Administrative Agent receipts for, or other evidence reasonably satisfactory to the Administrative Agent of, the payment of Real Estate Taxes and Other Charges in compliance with this Section 8.06.

 

(b) After prior written notice to the Administrative Agent, the Borrower, at its own expense, may contest by appropriate legal proceedings or other appropriate actions, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Real Estate Taxes and Other Charges, provided that:

 

(i) Reserved;

 

(ii) the Borrower shall pay the Real Estate Taxes and Other Charges under protest unless such proceeding shall suspend the collection of the Real Estate Taxes and Other Charges;

 

(iii) such proceeding shall be permitted under and be conducted in accordance with the applicable provisions of any other instrument governing the contest of Real Estate Taxes or Other Charges to which the Borrower or the Projects is subject and shall not constitute a default thereunder;

 

(iv) such proceeding shall be conducted in accordance with all Applicable Laws;

 

(v) neither the Projects nor any part thereof or interest therein will, in the reasonable opinion of the Administrative Agent, be in danger of being sold, forfeited, terminated, cancelled or lost during the pendency of the proceeding;

 

(vi) unless paid under protest, the Borrower shall have furnished such security as may be required in the proceeding, or as may be reasonably requested by the Administrative Agent (but in no event less than one hundred ten percent (110%) of the Real Estate Taxes or Other Charges being contested), to insure the payment of any such Real Estate Taxes and Other Charges, together with all interest and penalties thereon; and

 

(vii) the Borrower shall promptly upon final determination thereof or upon the failure of the existence of (ii), (iii), (iv) or (v) above pay the amount of such Real Estate Taxes or Other Charges, together with all costs, interest and penalties.

 

8.07 Maintenance of the Projects; Alterations

 

.  The Borrower shall:

 

(i) maintain or cause to be maintained each Project in good condition and repair in a manner consistent with a Class-A office building located in the relevant submarket in which such Project is located in Los Angeles County, California, or in Honolulu County, Hawaii, as applicable, and make all reasonably necessary repairs or replacements thereto;

 

(ii) except for work that constitutes required work under Section 8.21, not remove, demolish or structurally alter, or permit or suffer the removal, demolition or structural alteration of, any of the Improvements or make any alteration that may have a Material Adverse Effect or involve a cost in the aggregate for such alteration and all other alterations involving a single work of improvement (or related group of improvements) which is anticipated to exceed the lesser of (A) $5,000,000 or (B) ten percent (10%) of the Appraised Value of such Project, without the prior consent of the Administrative Agent; provided, however, that the Administrative Agent’s consent shall not be required for tenant improvement work performed pursuant to the terms and provisions of an Approved Lease which (upon completion of such work) does not adversely affect any structural component of any Improvements, any utility or HVAC system contained in any Improvements or the exterior of any building (excluding signage or other alterations that would not otherwise require the consent of the Administrative Agent under this Section 8.07(ii) in the absence of this proviso) constituting a part of any Improvements at any Project; and provided, further, that the Administrative Agent’s consent shall not be unreasonably withheld for any alterations that are required by Applicable Law and otherwise require the consent of the Administrative Agent under this Section 8.07(ii);

 

(iii) complete promptly and in a good and workmanlike manner any Improvements which may be hereafter constructed and, subject to the terms of the Loan Documents (including, without limitation, Section 10.03), promptly restore (in compliance with Section 10.03) in like manner any portion of the Improvements which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed and material furnished therefor, subject to the Borrower’s right to contest any such claims (as long as, with respect to any claim for which a mechanic’s lien has been filed, such contested claims have been bonded over to the satisfaction of the Administrative Agent within thirty (30) days of the date of filing);

 

(iv) not commit, or permit, any waste of the Projects; and

 

(v) not remove any item from the Projects without replacing it with a comparable item of equal quality, value and usefulness, except that the Borrower may sell or dispose of in the ordinary course of the Borrower’s business any property which is obsolete.

 

8.08 Further Assurances

 

.  The Borrower will, and will cause each of the other Borrower Parties to, promptly upon request by the Administrative Agent, execute any and all further documents, agreements and instruments, and take all such further actions which may be required under any applicable law, or which the Administrative Agent may reasonably request, to effectuate the Transactions, all at the sole cost and expense of the Borrower.  The Borrower, at its sole cost and expense, shall take or cause to be taken all action required or requested by the Administrative Agent to maintain and preserve the Liens of the Security Documents and the priority thereof.  The Borrower shall from time to time execute or cause to be executed any and all further instruments, and register and record such instruments in all public and other offices, and shall take all such further actions, as may be necessary or requested by the Administrative Agent for such purposes, including timely filing or refiling all continuations and any assignments of any such financing statements, as appropriate, in the appropriate recording offices.

 

8.09 Performance of the Loan Documents

 

.  The Borrower shall observe, perform and satisfy all the terms, provisions, covenants and conditions required to be observed, performed or satisfied by it under the Loan Documents, and shall pay when due all costs, fees and expenses required to be paid by it under the Loan Documents.

 

8.10 Books and Records; Inspection Rights

 

.  The Borrower will, and will cause each of the other Borrower Parties to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each of the other Borrower Parties to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties (subject to the proviso set forth in Section 8.11(a)), to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times (during normal business hours) and as often as reasonably requested.

 

8.11 Environmental Compliance

 

.

 

(a) Environmental Covenants.  The Borrower covenants and agrees that:

 

(i) all uses and operations on or of each Project, whether by the Borrower or any other Person, shall be in compliance with all Environmental Laws and permits issued pursuant thereto;

 

(ii) except for Releases incidental to the Use of Hazardous Substances permitted by clause (iii) below and in compliance with all Applicable Laws, the Borrower shall not permit a Release of Hazardous Substances in, on, under or from any Project;

 

(iii) the Borrower shall not knowingly permit Hazardous Substances in, on, or under any Project, except those that are in compliance with all Environmental Laws and of types and in quantities customarily used in the ownership, operation and maintenance of buildings similar to the Projects (i.e., materials used in cleaning and other building operations) and shall undertake to supervise and inspect activities occurring on the Projects as may be reasonably prudent to comply with the foregoing obligation;

 

(iv) except as disclosed in Schedule 8.11 or as specifically described in the Environmental Reports, the Borrower shall not permit any underground storage tanks to be in, on, or under any Project, and shall operate, maintain, repair and replace any such underground storage tank so disclosed in compliance with all Applicable Laws;

 

(v) Reserved;

 

(vi) the Borrower shall keep each Project free and clear of all Liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of the Borrower or any other Person  (collectively, “Environmental Liens”);

 

(vii) notwithstanding clause (iii) above, the Borrower shall not, or knowingly permit any other Person to, install any asbestos or asbestos containing materials on any Project, and shall upon and following the Closing Date implement, comply with and maintain in effect an operations and maintenance program with respect to any existing asbestos or asbestos containing materials located at any Project;

 

(viii) the Borrower shall cause the Remediation of  Hazardous Substances present on, under or emanating from any Project, or migrating onto or into any Project, in accordance with this Agreement and applicable Environmental Laws subject to the right to contest such Remediation in accordance with Section 7(a) of the Environmental Indemnity; and

 

(ix) the Borrower shall provide the Administrative Agent, the Lenders and their representatives (A) with access, upon prior reasonable notice, at reasonable times (during normal business hours) to all or any portion of any Project for purposes of inspection; provided that such inspections shall not unreasonably interfere with the operation of such Project or the tenants or occupants thereof, and shall be subject to the rights of tenants under their Leases, and the Borrower shall cooperate with the Administrative Agent, the Lenders and their representatives in connection with such inspections, including, but not limited to, providing all relevant information and making knowledgeable persons available for interviews and (B) promptly upon request, copies of all environmental investigations, studies, audits, reviews or other analyses conducted by or that are in the possession or control of the Borrower in relation to any Project, whether heretofore or hereafter obtained.

 

Nothing contained in this Section 8.11 shall limit the rights of the Administrative Agent or any Lender for indemnification under the terms of the Environmental Indemnity Agreement.

 

(b) Environmental Notices.  The Borrower shall promptly provide notice to the Administrative Agent of:

 

(i) all Environmental Claims asserted or threatened against the Borrower or any other Person occupying any Project or any portion thereof or against any Project which become known to the Borrower;

 

(ii) the discovery by the Borrower of any occurrence or condition on any Project or on any real property adjoining or in the vicinity of any Project which could reasonably be expected to lead to an Environmental Claim against the Borrower, any Project, the Administrative Agent or any of the Lenders;

 

(iii) the commencement or completion of any Remediation at any Project; and

 

(iv) any Environmental Lien filed against any Project.

 

In connection therewith, the Borrower shall transmit to the Administrative Agent copies of any citations, orders, notices or other written communications received from any Person and any notices, reports or other written communications and copies of any future Environmental Reports whether or not submitted to any Governmental Authority with respect to the matters described above.

 

8.12 Management of the Projects

 

.

 

(a) The Borrower shall (i) cause each Project to be managed by the Property Manager in accordance with the Property Management Agreement, (ii) promptly perform and observe all of the material covenants required to be performed and observed by the Borrower under the Property Management Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder, (iii) promptly notify the Administrative Agent of any material default under the Property Management Agreement of which it is aware and (iv) promptly enforce the performance and observance of all of the material covenants required to be performed and observed by the Property Manager under the Property Management Agreement.

 

(b) If (i) an Event of Default exists, (ii) the Property Manager is insolvent, or (iii) the Property Manager is in default of any material covenant or obligation under the Property Management Agreement beyond the expiration of any applicable grace period set forth therein, the Borrower shall, at the request of the Administrative Agent, promptly terminate the Property Management Agreement and replace the Property Manager with a property manager approved by the Administrative Agent pursuant to a Property Management Agreement on terms and conditions reasonably satisfactory to the Administrative Agent.

 

8.13 Leases

 

.  The Borrower shall (a) upon the Closing Date, assign to the Administrative Agent (on behalf of the Lenders) any and all Leases and/or all Rents payable thereunder, including, but not limited to, any Lease which is now in existence or which may be executed after the Closing Date, (b) promptly perform and fulfill, or cause to be performed and fulfilled, each and every material term and provision of the Borrower’s obligations under the Leases, including the performance of any tenant improvement work required with respect thereto, (c) give to the Administrative Agent a copy of each notice of default given to any tenant under a Major Lease or sent by any tenant thereunder to the Borrower, (d) consistent with good business practices and in the best interests of the affected Project, enforce its rights with regard to all Leases unless otherwise approved by the Administrative Agent, (e) use its commercially reasonable efforts to lease the Projects, (f) diligently enforce the terms of each Lease with respect to any construction work to be performed by the tenant thereunder so that such work is performed in a manner which will cause a minimum amount of disruption to the tenants then in occupancy at any such Project and in a manner so as not to cause a default by the Borrower under any other tenants’ Leases or provide the basis for any abatement or set off by any other tenant of the rent payable under any such Lease, or a claim by any other tenant for breach of warranty of habitability or similar claim, and (g) prior to entering into any new Lease with a retail tenant provide a copy of the Borrower’s standard form of retail lease to the Administrative Agent for review and approval, which approval shall not be unreasonably withheld or delayed.

 

8.14 Tenant Estoppels

 

.  If and to the extent not obtained and delivered to the Administrative Agent (on behalf of the Lenders) as of the Closing Date, Borrower shall use commercially reasonable efforts to obtain estoppel certificates in form and substance satisfactory to the Administrative Agent from tenants covering at least seventy-five percent (75%) of all the leased space in the Projects as promptly as possible following the Closing Date.  Without limiting the foregoing, at the Administrative Agent’s request, at any time while an Event of Default exists and otherwise from time to time upon the joint agreement of the Borrower and the Administrative Agent, with each acting reasonably, the Borrower shall request and use commercially reasonable efforts to obtain and furnish to the Administrative Agent written estoppels in form and substance satisfactory to the Administrative Agent, executed by tenants under Leases in any Project and confirming the term, rent, and other provisions and matters relating to the Leases.  Borrower further hereby agrees that, while an Event of Default exists, the Administrative Agent may exercise all rights of the Borrower under the Leases to request the delivery of estoppels from the tenants thereunder.

 

8.15 Subordination, Non-Disturbance and Attornment Agreements

 

.  The Borrower shall use commercially reasonable efforts to provide to the Administrative Agent (on behalf of the Lenders) SNDA Agreements executed by each tenant under a Major Lease prior to the Closing Date; provided, however, that in addition to the obligations set forth in Section 9.09(c), if the Borrower does not obtain all such SNDA Agreements by the Closing Date, the Borrower shall continue to use commercially reasonable efforts to obtain such SNDA Agreements after the Closing Date.

 

8.16 Operating Plan and Budget

 

.

 

(a) Commencing with the budget for the calendar year 2011 and then annually thereafter, the Borrower shall submit to the Administrative Agent an annual budget for each Project (each an “Annual Budget”), in form and substance reasonably satisfactory to the Administrative Agent setting forth in detail budgeted monthly Operating Income and monthly Operating Expenses for each such Project (which may be in the form of the calendar year 2010 budget for each Project provided to the Administrative Agent prior to the Closing Date).  The Annual Budget for each year shall be delivered together with the annual financial statement for the preceding year pursuant to Section 8.01(a).  During any Cash Trap Trigger Period but not otherwise, the Administrative Agent shall have the right to approve such Annual Budget (including, without limitation, the Annual Budget for the portions of the calendar year in which such Cash Trap Trigger Period occurs following after the commencement of such Cash Trap Trigger Period).  Within fifty (50) days following the end of any calendar quarter which comprises a Cash Trap Trigger Period, the Borrower shall deliver to the Administrative Agent for its approval the Annual Budget (in the format as described above) for the calendar year in which such Cash Trap Trigger Period occurs (together with a reconciliation to that Annual Budget of actual revenues and expenses year-to-date), and shall thereafter deliver to Administrative Agent for its approval the Annual Budget (in the format as described above) proposed by the Borrower for the succeeding calendar year, by no later than the November 15 preceding such calendar year.  The Administrative Agent shall not unreasonably withhold its approval of any Annual Budget as required hereunder; provided, however, that if during any Cash Trap Trigger Period the actual monthly Operating Expenses exceed budgeted Operating Expenses in any month during any period by more than ten percent (10%), the Administrative Agent shall have the right to require the Borrower to submit for its approval a revised Annual Budget for review and approval by the Administrative Agent in its sole discretion.  If the Administrative Agent objects to any proposed Annual Budget for which approval is required hereunder, the Administrative Agent shall advise the Borrower of such objections within fifteen (15) Business Days after receipt thereof (and deliver to the Borrower a reasonably detailed description of such objections), and the Borrower shall within five (5) days after receipt of notice of any such objections revise such Annual Budget and resubmit the same to the Administrative Agent (such procedure to be repeated until such time as the Administrative Agent shall approve such Annual Budget).  Each such Annual Budget submitted to and (to the extent that such approval is required hereunder) approved by the Administrative Agent in accordance with terms hereof, as well as the budget for the current calendar year approved by the Administrative Agent on the Closing Date, shall hereinafter be referred to as an “Approved Annual Budget”.  Until such time that the Administrative Agent has approved a proposed Annual Budget for which its approval is required hereunder, the most recently Approved Annual Budget shall apply for purposes of this Section 8.16; provided that such Approved Annual Budget shall be adjusted to reflect actual increases in real estate taxes, insurance premiums, utilities expenses and other fixed costs and shall otherwise be adjusted to reflect any change during the preceding year in the Consumer Price Index.  Notwithstanding the foregoing, the Administrative Agent and the Lenders acknowledge that the Borrower is not required to operate under the terms of an Approved Annual Budget during any period other than a Cash Trap Trigger Period.

 

(b) During any Cash Trap Trigger Period, the Borrower may at any time propose an amendment to an Approved Annual Budget for any Project for the remainder of the calendar year in which such Cash Trap Trigger Period has occurred, and, when approved as provided below, such amended Approved Annual Budget for such Project shall be deemed to be and shall be effective as the Approved Annual Budget for such Project for such calendar year.  Prior to making any expenditures not reflected in any current Approved Annual Budget in excess of ten percent (10%) of the budgeted amount therefor, the Borrower shall propose an amendment to such Approved Annual Budget to the Administrative Agent for its approval in accordance with the standards for the granting or withholding of consent to Annual Budgets set forth in Section 8.16(a).  The Administrative Agent shall have fifteen (15) Business Days after receipt of any proposed amendment to such Approved Annual Budget to approve or disapprove such proposed amendment.

 

8.17 Operating Expenses

 

.  The Borrower shall pay all known costs and expenses of operating, maintaining, leasing and otherwise owning the Projects on a current basis and before the same become delinquent (subject however to the other provisions of this Agreement and the other Loan Documents), including all interest, principal (when due) and other sums required to be paid under this Agreement, the other Loan Documents and the Hedge Agreement, before utilizing any revenues derived or to be derived from or in respect of the Projects for any other purpose, including distributions or other payments to the Borrower’s Member or the Operating Partnership.

 

8.18 Margin Regulations

 

.  No part of the proceeds of the Loans will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation T, U, X or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements.

 

8.19 Hedge Agreements

 

.

 

(a) The Borrower shall obtain, or cause to be obtained by an Other Swap Pledgor, on or prior to the Closing Date and will at all times thereafter maintain, or cause to be maintained by an Other Swap Pledgor, in full force and effect, one or more Hedge Agreements in the aggregate notional amount equal to at least one hundred percent (100%) of the Outstanding Principal Amount of the Loans at such time (the “Aggregate Notional Amount”), which Hedge Agreement(s) shall be approved by the Administrative Agent in its reasonable discretion with (A) Eurohypo or its Affiliates, or (B) one or more other banks or insurance companies as counterparties (each a “Third-Party Counterparty”), which is effective to cause the All-in-Rate as to the applicable Aggregate Notional Amount not to exceed 4.446% per annum through the Hedging Termination Date.  Notwithstanding the foregoing, the parties acknowledge that the Operating Partnership has obtained a Hedge Agreement in the notional amount of $400,000,000 (the “Existing Hedge Agreement”) from PNC Bank, National Association (“PNC”), with an effective date of September 1, 2010, and a termination date of July 1, 2015 (subject to adjustment for the applicable business day convention as provided therein), that requires floating rate payments based on the one month LIBO Rate of interest and monthly fixed rate payments of 2.446%, and that such Hedge Agreement is sufficient to satisfy the foregoing requirements, subject to Borrower’s other rights and obligations under this Section 8.19.  On or prior to the Closing Date, the Borrower shall cause to be delivered by the Operating Partnership, a Hedge Agreement Pledge in form and substance satisfactory to the Administrative Agent, together with the Existing Hedge Agreement and other documentation for the Existing Hedge Agreement as may be reasonably acceptable to the Administrative Agent, and within thirty (30) days following the Closing Date deliver the counterparty acknowledgment executed by PNC in the form attached to the Hedge Agreement Pledge or in form and substance otherwise satisfactory to the Administrative Agent.  Any Hedge Agreement shall require monthly fixed rate and floating rate payments and be based on a LIBO Rate of interest having, at the Borrower’s option, successive Interest Periods (an “Interest Rate Hedge Period”) of one, two, three, six or twelve months or such other Interest Periods satisfactory to the Administrative Agent in its reasonable discretion.  Notwithstanding anything to the contrary contained in this Section 8.19, the Borrower or any Other Swap Pledgor shall be entitled to enter into one or more Hedge Agreements in excess of the Aggregate Notional Amount, up to the total amount of the Commitments or providing interest rate protection for periods that extend beyond the Hedging Termination Date (each such agreement, but only to the extent that it, after giving effect to all other Hedge Agreements maintained pursuant to this Section 8.19(a), relates to a notional amount in excess of the Aggregate Notional Amount or provides interest rate protection for periods that extend beyond the Hedging Termination Date, is referred to herein as an “Excess Hedge Agreement”) on terms acceptable to the Borrower or such Other Swap Pledgor; provided, however, that Borrower shall deliver, or cause to be delivered by an Other Swap Pledgor, upon the Administrative Agent’s request in accordance with the time requirements set forth in this Section 8.19(a), a Hedge Agreement Pledge with respect to each Excess Hedge Agreement, substantially in the form of Exhibit G-2 attached hereto, together with the counterparty’s acknowledgment and other instruments provided to be delivered thereunder.  Notwithstanding anything in this Section 8.19 to the contrary, except for the Existing Hedge Agreement, none of Eurohypo or its Affiliates, or any Lender or any Affiliate of Lender, shall enter into a Hedge Agreement with the Borrower as a counterparty.

 

(b) The Borrower’s obligations under any Hedge Agreement shall not be secured by the Deeds of Trust and shall not be secured by any Lien on or in all or any portion of the collateral under the Security Documents, any direct or indirect interest in the Borrower or any other Property.

 

(c) Any Hedge Agreement with a Third-Party Counterparty is herein called a “Third-Party Hedge Agreement.”  With respect to each Third-Party Hedge Agreement maintained with respect to the Aggregate Notional Amount and each Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section 8.19(a):  (i) the Third-Party Counterparty providing such Third-Party Hedge Agreement must have a long term credit rating no lower than “A” from S&P or “A2” from Moody’s at the time of entry into such Third-Party Hedge Agreement; provided, however, if there is a difference in the then current S&P rating and the Moody’s rating, the lesser rating shall be applicable; (ii) the form and substance thereof must be satisfactory to the Administrative Agent in its reasonable discretion and in all respects and (iii) each counterparty thereunder shall have delivered to the Administrative Agent a counterparty’s acknowledgment in the form attached to the Hedge Agreement Pledge applicable thereto (or in such other form as may be acceptable to the Administrative Agent in its reasonable discretion).

 

(d) Reserved.

 

(e) If the Borrower fails for any reason or cause whatsoever to secure and maintain, or cause to be secured and maintained by an Other Swap Pledgor, a Hedge Agreement with respect to the Aggregate Notional Amount as and when required to do so hereunder, such failure shall constitute an Event of Default and the Administrative Agent shall be entitled to exercise all rights and remedies available to it under this Agreement (for the benefit of the Lenders) and the other Loan Documents or otherwise, including the right (but not the obligation) of the Administrative Agent to secure or otherwise enter into one or more Hedge Agreements with respect to the Aggregate Notional Amount with a Lender for and on behalf of the Borrower without such action constituting a cure of such Event of Default and without waiving the Administrative Agent’s or the Lenders’ rights arising out of or in connection with such Event of Default.  If the Administrative Agent shall enter into a Hedge Agreement with a Lender in accordance with its right to do so pursuant to this subsection (e), then (i) the terms and provisions of any such Hedge Agreement, including the term thereof, shall be determined by the Administrative Agent in its sole discretion (except that the maximum notional amount of all such Hedge Agreements shall not exceed the Aggregate Notional Amount) and (ii) the Borrower shall pay all of the Administrative Agent’s costs and expenses in connection therewith, including any fees charged by the applicable counterparty, attorneys’ fees and disbursements, and the cost of additional title insurance in an amount determined by the Administrative Agent to be necessary to protect the Administrative Agent and the Lenders from potential funding losses under any Hedge Agreement provided by a Lender.

 

(f) Reserved.

 

(g) If the Borrower or Other Swap Pledgor is entitled to receive a payment upon the termination of any Hedge Agreement required by this Section 8.19, or, while any Event of Default exists, under any Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section 8.19(a) (it being understood that any termination payment paid with respect to any Excess Hedge Agreement shall be delivered to the Borrower or Other Swap Pledgor at any time while an Event of Default does not exist) such payment shall be delivered to the Administrative Agent and applied by the Administrative Agent to any amounts due to the Administrative Agent or the Lenders under the Loan Documents evidencing the Loans (it being understood that any such payment applied to the principal of the Loans shall be deemed a prepayment of such principal, and shall be accompanied by any applicable prepayment premium resulting from such prepayment, or such termination payment shall be applied in part to pay such principal and in part to pay such prepayment premium) in such order and priority as the Administrative Agent shall determine in its sole discretion.  Notwithstanding the foregoing, if (i) at any time upon or following any principal prepayment made pursuant to Section 2.06 the Outstanding Principal Amount is reduced and the Borrower or Other Swap Pledgor elects at its option to terminate or partially to terminate, or to reduce the notional amount of, any Hedge Agreement (or is required under the terms of such Hedge Agreement to do so) in a notional amount (in either such case) not exceeding, respectively, the amount by which the aggregate notional amount in effect under the Hedge Agreements then maintained pursuant hereto (other than Excess Hedge Agreements unless pledged pursuant to the Hedge Agreement Pledge substantially in the form of Exhibit G-1 attached hereto) exceeds the Aggregate Notional Amount then required to be hedged pursuant hereto or (ii) the Borrower or Other Swap Pledgor elects, in full compliance with the terms of each Hedge Agreement Pledge, to deliver to the Administrative Agent, in substitution for a Hedge Agreement, a substitute Hedge Agreement, then the Borrower or Other Swap Pledgor shall have the right to do so, and if the Borrower or Other Swap Pledgor is entitled (in the case of either (i) or (ii) above) to receive a termination payment from the counterparty in connection therewith, then, provided that no Event of Default then exists, the Borrower or Other Swap Pledgor shall have the right to receive and retain such termination payment free and clear of the Lien of the Hedge Agreement Pledge, provided, that, after giving effect to any such termination or substitution, the Borrower remains in compliance with its obligations under Section 8.19(a) with respect to the maintenance of Hedge Agreements with respect to the Aggregate Notional Amount then required to be hedged pursuant hereto and has complied (or caused the Other Swap Pledgor to comply) with the applicable conditions precedent set forth in Section 6(e) of the Hedge Agreement Pledge and the certification obligations with respect thereto set forth in the applicable Hedge Agreement Pledge and the Acknowledgment of Security Interest delivered pursuant thereto.  The Borrower or Other Swap Pledgor shall have the right to terminate, reduce the notional amount of or modify any Excess Hedge Agreement and to receive any payments from the counterparty thereunder resulting therefrom, provided that if an Event of Default exists and such Excess Hedge Agreement has been pledged to the Administrative Agent, then the rights and obligations of the Borrower (or Other Swap Pledgor) and the Administrative Agent with respect thereto shall be the same as their respective rights and obligations with respect to Hedge Agreements maintained with respect to the Aggregate Notional Amount.

 

(h) Upon securing any Hedge Agreement required under this Section 8.19, or any Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section 8.19(a) the Borrower agrees that the economic and other benefits of such Hedge Agreement and all of the other rights of the Borrower or Other Swap Pledgor thereunder shall be collaterally assigned to the Administrative Agent as additional security for the Loans for the ratable benefit of the Lenders, pursuant to a Hedge Agreement Pledge.  All Hedge Agreement Pledges shall be accompanied by (i) Uniform Commercial Code financing statements, in duplicate, with respect to such pledges and (ii) within ten (10) days after delivery of the applicable Hedge Agreement Pledge (or within such longer period as provided in Section 8.19(a) above), a counterparty’s acknowledgment in the form attached to the Hedge Agreement Pledge applicable thereto (or in such other form as may be acceptable to the Administrative Agent in its reasonable discretion) from each counterparty under each Hedge Agreement.

 

(i) Notwithstanding the provisions of Section 8.19(a), following the delivery of any notice of full or partial prepayment delivered by the Borrower pursuant to Section 2.06(a) or any notice of a proposed release of a Project pursuant to Section 2.06(c), Borrower’s obligation to maintain, or cause to be maintained, any Hedge Agreement required under Section 8.19(a) shall be suspended with respect to the full Aggregate Notional Amount (in the case of a notice of full prepayment) or the portion of the Aggregate Notional Amount equal to the amount to be prepaid in the case of a partial prepayment or pursuant to Section 2.09(a)(ii) in connection with the release of a Project (in the case of a notice of partial prepayment or notice of the release of a Project), and Borrower or the Other Swap Pledgor may terminate or reduce the notional amount of any Hedge Agreement theretofore entered into with respect to such suspended portion of the Aggregate Notional Amount; provided, however, that if such notice of prepayment or release is subsequently revoked, or if such prepayment or release does not occur on or prior to the date identified in such notice of prepayment or release (as such date may be postponed in accordance with the provisions of this Agreement), then the suspension of such obligation shall terminate, and Borrower shall be obligated to enter into and thereafter maintain, or to cause an Other Swap Pledgor to enter into and thereafter maintain, one or more Hedge Agreements at an agreed upon strike rate and otherwise in full compliance with Section 8.19(a) by not later than the end of a cumulative period during which the Hedge Agreements otherwise required under Section 8.19(a) are not being maintained (with respect to all such notices of prepayment or release in the aggregate) which shall not exceed (60) days in the aggregate.

 

(j) If any Hedge Agreement delivered by the Borrower or Other Swap Pledgor to the Administrative Agent shall, by its terms, expire during any period in which Borrower remains obligated to maintain a Hedge Agreement in effect pursuant to Section 8.19(a), and as a result thereof the Borrower would not be in compliance with its obligations under Section 8.19(a) with respect to the maintenance of Hedge Agreements covering the Aggregate Notional Amount, then, subject to the provisions of Section 8.19(i), the Borrower shall deliver, or cause an Other Swap Pledgor to deliver, to the Administrative Agent a replacement Hedge Agreement at least ten (10) Business Days prior to the expiration date of the then current Hedge Agreement (so as to remain in compliance with its obligations under Section 8.19(a) with respect to the maintenance of Hedge Agreements) which replacement Hedge Agreement shall be acceptable to the Administrative Agent in its reasonable discretion and otherwise satisfy the requirements of this Section 8.19.

 

8.20 Patriot Act Compliance.  The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, any Lender (for itself and/or as the Administrative Agent for all Lenders hereunder) may from time-to-time request, and the Borrower shall, and shall cause the other Borrower Parties, to provide to such Lender, such Borrower Party’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law.  An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

 

8.21 Required Work.  The Borrower shall cause the work described on Schedule 8.21 attached hereto to be completed on or before the applicable dates set forth on said schedule.  Such work shall be completed in a good and workmanlike manner, lien-free and in accordance with all Applicable Laws.  The Administrative Agent shall have the right to inspect such work and the reasonable costs of such inspection shall be paid by the Borrower.  In addition, the Borrower acknowledges receipt of the Environmental Reports and the Property Condition Reports and agrees to address in its prudent business judgment the recommendations contained in such reports.

 

8.22 Taxes on Security.  Borrower shall pay all taxes, charges, filing, registration and recording fees, excises and levies payable with respect to the Notes or the Liens created or secured by the Loan Documents, other than Excluded Taxes or any income, franchise and doing business taxes imposed on Administrative Agent or any Lender.  If there shall be enacted any law (1) deducting the Loans from the value of the Project for the purpose of taxation or (2) changing existing laws of taxation of mortgages, deeds of trust, security deeds, or debts secured by real property that are applicable to the Loans, Borrower shall promptly pay to Administrative Agent, on demand, all taxes, costs and charges for which Administrative Agent or any Lender is or may be liable as a result thereof; provided, however, that if such payment would be prohibited by law or would render the Loans usurious, then instead of collecting such payment, Administrative Agent may (and on the request of the Required Lenders shall) declare all amounts owing under the Loan Documents to be due and payable by written notice to Borrower, in which event the Loans shall become due and payable without penalty or premium one hundred twenty (120) days after such notice is given to Borrower.

 

ARTICLE IX.

 

 

NEGATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees that, until the payment in full of the Obligations, it will not do or permit, directly or indirectly, any of the following:

 

9.01 Fundamental Change

 

.

 

(a) Mergers; Consolidations; Disposal of Assets.  Except as expressly provided in Section 9.03(a)(vii), none of the Borrower Parties will merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease (other than tenant leases pursuant to and in accordance with Sections 8.13 and 9.09 of this Agreement) or otherwise dispose of (in one transaction or in a series of transactions) any substantial part of its Properties and assets whether now owned or hereafter acquired (but excluding any Transfer permitted by Section 9.03 or any sale or disposition of Projects subject to and in accordance with Section 2.09 of this Agreement or of obsolete or excess furniture, fixture and equipment in the ordinary course of business if same is unnecessary or is replaced with furniture, fixtures and equipment of equal or greater value and utility), or wind up, liquidate or dissolve, or enter into any agreement to do any of the foregoing.

 

(b) Organizational Documents.  Without the prior written consent of the Administrative Agent, the Borrower will not, and will not permit any of the other Borrower Parties to, make any Modification of the terms or provisions of its Organizational Documents, except: (i) Modifications necessary to clarify existing provisions of such Organizational Documents, (ii) Modifications which would have no adverse, substantive effect on the rights or interests of the Lenders in conjunction with the Loans or under the Loan Documents, or (iii) Modifications necessary to effectuate Transfers to the extent expressly permitted in this Agreement.

 

9.02 Limitation on Liens

 

.  The Borrower shall not create, incur, assume or suffer to exist any Lien upon or with respect to any of its Property, now owned or hereafter acquired; provided, however, that the following shall be permitted Liens:

 

(a) the Liens created by the Loan Documents and any Permitted Liens;

 

(b) Liens for taxes or assessments or other government charges or levies if not yet delinquent or if they are being contested in good faith by appropriate proceedings in accordance with Sections 8.04(b) and/or 8.06(b), if applicable;

 

(c) Liens or pledges (except to the extent that they would encumber any interest in any Project, any other asset which is collateral for the Loans or any interest in Borrower) to secure payment or performance bonds, guarantees, indemnities or other assurances in connection with the performance of tenant improvements required or permitted by Approved Leases and Modifications of Approved Leases and bonds of the type permitted under clause (a) above and (d) below;

 

(d) Judgment and other similar Liens (which shall be subordinate to the Liens of the Deeds of Trust) in an aggregate amount not in excess of $1,000,000 arising in connection with court proceedings, but only if the execution or other enforcement of such Liens is effectively stayed (or bonded over through the posting of a bond in accordance with a statutory bonding procedure the effect of which is to release such Lien from any Property of the Borrower and to limit the Lien claimant’s rights to recovery under the bond) and the claims secured thereby are being actively contested in good faith by appropriate proceedings and for which appropriate reserves have been established; and

 

(e) Liens consisting of the rights of the lessor to the property covered by any equipment lease entered into in compliance with Section 9.04(d), provided that such lien consists solely of such rights with respect to the leased property.

 

9.03 Due on Sale; Transfer; Pledge

 

.  Without the prior written consent of the Administrative Agent and (subject to Section 9.03(b) and the last paragraph of this Section 9.03) the Required Lenders:

 

(a) None of the Borrower, nor any Borrower Party, nor any Principal shall (w) directly or indirectly Transfer any interest in any Project or any part thereof (including any direct or indirect interest in any partnership, membership or other ownership interest or other Equity Interest in the Borrower, the Borrower’s Member or the Borrower’s Manager); (x) directly or indirectly grant any Lien on any direct or indirect interest in any Project or any part thereof, whether voluntarily or involuntarily; (y) enter into any arrangement granting any direct or indirect right or power to direct the operations, decisions and affairs of the Borrower, the Borrower’s Member or the Borrower’s Manager, whether through the ability to exercise voting power, by contract or otherwise; or (z) except as described in clause (e) of the definition of “Permitted Liens,” enter into any easement or other agreement granting rights in or restricting the use or development of any Project except for easements and other agreements which, in the reasonable opinion of the Administrative Agent, have no Material Adverse Effect; provided, however, that, the foregoing restrictions shall not apply with respect to:

 

(i) any Transfer of direct or indirect ownership interests in any Borrower’s Member or the Operating Partnership, or any successor to any Borrower’s Member (other than the ownership interests that are covered by Section 9.03(a)(ii)), unless following such Transfer, the REIT shall not directly or indirectly own fifty-one percent (51%) or more of the ownership interests in the Borrower or the REIT shall not directly or indirectly control the Borrower, or a Change of Control shall result from such Transfer;

 

(ii) the Transfer of direct or indirect ownership interests in, or the admission or withdrawal of any partner, member or shareholder to or from, the Borrower’s Manager or any general partner, manager or managing member of any successor to the Borrower or the Borrower’s Member referred to in Section 9.03(a)(iii);

 

(iii) the conveyance of all (and not less than all) of the Projects to a Qualified Successor Entity which assumes all of the obligations of the Borrower under the Loan Documents in form and substance satisfactory to the Administrative Agent and the Required Lenders and in recordable form; provided, however, that such Qualified Successor Entity and the general partner, manager or managing member of such Qualified Successor Entity, after giving effect to such Transfer, is in compliance with all of the covenants of the Borrower or applicable to or with reference to the Borrower’s Manager or any Borrower Party (as applicable) or applicable to the Operating Partnership contained in the Loan Documents (including, without limitation, the covenants set forth in the definition of “Limited Purpose Entity”) except as otherwise provided in the definition of “Borrower’s Manager” (with all references herein to “Borrower” to mean such Qualified Successor Entity, and all references herein to “Borrower’s Manager” to mean (except as otherwise provided in the definition of “Borrower’s Manager”) any general partner, manager or managing member of the Qualified Successor Entity; no Default or Event of Default is then existing or would result therefrom; and upon the transfer of such Projects to such Qualified Successor Entity, such Qualified Successor Entity, its controlling entity and the general partner, manager or managing member of such Qualified Successor Entity are in compliance in all material respects with all of the representations and warranties of the Borrower or applicable to the Borrower’s Manager (whether directly or as a Borrower Party) (as applicable) or applicable to the Operating Partnership contained herein and in the other Loan Documents (after giving effect to the modifications reflecting the identity of the transferee resulting from such transfer) except as otherwise provided in the definition of “Borrower’s Manager” (with all references herein to “Borrower” to mean such Qualified Successor Entity, and all references herein to “Borrower’s Manager” to mean (except as otherwise provided in the definition of “Borrower’s Manager”) any general partner, manager or managing member of the Qualified Successor Entity); and provided, further, that from and after such Transfer, in the case of a Transfer to a Qualified Successor Entity consisting of a REIT Subsidiary, the Projects may be managed by the REIT or any property management company owned or controlled directly or indirectly by the REIT.  Prior to such Transfer, the Administrative Agent and the Required Lenders shall have received and approved (which approval shall not be unreasonably withheld) the Organizational Documents of such Qualified Successor Entity and the general partner, manager or managing member of such Qualified Successor Entity (except that, in the case of a Qualified Successor Entity which is a REIT Subsidiary, there shall be no approval rights over the Organizational Documents of such general partner, manager or managing member if it is the REIT or the Operating Partnership), together with such financial information relating to such Qualified Successor Entity as the Administrative Agent may reasonably request, and concurrently with such Transfer, the Administrative Agent shall have received such endorsements to the Title Policies insuring ownership of the Projects by such Qualified Successor Entity and the continued priority of the Liens of the applicable Deeds of Trust after giving effect to the delivery by such entity of the assumption agreement referred to above (subject only to Permitted Title Exceptions), in form and substance satisfactory to the Administrative Agent and the Required Lenders, and such confirmation as the Administrative Agent may require that the Hedge Agreements required under Section 8.19(a) remain in full force and effect, in compliance with Section 8.19 hereof, as to the Loans as assumed by such Qualified Successor Entity.  In connection with any such Transfer, the assumption agreement to be entered into by the Borrower and the Qualified Successor Entity (and such other parties deemed appropriate by the Administrative Agent) shall include such modifications to this Agreement and the other Loan Documents as the Administrative Agent and the Required Lenders may reasonably require, including, without limitation, such modifications to the covenants and other provisions that are contained herein and that relate to the Borrower or Borrower’s Manager or are applicable to the Operating Partnership, as shall be deemed necessary by the Administrative Agent to allocate to the Qualified Successor Entity and its general partner or manager responsibility for the performance of the covenants of, and satisfaction of the other provisions set forth herein that relate to, the Borrower, the Borrower’s Manager or are applicable to the Operating Partnership, and, if and only if the Guarantor Documents do not remain in effect after such Transfer, of such limited indemnity agreements and guaranties as shall be deemed necessary by the Administrative Agent to obtain recourse liability from the general partner or manager of the Qualified Successor Entity (if such general partner or manager is not the Guarantor) on terms consistent with the obligations of the Guarantor under the Guarantor Documents immediately upon the Closing Date.  Upon compliance with the foregoing requirements in connection with such Transfer, the original Borrower, shall be released from its obligations under the Loan Documents arising from and after such Transfer, but such release shall not limit the obligations of the Borrower to comply with any requirements applicable to it (if any) in other capacities (including, without limitation, in capacities such as the general partner, managing member or manager of such Qualified Successor Entity).  As used herein, “Qualified Successor Entity” shall mean either (I) an entity (other than the REIT, the Operating Partnership or any Subsidiary of such REIT), majority-owned, directly or indirectly, by (A) the Borrower and/or (B) the Borrower’s Member, or (II) a REIT Subsidiary (other than the Operating Partnership); and, provided further, however, that in the case of clauses (I) and (II) above, such Qualified Successor Entity shall, from the date of its formation, have been in compliance with the provisions of Sections 9.02, 9.04 and 9.05 hereof as if each reference therein to “Borrower” were to mean and refer to such Qualified Successor Entity;

 

(iv) entering into Approved Leases or the granting of Liens expressly permitted by the Loan Documents;

 

(v) any Transfers which are permitted under Section 14.31;

 

(vi) any Transfers expressly permitted by the Loan Documents; and

 

(vii) any of the following so long as no Change of Control shall result therefrom:  (A) any Transfer or issuance (whether through public offerings, private placements or other means) of shares or Equity Interests in the REIT or the Operating Partnership; (B) any conversion, into securities of the REIT, of partnership units or other Equity Interests of the Operating Partnership; (C) any issuance or Transfer of any Equity Interests in any REIT Subsidiary owning any direct or indirect Equity Interests in any Borrower Party, so long as following such issuance or Transfer the REIT shall directly or indirectly own fifty-one percent (51%) or more of the ownership interests in the Borrower and shall directly or indirectly control the Borrower; and/or (D) any merger, consolidation, dissolution, liquidation, reorganization, sale, lease or other transaction involving any Person other than the Borrower so long as the REIT (or, as applicable, a REIT Subsidiary) is the surviving entity and the REIT thereafter directly or indirectly owns fifty-one percent (51%) or more of the ownership interests in the Borrower and directly or indirectly controls the Borrower.

 

(b) Notwithstanding any provision in this Section 9.03 to the contrary, Borrower shall not permit the REIT to be the Borrower’s Manager;

 

(c) [Reserved]; and

 

(d) As used in Sections 9.03(a)(i), (a)(iii) and (a)(vii), “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of such Person.

 

Notwithstanding the foregoing provisions of this Section 9.03, any Transfer of a direct or indirect ownership interest in the Borrower, the Borrower’s Member, the Borrower’s Manager or any Qualified Successor Entity or any general partner, manager or managing member of any Qualified Successor Entity shall be further subject to the requirement that, after giving effect to such Transfer, the Borrower, the Borrower’s Member, the Borrower’s Manager, any Qualified Successor Entity and its controlling entity and general partner or manager shall be in compliance with all applicable laws applicable to such Persons and relating to such Transfer, including the USA Patriot Act and regulations issued pursuant thereto and “know your customer” laws, rules, regulations and orders.  In addition, any such Transfer (except for any Transfer of publicly-traded stocks in the REIT or any Transfers that are permitted by Section 9.03(a)(vii)) shall be further subject to (w) the Borrower providing prior written notice to Administrative Agent of any such Transfer, (x) no Default or Event of Default then existing, (y) the proposed transferee being a corporation, partnership, limited liability company, joint venture, joint-stock company, trust or individual approved in writing by each Lender subject to a Limiting Regulation in its discretion, and (z) payment to the Administrative Agent on behalf of the Lenders of all reasonable costs and expenses incurred by the Administrative Agent or any Lenders in connection with such Transfer.  Each Lender at the time subject to a Limiting Regulation shall, within ten (10) Business Days after receiving the Borrower’s notice of a proposed Transfer subject to this Section 9.03, furnish to the Borrower a certificate (which shall be conclusive absent manifest error) stating that it is subject to a Limiting Regulation, whereupon such Lender shall have the approval right contained in clause (y) above.  Each Lender which fails to furnish such a certificate to the Borrower during such ten (10) Business Day period shall be automatically and conclusively deemed not to be subject to a Limiting Regulation with respect to such Transfer.  If any Lender subject to a Limiting Regulation fails to approve a proposed transferee under clause (y) above (any such Lender being herein called a “Rejecting Lender”), the Borrower, upon three (3) Business Days’ notice, may (A) notwithstanding the terms of Sections 2.06, prepay such Rejecting Lender’s outstanding Loans or (B) require that such Rejecting Lender transfer all of its right, title and interest under this Agreement and such Rejecting Lender’s Note to any Eligible Assignee or Proposed Lender selected by the Borrower that is reasonably satisfactory to the Administrative Agent if such Eligible Lender or Proposed Lender (x) agrees to assume all of the obligations of such Rejecting Lender hereunder, and to purchase all of such Rejecting Lender’s Loans hereunder for consideration equal to the aggregate outstanding principal amount of such Rejecting Lender’s Loans, together with interest thereon to the date of such purchase (to the extent not paid by the Borrower), and satisfactory arrangements are made for payment to such Rejecting Lender of all other amounts accrued and payable hereunder to such Rejecting Lender as of the date of such transfer (including any fees accrued hereunder and any amounts that would be payable under Section 2.06 as if all such Rejecting Lender’s Loans were prepaid in full on such date) and (y) approves the proposed transferee.  Subject to the provisions of Section 14.07 such Eligible Assignee or Proposed Lender shall be a “Lender” for all purposes hereunder.  Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements of the Borrower contained in Section 5.05 shall survive for the benefit of such Rejecting Lender with respect to the time period prior to such replacement.

 

9.04 Indebtedness

 

.  The Borrower shall not create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness or enter into any equipment leases (whether or not constituting Indebtedness), except for the following:

 

(a) Indebtedness Under the Loan Documents.  Indebtedness of the Borrower in favor of the Administrative Agent and the Lenders pursuant to this Agreement and the other Loan Documents;

 

(b) Accounts Payable; Etc. Trade and operational debt and tenant improvement allowances and leasing concessions described in subsection (d) of the definition of Limited Purpose Entity and Indebtedness described in subsection (e) of the definition of Limited Purpose Entity;

 

(c) Contingent Obligations.  Indebtedness consisting of unsecured Swap Agreements entered into by the Borrower with respect to Indebtedness permitted under Section 9.04 (a); and

 

(d) Indebtedness for Capital Improvements.  Unsecured Indebtedness of the Borrower (including obligations under equipment leases or other personal property used in the ownership or operation of the Projects), in the aggregate amount during the term of the Loans not to exceed $20,000,000 (which amount shall be reduced from time to time in connection with a release of a Project permitted under Section 2.09 by the Allocated Loan Percentage thereof of the Project so released) (inclusive of the portion of the value of the equipment covered by equipment leases entered into pursuant to this Section 9.04(d) amortized through the rental payments under such leases) incurred in connection with capital or tenant improvements to (or other tenant concessions made in connection with) the Projects or the acquisition of equipment or other assets for the benefit of the Projects, and that is not used for the purposes of making Restricted Payments.  Not more than $2,000,000 (which amount shall be reduced from time to time in connection with a release of a Project permitted under Section 2.09 by the Allocated Loan Percentage thereof of the Project so released) maximum may be incurred in the form of equipment leases (as measured by the value of the equipment covered by such equipment leases amortized through the rental payments under such leases); provided that such equipment leases relate to equipment constituting neither fixtures nor personal property material to the operation, maintenance or management of any of the Projects.

 

9.05 Investments

 

.  The Borrower will not make or permit to remain outstanding any Investments except (a) operating deposit accounts or money market accounts with banks, (b) Permitted Investments, (c) the Projects, and (d) other investments required or permitted by the Loan Documents.  Notwithstanding the foregoing, nothing contained in this Section 9.05 shall permit Borrower to make any Investment that is not permitted under the requirements set forth in the definition of “Limited Purpose Entity”.

 

9.06 Restricted Payments

 

.  The Borrower will not make any Restricted Payment at any time during the existence of a Major Default or Event of Default.

 

9.07 Change of Organization Structure; Location of Principal Office

 

.  The Borrower or any Qualified Successor Entity that may hereafter acquire title to any of the Projects shall not change its name or change the location of its chief executive office, state of formation or organizational structure unless, in each instance, the Borrower or such Qualified Successor Entity, as the case may be, shall have (a) given the Administrative Agent at least thirty (30) days’ prior written notice thereof, and (b) made all filings or recordings, and taken all other action, reasonably requested by the Administrative Agent that is reasonably necessary under Applicable Law to protect and continue the priority of the Liens created by the Security Documents.

 

9.08 Reserved

 

.

 

9.09 Leases

 

.

 

(a) Negative Covenants.  The Borrower shall not (i) accept from any tenant, nor permit any tenant to pay, Rent for more than one month in advance except for payment in the nature of security for performance of a tenant’s obligations, escalations, percentage rents and estimated payments (not prepaid more than one month prior to the date such estimated payments are due) of operating expenses, taxes and other pass-throughs paid by tenants pursuant to their Leases, (ii) Modify (other than ministerial changes), terminate, or accept surrender of, any Major Lease now existing or hereafter made, without the prior written consent of the Administrative Agent; notwithstanding the foregoing, so long as no Event of Default exists, the Borrower shall retain the right to Modify, terminate, or accept surrender of any Approved Lease that is not a Major Lease; provided that (A) any such Modification, is (1) consistent with fair market terms and (2) is entered into pursuant to arm’s-length negotiations with a tenant not affiliated with the Borrower, and (B) any such termination is (1) in the ordinary course of business, (2) consistent with good business practice and (3) in the best interests of the affected Project, (iii) except for the Deed of Trust, assign, transfer (except for a Transfer thereof together with the transfer of the Projects to the entity described in Section 9.03(a)(iii) in full compliance with the provisions of such Section), pledge, subordinate or mortgage any Lease or any Rent without the prior written consent of the Administrative Agent and the Required Lenders, (iv) waive or release any nonperformance of any material covenant of any Major Lease by any tenant without the Administrative Agent’s prior written consent, (v) release any guarantor from its obligations under any guaranty of any Major Lease or any letter of credit or other credit support for a tenant’s performance under any Major Lease, except as expressly permitted pursuant to the terms of such Lease or (vi) enter into any master lease for any space at the Projects.  Notwithstanding the foregoing or anything to the contrary contained herein, the Borrower shall have the right, at its option, to terminate or accept the surrender of any Lease (including any Major Lease), and to pursue any other rights and remedies the Borrower may have against any tenant, following an uncured material default by a tenant under its Lease.

 

(b) Approvals.  The Borrower shall not enter into any Lease for any space at any Project (unless such proposed Lease is held in escrow pending the receipt of any approval required below) except as follows:

 

(i) Non-Major Leases.  So long as no Event of Default exists, the Borrower may enter into Leases that do not constitute Major Leases, and extensions, Modifications and renewals thereof without the approval of the Administrative Agent or any Lender; provided that such Lease, extension, renewal or Modification (A) in the case of a Lease, is substantially in the form of the Borrower’s standard form office lease or standard form retail lease, as applicable, previously approved by the Administrative Agent, (B) is consistent with fair market terms and (C) is entered into pursuant to arm-length negotiations with a tenant not affiliated with the Borrower.  Any proposed Lease that is not a Major Lease, or any extension, renewal or modification of any such Lease, that does not comply with the preceding sentence shall require the prior approval of the Administrative Agent.

 

(ii) Major Leases.  The Borrower shall not enter into any Major Lease or any extension, renewal or Modification of any Major Lease without the prior written approval of the Administrative Agent.

 

(iii) Information.  With respect to any Lease or Modification of Lease that requires approval of the Administrative Agent, the Borrower shall provide the Administrative Agent with the following information (collectively, the “Lease Approval Package”):  (A) all material information available to the Borrower concerning the lessee and its business and financial condition; (B) a draft of the lease (or lease modification); and (C) a summary (the “Lease Information Summary”) substantially in the form attached hereto as Exhibit N, of the material terms of such lease or lease modification.  Within ten (10) Business Days after the Administrative Agent shall have received a Lease Approval Package, the Administrative Agent shall either consent or refuse to consent to such Lease Approval Package.  If the Administrative Agent shall fail to respond within such ten (10) Business Day period, the Administrative Agent shall be deemed to have approved such lease or lease modification; provided that such lease or lease modification is documented pursuant to a lease or lease modification which is consistent with the draft and lease summary previously delivered to the Administrative Agent in all material respects.  If such Lease Approval Package is not consistent in all material respects, the Borrower shall provide the Administrative Agent with a revised Lease Approval Package showing material changes from the draft previously delivered to the Administrative Agent.  Within five (5) Business Days after the Administrative Agent shall have received such revised Lease Approval Package, the Administrative Agent shall either consent or refuse to consent to such Lease Approval Package.  If the Administrative Agent shall fail to respond within such five (5) Business Day period, the Administrative Agent shall be deemed to have approved such lease or lease modification.

 

(c) Additional Requirements as to all Leases.  Notwithstanding anything to the contrary set forth in this Section 9.09, the following requirements shall apply with respect to all Leases and all Modifications of Leases entered into after the date hereof:

 

(i) The Borrower shall within ten (10) days after the Administrative Agent’s request, provide the Administrative Agent with a true, correct and complete copy thereof as signed by all such parties, including any Modifications and Guarantees thereof.

 

(ii) All Leases must be subordinate to the Deed of Trust, and all existing and future advances thereunder, and to any Modification thereof.

 

(iii) Notwithstanding anything to the contrary set forth above, the Administrative Agent may require that the Borrower and the tenant under any Major Lease execute and deliver an SNDA Agreement (with such commercially reasonable changes thereto as may be requested by such tenant).  The Administrative Agent (on behalf of the Lenders) shall, if requested by the Borrower, and as a condition to a tenant’s obligation to subordinate its lease (if necessary or if requested by the Borrower) or attorn, enter into an SNDA Agreement with such tenant (with such commercially reasonable changes thereto as may be requested by such tenant).  The Administrative Agent’s execution thereof shall be conditioned upon the prior execution thereof by both the tenant and the Borrower.

 

(iv) All Leases shall be substantially in the form of the Borrower’s standard form office lease, approved by the Administrative Agent and the Borrower on the Closing Date, with such Modifications as the Administrative Agent shall thereafter approve prior to the execution of such Leases.

 

9.10 Reserved.

 

 

 

 

9.11 No Joint Assessment; Separate Lots

 

.  The Borrower shall not suffer, permit or initiate the joint assessment of any Project with any other real property constituting a separate tax lot.

 

9.12 Zoning

 

.  The Borrower shall not, without the Administrative Agent’s prior written consent, seek, make, suffer, consent to or acquiesce in any change or variance in any zoning or land use laws or other conditions of any Project or any portion thereof.  Except as disclosed on the Appraisals delivered to the Administrative Agent prior to the Closing Date, any zoning reports furnished to or obtained by the Administrative Agent prior to the Closing Date or any other existing non-conforming use disclosed on Schedule 9.12, the Borrower shall not use or permit the use of any portion of any Project in any manner that could result in such use becoming a non-conforming use under any zoning or land use law or any other applicable law, or Modify any agreements relating to zoning or land use matters or permit the joinder or merger of lots for zoning, land use or other purposes, without the prior written consent of the Administrative Agent.  Without limiting the foregoing, in no event shall the Borrower take any action that would reduce or impair either (a) the number of parking spaces at any Project or (b) access to any Project from adjacent public roads.

 

Further, without the Administrative Agent’s prior written consent, the Borrower shall not file or subject any part of any Project to any declaration of condominium or co-operative or convert any part of any Project to a condominium, co-operative or other direct or indirect form of multiple ownership and governance.

 

9.13 ERISA

 

.  The Borrower shall not take any action, or omit to take any action, which would (a) cause the Borrower’s assets to constitute “plan assets” for purposes of ERISA or the Code or (b) cause the Transactions to be a nonexempt prohibited transaction (as such term is defined in Section 4975 of the Code or Section 406 of ERISA) that could subject the Administrative Agent and/or the Lenders, on account of any Loan or execution of the Loan Documents hereunder, to any tax or penalty on prohibited transactions imposed under Section 4975 of the Code or Section 502(i) of ERISA.

 

9.14 Ground Lease.  The Borrower shall not surrender the leasehold estate created by the Ground Lease or terminate, Modify or cancel the Ground Lease or cause or permit the leasehold estate thereunder to be merged into the fee estate in the land affected thereby without the prior written consent of the Administrative Agent and the Required Lenders.  Any such surrender of the leasehold estate created by such Ground Lease or termination, cancellation, Modification or merger of such Ground Lease shall be void ab initio and of no force and effect.

 

9.15 Property Management

 

.  The Borrower will not, without the prior written approval of the Administrative Agent, (i) enter into any new Property Management Agreement; (ii) terminate or make any material changes to the Property Management Agreement, either orally or in writing, in any respect; or (iii) consent to, approve or agree to any assignment or transfer by or with respect to the Property Manager (including transfers of beneficial interests in the Property Manager or assignments or transfers by the Property Manager of any or all of its rights under any Property Management Agreement) except as otherwise permitted by Section 9.03 or Section 14.31.  Notwithstanding the foregoing, the Borrower may, on prior written notice to the Administrative Agent, subject to the limitations set forth herein with respect to the Administrative Agent’s approval of any new manager for any Project, terminate a Property Management Agreement in accordance with its terms as a result of a material default by a Property Manager thereunder.  Any change in ownership or control of the Property Manager other than as specifically set forth herein, or permitted by Section 9.03 or Section 14.31, shall be cause for the Administrative Agent to re-approve such Property Manager and Property Management Agreement.  If at any time the Administrative Agent consents to the appointment of a new Property Manager, such new Property Manager and the Borrower shall, as a condition of the Administrative Agent’s consent, execute a Property Manager’s Consent in the form then used by the Administrative Agent.  Each Property Manager shall be required to hold and maintain all necessary licenses, certifications and permits required by Applicable Law.

 

9.16 Foreign Assets Control Regulations

 

.  Neither the Borrower, any Borrower Party nor the Operating Partnership shall use the proceeds of the Loan in any manner that will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the Anti-Terrorism Order or any enabling legislation or executive order relating to any of the same.  Without limiting the foregoing, neither the Borrower, any Borrower Party nor the Operating Partnership will permit itself nor any of its Subsidiaries to (a) become a blocked person described in Section 1 of the Anti-Terrorism Order or (b) knowingly engage in any dealings or transactions or be otherwise associated with any person who is known by the Borrower, the Borrower Party or the Operating Partnership or who (after such inquiry as may be required by Applicable Law) should be known by the Borrower Party or the Operating Partnership to be a blocked person.

 

ARTICLE X.

 

 

INSURANCE AND CONDEMNATION PROCEEDS

 

10.01 Casualty Events

 

.

 

(a) If a Casualty Event shall occur as to any Project which results in damage in excess of $500,000, the Borrower shall give prompt notice of such damage to the Administrative Agent and shall, subject to the provisions of Section 10.03, promptly commence and diligently prosecute in accordance with Section 8.07 and this Article X the completion of the repair and restoration of such Project in accordance with Applicable Law to, as nearly as reasonably possible, the condition such Project was in immediately prior to such Casualty Event, with such alterations as may be reasonably approved by the Administrative Agent (a “Restoration”) for any Restoration for which such approval is otherwise required pursuant to Section 10.03(e) or alteration for which such approval is otherwise required pursuant to Section 8.07.  The Borrower shall pay all costs of such Restoration whether or not such costs are covered by Insurance Proceeds.  The Administrative Agent may, but shall not be obligated to, make proof of loss if not made promptly by the Borrower.  All Net Proceeds with respect to a Significant Casualty Event, shall, at the Administrative Agent’s option, with the consent of the Required Lenders, be applied to the payment of the Obligations unless required to be made available to the Borrower for Restoration hereunder, in which case such Net Proceeds shall, subject to the provisions of this Agreement, be made available to the Borrower to pay the costs incurred in connection with the Restoration.  All Net Proceeds with respect to a Casualty Event that is not a Significant Casualty Event shall, subject to the provisions of this Agreement, be made available to the Borrower to pay the costs incurred in connection with the Restoration of the affected Project.

 

(b) If Restoration of any Project following a Casualty Event is reasonably expected to cost not more than the lesser of (i) $5,000,000 and (ii) ten percent (10%) of the Appraised Value of such Project (the “Insurance Threshold Amount”), provided no Event of Default exists, the Borrower may, upon notice to the Administrative Agent, settle and adjust any claim with respect to such Casualty Event without the prior consent of the Administrative Agent and the Borrower is hereby authorized to collect the Insurance Proceeds with respect to any such claim; provided such adjustment is carried out in a manner consistent with good business practice.  In the event that Restoration of any Project is reasonably expected to cost an amount equal to or in excess of the Insurance Threshold Amount (a “Significant Casualty Event”), provided no Event of Default exists, the Borrower may, with the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld), settle and adjust any claim of the Borrower and agree with the insurer(s) on the amount to be paid on the loss, and the Insurance Proceeds shall be due and payable solely to the Administrative Agent (on behalf of the Lenders); notwithstanding the foregoing, the Administrative Agent shall retain the right to participate (not to the exclusion of the Borrower) in any such insurance settlement at any time.  If an Event of Default exists, with respect to any Casualty Event, the Administrative Agent, in its sole discretion, may settle and adjust any claim without the consent of the Borrower and agree with the insurer(s) on the amount to be paid on the loss, and the Insurance Proceeds shall be due and payable solely to the Administrative Agent (on behalf of the Lenders) and deposited in a Controlled Account and disbursed in accordance herewith.  If the Borrower or any party other than the Administrative Agent is a payee on any check representing Insurance Proceeds with respect to a Significant Casualty Event, the Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of the Administrative Agent.  The Borrower hereby irrevocably appoints the Administrative Agent as its attorney-in-fact, coupled with an interest, to endorse such check payable to the order of the Administrative Agent.  The reasonable out-of-pocket expenses incurred by the Administrative Agent in the settlement, adjustment and collection of the Insurance Proceeds shall become part of the Obligations and shall be reimbursed by the Borrower to the Administrative Agent upon demand to the extent not already deducted by the Administrative Agent from such Insurance Proceeds in determining Net Proceeds.

 

10.02 Condemnation Awards

 

.

 

(a) The Borrower shall promptly give the Administrative Agent notice of any actual Taking or any Taking that has been threatened in writing and shall deliver to the Administrative Agent copies of any and all papers served in connection with such actual or threatened Taking.  The Administrative Agent may participate in any Taking proceedings (not to the exclusion of the Borrower), and the Borrower shall from time to time deliver to the Administrative Agent all instruments requested by it to permit such participation.  The Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with the Administrative Agent, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings.  The Administrative Agent may participate in any such proceedings (not to the exclusion of the Borrower) and may be represented therein by counsel of the Administrative Agent’s selection at the Borrower’s cost and expense.  Without the Administrative Agent’s prior consent, the Borrower (i) shall not agree to any Condemnation Award and (ii) shall not take any action or fail to take any action which would cause the Condemnation Award to be determined; provided, however, that if no Event of Default exists, and upon prior written notice to the Administrative Agent, the Borrower shall have the right to compromise and collect or receive any Condemnation Award that does not exceed the lesser of (a) $5,000,000 and (b) ten percent (10%) of the Appraised Value of such Project, provided that such condemnation does not result in any material adverse effect upon the Project affected thereby.  In the event of such Taking, the Condemnation Award payable is hereby assigned to and (except as provided in the preceding sentence) shall be paid to the Administrative Agent (on behalf of the Lenders) and, except as expressly set forth in Section 10.03 hereof, shall be applied to the repayment of the Obligations.  If any Project or any portion thereof is subject to a Taking, the Borrower shall promptly commence and diligently prosecute the Restoration of such Project in accordance with this Article X and otherwise comply with the provisions of Section 10.03.  If such Project is sold, through foreclosure or otherwise, prior to the receipt by the Administrative Agent of the Condemnation Award, the Administrative Agent and the Lenders shall have the right, whether or not a deficiency judgment on the Notes shall have been sought, recovered or denied, to receive the Condemnation Award, or a portion thereof sufficient to pay the Obligations.

 

10.03 Restoration

 

.

 

(a) If each of the Net Proceeds and the cost of completing the Restoration shall be not more than the Insurance Threshold Amount, the Net Proceeds will be disbursed by the Administrative Agent to the Borrower upon receipt; provided that no Major Default or Event of Default then exists and, except where the Restoration has already been completed by the Borrower and the Borrower seeks reimbursement for costs of the Restoration, the Borrower delivers to the Administrative Agent a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement; and the Borrower thereafter commences and diligently proceeds with the Restoration thereof in compliance with Section 8.07 and this Article X.

 

(b) If either the Net Proceeds or the costs of completing the Restoration is equal to or greater than the Insurance Threshold Amount, the Administrative Agent shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 10.03.  The term “Net Proceeds” for purposes of this Article X shall mean:  (i) the net amount of all Insurance Proceeds received by the Administrative Agent pursuant to the Policies as a result of such damage or destruction, after deduction of the Administrative Agent’s reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same, or (ii) the net amount of the Condemnation Award, after deduction of the Administrative Agent’s reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same, whichever the case may be.

 

(c) The Net Proceeds shall be made available to the Borrower for Restoration; provided that each of the following conditions is met:

 

(i) no Major Default or Event of Default exists;

 

(ii) (A) in the event the Net Proceeds are Insurance Proceeds, less than twenty-five percent (25%) of the total (gross) floor area of the Improvements on such Project has been damaged, destroyed or rendered unusable as a result of such Casualty Event or (B) in the event the Net Proceeds are Condemnation Awards, less than ten percent (10%) of the land constituting such Project is taken, and such land is located along the perimeter or periphery of such Project, and no portion of the Improvements (other than sidewalks, paved areas and decorative non-structural elements of the Improvements) is located on such land;

 

(iii) the Debt Service Coverage Ratio projected (with Operating Income and Operating Expenses also being projected rather than being based on the previous calendar quarter) by the Administrative Agent for a period of one year after the Administrative Agent’s estimated date for the stabilization of the affected Project following completion of the Restoration will be equal to or greater than 1.15:1.00 based on Leases with respect to which the tenants do not have the right to or have waived any right to terminate their respective Leases;

 

(iv) the Debt Yield projected (with Operating Income and Operating Expenses also being projected rather than being based on the previous calendar quarter) by the Administrative Agent for a period of one year after the Administrative Agent’s estimated date for the stabilization of the affected Project following completion of the Restoration will be equal to or greater than eight percent (8.0%) based on Leases with respect to which the tenants do not have the right to or have waived any right to terminate their respective Leases;

 

(v) subject to the applicable provisions of Section 10.03(l), the Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than ninety (90) days after such Casualty Event or Taking, as the case may be, occurs) and shall diligently pursue the same to completion to the reasonable satisfaction of the Administrative Agent;

 

(vi) the Administrative Agent shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Notes, which will be incurred with respect to the subject Project as a result of the occurrence of any such Casualty Event or Taking, as the case may be, will be covered out of (A) the Net Proceeds, (B) the proceeds of Business Interruption Insurance, if applicable, or (C) other funds of the Borrower;

 

(vii) the Administrative Agent shall be satisfied that the Restoration will be completed on or before the earliest to occur of (A) six (6) months prior to the Stated Maturity Date, (B) such time as may be required under Applicable Law in order to repair and restore the subject Project to the condition it was in immediately prior to such Casualty Event or to as nearly as possible the condition it was in immediately prior to such Taking, as the case may be, and (C) six (6) months prior to the expiration of the Business Interruption Insurance unless the Borrower delivers to the Administrative Agent such additional security to the Administrative Agent in an amount reasonably determined by the Administrative Agent which additional security shall consist of cash or a letter of credit reasonably satisfactory to the Administrative Agent;

 

(viii) the subject Project and the use thereof after the Restoration will be in substantial compliance with and permitted under all Applicable Laws;

 

(ix) the Borrower shall deliver, or cause to be delivered, to the Administrative Agent satisfactory evidence that after Restoration, the subject Project would be at least as valuable as immediately before the Casualty Event or Taking occurred;

 

(x) such Casualty Event or Taking, as the case may be, does not result in the permanent loss of any current access to the subject Project;

 

(xi) the Borrower shall deliver, or cause to be delivered, to the Administrative Agent a signed detailed budget approved in writing by the Borrower’s architect or engineer stating the entire cost of completing the Restoration, which budget shall be reasonably acceptable to the Administrative Agent and any architect or engineer the Administrative Agent may engage (at the Borrower’s expense); and

 

(xii) the Net Proceeds together with any cash or cash equivalent deposited by the Borrower with the Administrative Agent are sufficient in the Administrative Agent’s judgment to cover the cost of the Restoration.

 

(d) Except for proceeds of a Casualty Event or Taking received and retained by the Borrower in compliance with the provisions of this Article X, the Net Proceeds shall be held by the Administrative Agent in a Controlled Account, until disbursed in accordance with the provisions of this Section 10.03, and shall constitute additional security for the Obligations.  Upon receipt of evidence reasonably satisfactory to the Administrative Agent that all the conditions precedent to such advance, including those set forth in subsection (c) above, have been satisfied, the Net Proceeds shall be disbursed by the Administrative Agent to, or as directed by, the Borrower from time to time during the course of the Restoration in substantially the same manner and subject to similar conditions as if such advances were being made in connection with a construction loan, such manner of disbursement and conditions to be determined by the Administrative Agent, including the Administrative Agent’s receipt of (i) advice from the Restoration Consultant (who shall be employed by the Administrative Agent at the Borrower’s sole expense) that the work completed or materials installed conform to said budget and plans, as approved by the Administrative Agent, (ii) evidence that all materials installed and work and labor performed to the date of the applicable advance (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, including the receipt of waivers of lien, contractor’s certificates, surveys, receipted bills, releases, title policy endorsements and such other evidences of cost, payment and performance satisfactory to the Administrative Agent, and (iii) evidence that there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other Liens of any nature whatsoever on the subject Project which have not either been fully bonded to the reasonable satisfaction of the Administrative Agent and discharged of record or in the alternative fully insured to the reasonable satisfaction of the Administrative Agent under the Title Policy.

 

(e) All plans and specifications required in connection with any Restoration resulting in Net Proceeds in excess of the Insurance Threshold Amount shall be subject to prior review and approval (such approval not to be unreasonably withheld) in all respects by the Administrative Agent and by an independent consulting engineer selected by the Administrative Agent (the “Restoration Consultant”).  All plans and specifications required in connection with any Restoration resulting in Net Proceeds not in excess of the Insurance Threshold Amount shall be provided to the Administrative Agent in the ordinary course of business.  The Administrative Agent shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with any Restoration.  With respect to any Restoration resulting in Net Proceeds in excess of the Insurance Threshold Amount (whether resulting from a Casualty Event or a Taking), the identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as all contracts having a cost in excess of $100,000, shall be subject to the prior review and approval (such approval not to be unreasonably withheld) of the Administrative Agent and the Restoration Consultant.  All costs and expenses incurred by the Administrative Agent in connection with making the Net Proceeds available for the Restoration including reasonable counsel fees and disbursements and the Restoration Consultant’s fees, shall be paid by the Borrower.  The Borrower shall also obtain, at its sole cost and expense, all necessary Government Approvals as and when required in connection with such Restoration and provide copies thereof to the Administrative Agent and the Restoration Consultant.

 

(f) In no event shall the Administrative Agent be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Restoration Consultant, minus the Restoration Retainage.  The term “Restoration Retainage” shall mean the greater of (i) an amount equal to ten percent (10%) of the hard costs actually incurred for work in place as part of the Restoration, as certified by the Restoration Consultant and (ii) the amount actually held back by the Borrower from contractors, subcontractors and materialmen engaged in the Restoration.  The Restoration Retainage shall not be released until the Restoration Consultant certifies to the Administrative Agent that the Restoration has been substantially completed in accordance with the provisions of this Section 10.03, subject to punch-list items and other non-material items of work and that all approvals necessary for the re-occupancy and use of the subject Project have been obtained from all appropriate Governmental Authorities, and the Administrative Agent receives evidence reasonably satisfactory to the Administrative Agent that the costs of the Restoration have been paid in full or will be paid in full out of the Restoration Retainage; provided, however, that the Administrative Agent will release the portion of the Restoration Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Restoration Consultant certifies to the Administrative Agent that such contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with its contract, and the Administrative Agent receives lien waivers and evidence of payment in full of all sums due to such contractor, subcontractor or materialman as may be reasonably requested by the Administrative Agent or by the Title Company issuing the Title Policy, and the Administrative Agent receives an endorsement to the Title Policy insuring the continued priority of the lien of the Deed of Trust and evidence of payment of any premium payable for such endorsement.  If required by the Administrative Agent, the release of any such portion of the Restoration Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to such contractor, subcontractor or materialman.

 

(g) The Administrative Agent shall not be obligated to make disbursements of the Net Proceeds more frequently than once per month.

 

(h) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of the Administrative Agent in consultation with the Restoration Consultant, be sufficient to pay in full the balance of the costs which are estimated by the Restoration Consultant to be incurred in connection with the completion of the Restoration, the Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with the Administrative Agent within ten (10) Business Days of the Administrative Agent’s request and before any further disbursement of the Net Proceeds shall be made.  The Net Proceeds Deficiency shall be held in a Controlled Account and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and, until so disbursed, shall constitute additional security for the Obligations.

 

(i) After the Restoration Consultant certifies to the Administrative Agent that a Restoration has been substantially completed in accordance with the provisions of this Section 10.03, and the receipt by the Administrative Agent of evidence satisfactory to the Administrative Agent that all costs incurred in connection with the Restoration have been paid in full, the excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited in a Controlled Account shall be remitted to the Borrower, provided that (a) no Event of Default shall exist and (b) the Debt Service Coverage Ratio projected (with Operating Income and Operating Expenses also being projected rather than being based on the previous calendar quarter) by the Administrative Agent for a period of one year will be equal to or greater than 1.15:1.00 based on Leases with respect to which tenants have not exercised any right to terminate their respective Leases and which are in full force and effect and the tenants thereunder are not in material default under their Leases with respect to a default which would give rise to the right of the Borrower, as the landlord, to terminate such Leases; and the Debt Yield projected (with Operating Income and Operating Expenses also being projected rather than being based on the previous calendar quarter) by the Administrative Agent for a period of one year will be equal to or greater than eight percent (8.0%) based on Leases with respect to which tenants have not exercised any right to terminate their respective Leases and which are in full force and effect and the tenants thereunder are not in material default under their Leases with respect to a default which would give rise to the right of the Borrower, as the landlord, to terminate such Leases.  If the Borrower fails to satisfy the provisions of clause (b) above, any such excess Net Proceeds shall be held in the Cash Trap Account in accordance with the Cash Trap Account Security Agreement.

 

(j) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to the Borrower as excess Net Proceeds pursuant to subsection (i) above may (A) be retained and applied by the Administrative Agent for the account of the Lenders toward the payment of the Obligations, whether or not then due and payable, in such order, priority and proportions as the Administrative Agent in its sole discretion shall deem proper (but without premium or penalty) or (B) at the sole discretion of the Administrative Agent, be paid, either in whole or in part, to the Borrower for such purposes and upon such conditions as the Administrative Agent shall designate.  In the event the Net Proceeds are applied to the Obligations and all of the Obligations have been performed or are discharged by the application of less than all of the Net Proceeds, then any remaining Net Proceeds will be paid over to the Borrower or any other party legally entitled thereto.

 

(k) Notwithstanding any Casualty Event or Taking, the Borrower shall continue to pay the Obligations in the manner provided in the Notes, this Agreement and the other Loan Documents and the Outstanding Principal Amount shall not be reduced unless and until (i) any Insurance Proceeds or Condemnation Award shall have been actually received by the Administrative Agent, (ii) the Administrative Agent shall have deducted its reasonable expenses of collecting such proceeds and (iii) the Administrative Agent shall have applied any portion of the balance thereof to the repayment of the Outstanding Principal Amount in accordance with Section 10.03(j).  The Lenders shall not be limited to the interest paid on any Condemnation Award but shall continue to be entitled to receive interest at the rate or rates provided in the Notes and this Agreement if such interest is then due hereunder.

 

(l) Notwithstanding anything to the contrary contained in this Article X or Section 8.07, if pursuant to the provisions of this Article X the Net Proceeds are required to be made available to the Borrower for Restoration of the damage caused by a Casualty Event or any Taking, the Borrower’s obligation to commence or thereafter to proceed with such Restoration shall be conditioned upon the Borrower’s receipt of the Net Proceeds attributable to such Casualty Event or Taking, respectively; provided, however, that nothing contained in this sentence (or any other provision of this Article X) shall (i) defer, limit or excuse in any respect the Borrower’s obligation to commence or proceed with the Restoration of any Project: (A) if the Borrower does not diligently pursue the collection of such Net Proceeds; (B) where the relevant Casualty Event is not a Significant Casualty Event or the Taking involves a claim of not more than the lesser of $5,000,000 or ten percent (10%) of the Appraised Value of the affected Project; (C) in the case of a Casualty Event, to the extent that the costs of such Restoration are included within any applicable deductible or self-insurance retention, or exceed the applicable limits of insurance, under any insurance policy maintained hereunder; (D) in the case of a Casualty Event, if the Borrower is, at the time of such Casualty Event, in default in its obligation to maintain the insurance policies required under Section 8.05 in any respect which would reduce the amount of Net Proceeds available to the Borrower on account of such Casualty Event below the amount which would have been available had the Borrower not been in default of such obligation, then to the extent of such reduction; or (E) to the extent that the Net Proceeds available to the Borrower on account of such Casualty Event or Taking are reasonably anticipated to be reduced as a result of any defense to coverage or other defense available to the insurer or condemning authority, whether as a result of any act or omission of the Borrower or otherwise (provided that the undisputed portion of such Net Proceeds shall have been paid by the insurer or condemning authority and made available to the Borrower); (ii) defer, limit or excuse in any respect the Borrower’s obligation to undertake such prudent measures (subject in all cases to any applicable provisions in Section 8.07) as may be necessary to keep any Project, following any Casualty Event or Taking, safe, secure and protected and as may be appropriate to avoid further deterioration or damage; or (iii) defer, limit or excuse any obligation of the Borrower under this Agreement or the other Loan Documents (other than the obligation to commence and diligently prosecute the Restoration of such damage).

 

ARTICLE XI.

 

 

CASH TRAP ACCOUNT

 

11.01 Cash Trap Trigger Event

 

.  Upon the occurrence of a Cash Trap Trigger Event and on each day that the required monthly report is due under Section 8.01(e) and continuing for each month thereafter during any Cash Trap Trigger Period, the Borrower shall cause all Excess Cash from the Projects to be paid each month directly to the Administrative Agent for deposit into a Cash Trap Account established for and in the name of the Borrower for the benefit of the Administrative Agent (on behalf of the Lenders) as additional collateral for its Obligations.

 

(a) Establishment and Maintenance of the Cash Trap Account.

 

(i) The Cash Trap Account (A) shall be a separate and identifiable account from all other funds held by the Depository Bank and (B) shall contain only funds required to be deposited pursuant to this Section 11.01.  Any interest which may accrue on the amounts on deposit in a Cash Trap Account shall be added to and shall become part of the balance of the Cash Trap Account.  The Borrower shall enter into with the Administrative Agent (for the benefit of the Lenders) and the applicable Depository Bank a Cash Trap Account Security Agreement (with such changes thereto as may be required by the Depository Bank and satisfactory to the Administrative Agent) which shall govern the Cash Trap Account established for it and the rights, duties and obligations of each party to such Cash Trap Account Security Agreement.

 

(ii) The Cash Trap Account Security Agreement shall provide that (A) the Cash Trap Account shall be established in the name of the Administrative Agent for the benefit of the Lenders, (B) the Cash Trap Account shall be subject to the sole dominion, control and discretion of the Administrative Agent, and (C) neither the Borrower nor any other Person, including, without limitation, any Person claiming on behalf of or through the Borrower, shall have any right or authority, whether express or implied, to make use of or withdraw, or cause the use or withdrawal of, any proceeds from the Cash Trap Account or any of the other proceeds deposited in the Cash Trap Account, except as expressly provided in this Agreement or in the Cash Trap Account Security Agreement.

 

(b) Deposits to, Disbursements and Release from the Cash Trap Account.  All deposits to and disbursements of all or any portion of the deposits to the Cash Trap Account shall be in accordance with this Agreement and the Cash Trap Account Security Agreement.  The Borrower hereby agrees to pay any and all fees charged by Depository Bank in connection with the maintenance of the Cash Trap Account and the performance of its duties.  During any Cash Trap Trigger Period, provided that no monetary Default or any Event of Default exists at the time of any request by the Borrower for a disbursement from the Cash Trap Account, the Administrative Agent will direct the Depository Bank to transfer amounts credited to the Cash Trap Account to the Borrower’s Account to pay or reimburse the Borrower for (i) Real Estate Taxes or Insurance Premiums, (ii) capital expenditures incurred pursuant to an Approved Annual Budget (such capital expenditures, “Approved Capital Expenditures”), (iii) actual costs of tenant improvements and/or leasing commissions pursuant to an Approved Lease and set forth in an Approved Annual Budget (such expenditures, “Approved Leasing Expenditures”), or (iv) capital expenditures which have been approved by the Administrative Agent in accordance with subsection (c)(iv) below or leasing expenditures incurred pursuant to an Approved Lease, in either case which are not set forth in an Approved Annual Budget (such expenditures, “Extraordinary Capital or Leasing Expenditures”), in accordance with the terms and conditions set forth below in subsection (c).  Provided no Default or Event of Default then exists, any funds held in the Cash Trap Account shall be released to the Borrower for the account of the Borrower upon the occurrence of a Cash Trap Release Event and, in such event the Borrower shall no longer be required to cause the deposit of the subsequent Excess Cash into the Cash Trap Account unless a Cash Trap Trigger Event occurs with respect to any future calendar quarter.

 

(c) Conditions to Disbursements from Cash Trap Account.  Each disbursement from a Cash Trap Account is subject to the satisfaction of each of the following conditions:

 

(i) Disbursements shall be utilized solely for Real Estate Taxes, Insurance Premiums, Approved Capital Expenditures, Approved Leasing Expenditures and Extraordinary Capital or Leasing Expenditures and shall be in an amount no greater than the actual cost of such Real Estate Taxes or Insurance Premiums, Approved Capital Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures to the extent not theretofore paid from Operating Income;

 

(ii) Disbursements for Approved Capital Expenditures, Approved Leasing Expenditures and Extraordinary Capital or Leasing Expenditures shall not be made more frequently than monthly, and each disbursement (if any) shall be in an amount not less than $25,000.00 (unless the disbursement represents the final disbursement for a particular Approved Capital Expenditure or Approved Leasing Expenditure);

 

(iii) Not less than ten (10) days prior to the requested funding date for a disbursement, the Administrative Agent shall have received a written request for such disbursement executed by an Authorized Officer on behalf of the Borrower, which request shall specify the date on which the Borrower requests the disbursement to be made and the Person(s) or account(s) to whom such disbursement should be made (such duly completed request is referred to herein as a “Disbursement Request”);

 

(iv) Not less than ten (10) days prior to each disbursement for Approved Capital Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures, the Administrative Agent shall have received, reviewed and approved (A) a certificate executed by the Borrower, or, if such Person was engaged for such work, the Borrower’s architect or engineer, as applicable, certifying that, to the knowledge of such Person, the work for which such disbursement is being requested has been completed to the percentage of completion specified in the Disbursement Request substantially in accordance with the applicable plans and specifications therefor and in a good and workmanlike manner; (B) sworn statements and conditional lien waivers from all contractors, subcontractors and materialmen with respect to such work; (C) sworn statements and final lien waivers from all contractors and subcontractors and materialmen with respect to work theretofore completed and for which a disbursement was made to the Borrower in a prior month; (D) copies of paid invoices for prior disbursements and open invoices for requested disbursements, and an all bills paid affidavit from the Borrower; (E) with respect to the final payment for a work of improvement, certificates of occupancy (or similar documentation), as required by Applicable Law, relating to the work for which such disbursement is being made; and (F) such other supporting documentation as may be reasonably required by the Administrative Agent, all in form and substance reasonably satisfactory to the Administrative Agent.  Notwithstanding the foregoing, in lieu of complying with the requirements in clauses (A) through (F) above with respect to any requested disbursement for Approved Capital Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures which consists of leasing commissions or sums due pursuant to any contract or subcontract providing for an aggregate contract sum of not more than $50,000, the Borrower may, not less than ten (10) days prior to the requested funding date for any disbursement on account thereof, deliver to the Administrative Agent, together with (or as part of) its Disbursement Request, a certificate executed by an Authorized Officer on behalf of the Borrower certifying that such sums so requested are due and payable and are Approved Capital Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures which have been incurred in compliance with this Agreement and containing copies of the relevant invoices, contracts or other back-up documentation to confirm that such sums are then owing; and

 

(v) Based on the most recent reconciliation report delivered by the Borrower pursuant to Section 8.01(e)(iii) prior to the delivery of such Disbursement Request (or, if the most recent such report has not been delivered pursuant to such section or article, based on such other information as the Administrative Agent shall determine in its reasonable discretion), the results from the operations of the Projects for the month and year-to-date covered by such reconciliation report shall be equal to or better than the results contemplated by the Approved Annual Budget for such month and year-to-date, except for Extraordinary Capital or Leasing Expenditures or other expenses or items approved by the Administrative Agent.

 

ARTICLE XII.

 

 

EVENTS OF DEFAULT

 

12.01 Events of Default

 

.  Any one or more of the following events shall constitute an “Event of Default”:

 

(a) The Borrower shall: (i) fail to pay any principal of any Loan when due (whether at stated maturity, mandatory prepayment or otherwise); or (ii) fail to pay any interest on any Loan, any fee or any other amount (other than an amount referred to in clause (i) above) payable by it under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and, in the case of this clause (ii), such default shall continue for a period of five (5) days; or

 

(b) The Borrower (or, if applicable, any Borrower Party) shall default in the performance of any of its obligations under any of Sections 8.05, 8.06, 8.12, 8.17, 8.19 or Article IX (other than Section 9.06); or any Change in Control shall occur; or the Borrower shall default in the performance of any of its obligations under Section 8.16 which are required to be performed during any Cash Trap Trigger Period; or the Borrower shall make any Restricted Payment while any Event of Default exists; or the Borrower shall make a Restricted Payment while any other Major Default exists unless such Major Default is cured within the applicable cure or grace period therefor; or

 

(c) Any representation, warranty or certification made or deemed made herein or in any other Loan Document (or in any Modification hereto or thereto) by the Borrower or any request, notice or certificate furnished by or on behalf of any Borrower Party or the Operating Partnership pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or

 

(d) Any of the Bankruptcy Parties shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or

 

(e) An involuntary proceeding shall be commenced or an involuntary petition shall be filed, seeking (i) liquidation, reorganization or other relief in respect of any of the Bankruptcy Parties or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any of the Bankruptcy Parties or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered; or

 

(f) Any Bankruptcy Party shall (i) voluntarily commence as to itself any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (e) of this Section 12.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or for a substantial part of any of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; or

 

(g) The Borrower shall default in the payment when due of any principal of or interest on any of its Indebtedness (other than the Obligations) in excess of Two Hundred Fifty Thousand Dollars ($250,000) and such default shall not be cured within any applicable notice or cure period provided with respect to such Indebtedness; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity; or

 

(h) Any of the Bankruptcy Parties shall be terminated, dissolved or liquidated (as a matter of law or otherwise) or proceedings shall be commenced by any Person (including any Bankruptcy Party) seeking the termination, dissolution or liquidation of any Bankruptcy Party, except, in each case, in connection with a merger, termination, dissolution or liquidation permitted by Section 9.03(a); or

 

(i) One or more (i) judgments for the payment of money (exclusive of judgment amounts fully covered by insurance (other than permitted deductibles) where the insurer has admitted liability in respect of the full amount of such judgment) aggregating in excess of One Million Dollars ($1,000,000) shall be rendered against one or more of the Borrower Parties or (ii) non-monetary judgments, orders or decrees shall be entered against any of the Borrower Parties which have or would reasonably be expected to have a Material Adverse Effect, and, in either case, the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed (or bonded over through the posting of a bond in accordance with a statutory bonding procedure the effect of which is to limit the judgment creditor’s claim to recovery under the bond), or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower Party to enforce any such judgment; or

 

(j) An ERISA Event shall have occurred that, in the opinion of the Administrative Agent, when taken together with all other such ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; or

 

(k) The Liens created by the Security Documents shall at any time not constitute a valid and perfected first priority Lien (subject to the Permitted Title Exceptions) on the collateral intended to be covered thereby in favor of the Administrative Agent, free and clear of all other Liens (other than the Permitted Title Exceptions and Liens which are described in clauses (b), (c), (e) and (g) of the definition of “Permitted Liens” or which are described in Section 9.02 of this Agreement, and which are in the case of Liens described in clause (e) of the definition of “Permitted Liens” and Section 9.02(d) of this Agreement subordinate to the Lien of the Deed of Trust encumbering the affected Project), or, except for expiration in accordance with its terms or releases or terminations contemplated by this Agreement, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by any Borrower Party or any of their Affiliates (controlled by the REIT); or

 

(l) The Guarantor shall (i) default under any of the Guarantor Documents beyond any applicable notice and grace period; or (ii) revoke or attempt to revoke, contest or commence any action against its obligations under any of the Guarantor Documents; or

 

(m) The Borrower violates (i) any of the provisions set forth in clauses (a), (b), (d) (if such violation results from the incurrence or assumption of indebtedness for borrowed money), (e) (if such violation results in the giving of guarantees of indebtedness for borrowed money), (f) or (g) of the definition of Limited Purpose Entity which continues for a period of five (5) Business Days or (ii) any of the provisions set forth in clauses (c), (d) (with respect to all other violations of this clause), or (e) (with respect to all other violations of this clause), of the definition of Limited Purpose Entity and such violation is not cured within thirty (30) days of the date that any officer of the Borrower obtains knowledge of such violation; or

 

(n) At any time the REIT fails to satisfy the requirements of being a real estate investment trust as defined in the Code if such failure could reasonably be expected to result in a Material Adverse Effect; or

 

(o) The Borrower uses, or permits the use of, funds from the Security Accounts for any purpose other than the purpose for which such funds were disbursed from the Security Accounts; or

 

(p) Except as permitted by Section 8.19(i), the failure of the Borrower to maintain, or cause to be maintained, Hedge Agreements with respect to the Aggregate Notional Amount in accordance with Section 8.19; or the occurrence of any default by or termination event as to the Borrower or Other Swap Pledgor under any Hedge Agreement maintained with respect to the Aggregate Notional Amount which is not cured within the applicable notice and grace or cure periods provided therein; or

 

(q) Reserved;

 

(r) Any of the Borrower Parties shall default under any of the other terms, covenants or conditions of this Agreement or any other Loan Document not set forth above in this Section 12.01 and such default shall continue for thirty (30) days after notice from the Administrative Agent to the Borrower; provided, however, that if (i) such default is susceptible of cure but the Administrative Agent reasonably determines that such non-monetary default cannot be reasonably cured within such thirty (30) day period, (ii) the Administrative Agent determines, in its sole discretion, that such default does not create a material risk of sale or forfeiture of, or substantial impairment in value to, any material portion of the Projects, and (iii) the Borrower has provided the Administrative Agent with security reasonably satisfactory to the Administrative Agent against any interruption of payment or impairment of collateral that is reasonably likely to result from such continuing failure, then, so long as the relevant Borrower Party shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for the relevant Borrower Party in the exercise of due diligence to cure such default, but in no event shall such period exceed ninety (90) days after the original notice from the Administrative Agent or extend beyond the Maturity Date; or

 

(s) Reserved.

 

12.02 Remedies

 

.  Upon the occurrence of an Event of Default and at any time thereafter during the existence of such event, the Administrative Agent may (subject to, and in accordance with, the provisions of Section 13.03) and, upon request of the Required Lenders shall, by written notice to the Borrower, pursue any one or more of the following remedies, concurrently or successively, it being the intent hereof that none of such remedies shall be to the exclusion of any other:

 

(a) In the case of an Event of Default other than one referred to in clause (e) or (f) of Section 12.01 with respect to any Bankruptcy Party, terminate the Commitments and/or declare the Outstanding Principal Amount of the Loans, and the accrued interest on the Loans and all other amounts payable by the Borrower hereunder (including any amounts payable under Section 5.05) and under the Notes and the Obligations of the Borrower under the other Loan Documents to be forthwith due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower.  In the case of the occurrence of an Event of Default referred to in clause (e) or (f) of Section 12.01 with respect to a Bankruptcy Party, the Commitments shall automatically be terminated and the Outstanding Principal Amount of the Loans, and the accrued interest on, the Loans and all other amounts payable by the Borrower hereunder (including any amounts payable under Section 5.05) and under the Notes and the Obligations of the Borrower under the other Loan Documents shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower;

 

(b) If the Borrower shall fail, refuse or neglect to make any payment or perform any Obligations under the Loan Documents, then, while any Event of Default exists and without notice to or demand upon the Borrower and without waiving or releasing any other right, remedy or recourse the Administrative Agent may have because of such Event of Default, the Administrative Agent may (but shall not be obligated to) make such payment or perform such Obligation for the account of and at the expense of the Borrower, and shall have the right to enter upon the Projects for such purpose and to take all such action thereon and with respect to the Projects as it may deem necessary or appropriate.  If the Administrative Agent shall elect to pay any sum due with respect to the Projects, the Administrative Agent may do so in reliance on any bill, statement or assessment procured from the appropriate Governmental Authority or other issuer thereof without inquiring into the accuracy or validity thereof.  Similarly, in making any payments to protect the security intended to be created by the Loan Documents, the Administrative Agent shall not be bound to inquire into the validity of any apparent or threatened adverse title, Lien, encumbrance, claim or charge before making an advance for the purpose of preventing or removing the same.  Additionally, if any Hazardous Substance affects or threatens to affect any of the Projects, the Administrative Agent may (but shall not be obligated to) give such notices and take such actions as it deems necessary or advisable in order to abate the discharge of or remove any Hazardous Substance; and/or

 

(c) Exercise or pursue any other remedy or cause of action permitted under this Agreement, any or all of the Security Documents or any other Loan Document, or conferred upon the Administrative Agent and the Lenders by operation of law.

 

ARTICLE XIII.

 

 

THE ADMINISTRATIVE AGENT

 

13.01 Appointment, Powers and Immunities

 

.  Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to act as its agent hereunder and under the other Loan Documents with such powers as are specifically delegated to the Administrative Agent by the terms of this Agreement and of the other Loan Documents, together with such other powers as are reasonably incidental thereto.  The Administrative Agent (which term as used in this sentence and in Section 13.05 and the first sentence of Section 13.06 shall include reference to its Affiliates and its own and its Affiliates’ officers, directors, employees and agents):

 

(a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Loan Documents, and shall not by reason of this Agreement or any other Loan Document be a fiduciary or trustee for any Lender except to the extent that the Administrative Agent acts as an agent with respect to the receipt or payment of funds, nor shall the Administrative Agent have any fiduciary duty to the Borrower nor shall any Lender have any fiduciary duty to the Borrower or any other Lender;

 

(b) shall not be responsible to the Lenders for any recitals, statements, representations or warranties contained in this Agreement or in any other Loan Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Loan Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any other Loan Document or any other document referred to or provided for herein or therein or for any failure by the Borrower or any other Person to perform any of its obligations hereunder or thereunder;

 

(c) shall administer the Loan and the Loan Documents in a manner consistent with its administration of other loans which it holds for its own account, but subject to the foregoing, shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence, bad faith or willful misconduct;

 

(d) shall not, except to the extent expressly instructed by the Required Lenders with respect to collateral security under the Security Documents, be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Loan Document; and

 

(e) shall not be required to take any action which is contrary to this Agreement or any other Loan Document or Applicable Law.

 

The relationship between the Administrative Agent and each Lender is a contractual relationship only, and nothing herein shall be deemed to impose on the Administrative Agent any obligations other than those for which express provision is made herein or in the other Loan Documents.  The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.  The Administrative Agent may deem and treat the payee of a Note as the holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed with the Administrative Agent, any such assignment or transfer to be subject to the provisions of Section 14.07.  Except to the extent expressly provided in Sections 13.08 and 13.10, the provisions of this Article XIII are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have any rights as a third-party beneficiary of any of the provisions hereof and the Lenders may Modify or waive such provisions of this Article XIII in their sole and absolute discretion.

 

13.02 Reliance by Administrative Agent

 

.  The Administrative Agent shall be entitled to rely upon any certification, notice, document or other communication (including any thereof by telephone, telecopy, telegram or cable) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent in good faith.  As to any matters not expressly provided for by this Agreement or any other Loan Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders (or the unanimous consent of the Lenders to the extent required under Section 14.05), and such instructions of the Required Lenders (or the unanimous consent of the Lenders to the extent required under Section 14.05) and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders.

 

13.03 Defaults

 

(a) .The Administrative Agent shall give the Lenders notice of any material Default of which the Administrative Agent has knowledge or notice.  Except with respect to (i) the nonpayment of principal, interest or any fees that are due and payable under any of the Loan Documents, (ii) Defaults with respect to which the Administrative Agent has actually sent written notice of to the Borrower and (iii) material Defaults with respect to which the Administrative Agent is given written notice (or copied on such written notice) from a third party specifying such Default, the Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default unless the Administrative Agent has received notice from a Lender or the Borrower specifying such Default and stating that such notice is a “Notice of Default”.  If the Administrative Agent has such knowledge or receives such a notice from the Borrower or a Lender in accordance with the immediately preceding sentence with respect to the occurrence of a material Default, the Administrative Agent shall give prompt notice thereof to the Lenders.  Subject to the last sentence of this Section 13.03(a), within ten (10) days of delivery of such notice of Default from the Administrative Agent to the Lenders (or such shorter period of time as the Administrative Agent reasonably determines is necessary), the Administrative Agent and the Lenders shall consult with each other to determine a proposed course of action.  The Lenders agree that the Administrative Agent shall (subject to Section 13.07) take such action with respect to such Default as shall be directed by the Required Lenders, provided that, (A) unless and until the Administrative Agent shall have received such directions, the Administrative Agent may while a Default exists (but shall not be obligated to) take such action, or refrain from taking such action, including decisions (1) to make protective advances that the Administrative Agent reasonably determines are necessary to protect or maintain the Projects; provided, however, that except for protective advances for the payment of real estate taxes, assessments, insurance and contractual obligations under Leases, the Administrative Agent shall not make protective advances with respect to any Project in excess of $500,000, or with respect to the Projects in the aggregate in excess of $2,500,000, in any twelve (12) month period, without the approval of the Required Lenders and (2) to foreclose on any of the Projects or exercise any other remedy, with respect to such Default as it shall deem advisable in the interest of the Lenders and (B) no actions approved by the Required Lenders shall violate the Loan Documents or Applicable Law; provided, further, that notwithstanding clause (A) above, or Section 12.02, the Administrative Agent shall provide the Lenders with ten (10) Business Days’ prior written notice before commencing foreclosure on any of the Projects and, if the Required Lenders shall, during such ten (10) Business Day period, direct the Administrative Agent not to commence such foreclosure, the Administrative Agent shall refrain from doing so until otherwise directed by the Required Lenders, and, without limiting Section 13.03(b), after foreclosure has commenced, if directed by the Required Lenders, the Administrative Agent shall (subject to Section 13.07) cease pursuing such foreclosure to completion unless and until otherwise subsequently directed by the Required Lenders.  Each of the Lenders acknowledges and agrees that no individual Lender may separately enforce or exercise any of the provisions of any of the Loan Documents (including the Notes) other than through the Administrative Agent.  The Administrative Agent shall promptly advise the Lenders of all material actions which the Administrative Agent takes in accordance with the provisions of this Section 13.03(a) and shall continue to consult with the Lenders with respect to all of such actions.  Notwithstanding the foregoing, if the Required Lenders shall at any time direct that a different or additional remedial action be taken from that already undertaken by the Administrative Agent, including the commencement of foreclosure proceedings, such different or additional remedial action shall be taken in lieu of or in addition to, the prosecution of such action taken by the Administrative Agent; provided that all actions already taken by the Administrative Agent pursuant to this Section 13.03(a) shall be valid and binding on each Lender.  All money received from any enforcement actions, including the proceeds of a foreclosure sale of the Projects, shall be applied, first, to the payment or reimbursement of the Administrative Agent for expenses and advances incurred in accordance with the provisions of Sections 13.03(a) and (e) and 13.05 and to the payment of any fees owing to the Administrative Agent pursuant to the Loan Documents or any other separate agreement among the Lenders, second, to the payment or reimbursement of the Lenders for expenses incurred in accordance with the provisions of Sections 13.03(c), (d) and (e) and 13.05; third, to the payment or reimbursement of the Lenders for any advances made pursuant to Section 13.03(b); fourth, pari passu to the Lenders in accordance with their respective Proportionate Shares until the Obligations have been fully paid and discharged in full; and fifth to the person(s) legally entitled thereto.  Unless otherwise directed by the Required Lenders as set forth herein, after delivery by the Administrative Agent of the default notice to the Lenders pursuant to this Section 13.03(a), the Administrative Agent shall promptly thereafter (but in any event within ninety (90) days of such occurrence, unless such default has been cured or no longer exists or the Required Lenders have agreed to a forbearance with respect to such default within such ninety (90) day period) order an Appraisal of each Project.  Notwithstanding anything to the contrary herein, within thirty (30) days after (i) the occurrence of any Event of Default of which the Administrative Agent has given notice thereof to the Lenders pursuant to Section 13.03(a) or (ii) the receipt by the Administrative Agent of a Notice of Default from any Lender pursuant to this Section 13.03(a), the Administrative Agent may resign as the Administrative Agent hereunder, unless within such thirty (30) day period, the Administrative Agent and the Lenders have reached an agreement with respect to certain fees (collectively, the “Servicing Fees”) that would be payable to the Administrative Agent for servicing, special servicing and administering the Loans after such Event of Default and during the continuation thereof and managing the Projects during any period of time that the Projects are acquired by the Administrative Agent or its nominee as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, which Servicing Fees shall be payable in accordance with a separate agreement to be entered into by the Administrative Agent and the Lenders.  In the event the Administrative Agent resigns as permitted hereunder, then the Required Lenders shall have the right to appoint a successor Administrative Agent which (A) satisfies the requirements of Section 13.08 or (B) is otherwise a nationally recognized commercial mortgage loan servicer (a “Special Servicer”) which (i) has the minimum rating required of a special servicer in the case of Fitch, (ii) is on the S&P list of approved special servicers in the case of S&P and (iii) in the case of Moody’s, such special servicer is acting as special servicer in a commercial mortgage loan securitization that was rated by Moody’s within the twelve (12) month period prior to the date of determination, and Moody’s has not downgraded or withdrawn the then-current rating on any class of commercial mortgage securities or placed any class of commercial mortgage securities on watch citing the continuation of such special servicer as special servicer of such commercial mortgage securities, within thirty (30) days after such resignation, or, if the Required Lenders have not appointed such a successor Administrative Agent within such thirty (30) day period, then the resigning Administrative Agent may (on behalf of the Lenders) appoint a successor Administrative Agent that satisfies the requirements of Section 13.08 or is otherwise a Special Servicer, and in either case, the Lenders shall pay the Servicing Fees required by such successor Administrative Agent in accordance with a separate agreement with such successor Administrative Agent.  The time periods within which the Administrative Agent is required to act in this Article XIII shall be tolled, commencing on the thirtieth day after (A) the occurrence of any Event of Default of which the Administrative Agent has given notice thereof to the Lenders pursuant to Section 13.03(a) or (B) the receipt by the Administrative Agent of a Notice of Default from any Lender pursuant to this Section 13.03(a), and continuing until ten (10) Business Days after a replacement Administrative Agent has been appointed or the Administrative Agent and the Lenders have reached an agreement regarding the Servicing Fees.

 

(b) (i)           In addition to and without limiting any of the provisions of Section 13.03(a), not later than one hundred twenty (120) days after (A) the occurrence of any Event of Default that results from any Default of which the Administrative Agent has delivered notice to the Lenders pursuant to said Section 13.03(a) or (B) the receipt by the Administrative Agent of a Notice of Default from any Lender pursuant to said Section 13.03(a), the Administrative Agent will proceed with taking the Enforcement Actions listed below, in each case in accordance with the advice of counsel) unless the Required Lenders at anytime direct the Administrative Agent to proceed with an alternative course of action with respect to such Default or to suspend, delay or deter any such Enforcement Action, then in the case the Administrative Agent is required to so proceed, the Administrative Agent shall (and is hereby instructed by each Lender to), subject to Section 13.07 and all other applicable terms of this Article XIII, (1) accelerate the Loan (if not previously accelerated) and commence (through the recording, filing and/or service of such notices of default or other notices or pleadings as may be required by applicable law) (and thereafter diligently pursue to completion) appropriate foreclosure proceedings with respect to the Projects pursuant to the Deeds of Trust, in each case in accordance with the advice of counsel, and (2) take such other actions as the Administrative Agent deems reasonably necessary in connection therewith in order to protect the Projects (including, without limitation, if deemed appropriate by the Administrative Agent, seeking the appointment of a receiver for the Projects) (the foregoing clauses (1)and (2) are herein referred to as the “Enforcement Actions”) (it being understood that the Administrative Agent shall have no obligation to commence foreclosure proceedings with respect to any Project in the State of Hawaii unless and until it shall have completed foreclosure proceedings with respect to all Projects in the State of California).

 

(ii)           Within forty-five (45) days after the occurrence of any Event of Default that results from any Default of which the Administrative Agent has delivered notice to the Lenders pursuant to said Section 13.03(a) (unless the Required Lenders have agreed to a forbearance with respect to any such Default) and thereafter not less frequently then once each quarter during each quarter during which the Loan remains in default, prepare or cause to be prepared and delivered to each of the Lenders a report which includes the following information, to the extent reasonably determinable:

 

(A) a summary of the status of the Loan and any negotiations with the Borrower (including the status of any foreclosure actions or other proceedings undertaken with respect thereto, any proposed workouts with respect thereto and the negotiations with respect to any such workouts);

 

(B) the income or operating statements available for the Projects;

 

(C) the Administrative Agent’s recommendations, if any, as to how the Loan might be returned to performing status or otherwise realized upon; and

 

(D) such other information as may be in the possession or control of the Administrative Agent as may be reasonably requested in writing by any Lender.

 

(c) All losses with respect to interest (including interest at the Post-Default Rate) and other sums payable pursuant to the Notes or incurred in connection with the Loans, the enforcement thereof or the realization of the security therefor, shall be borne by the Lenders in accordance with their respective Proportionate Shares of the Loan, and the Lenders shall promptly, upon request, remit to the Administrative Agent their respective Proportionate Shares of (i) any expenses incurred by the Administrative Agent in connection with any Default to the extent any expenses have not been paid by the Borrower, (ii) any advances made to pay taxes or insurance or otherwise to preserve the Lien of the Security Documents or to preserve and protect the Projects, whether or not the amount necessary to be advanced for such purposes exceeds the amount of the Obligations, (iii) any other expenses incurred in connection with the enforcement of the Deeds of Trust or other Loan Documents, and (iv) any expenses incurred in connection with the consummation of the Loans not paid or provided for by the Borrower.  To the extent any such advances are recovered in connection with the enforcement of the Deeds of Trust or the other Loan Documents, each Lender shall be paid its Proportionate Share of such recovery after deduction of the expenses of the Administrative Agent and the Lenders.

 

(d) If, at the direction of the Required Lenders or otherwise as provided in Section 13.03(a) or Section 13.03(b), any action(s) is brought to collect on the Notes or enforce the Security Documents or any other Loan Document, such action shall (to the extent permitted under applicable law and the decisions of the court in which such action is brought) be an action brought by the Administrative Agent for the Lenders, collectively, to collect on all or a portion of the Notes or enforce the Security Documents or any other Loan Document and counsel selected by the Administrative Agent shall prosecute any such action at the direction of the Administrative Agent on behalf of the Administrative Agent and the Lenders, and the Administrative Agent and the Lenders shall consult and cooperate with each other in the prosecution thereof.  Subject to the prerogative of the Required Lenders pursuant to Section 13.03(a) and (b), all decisions concerning the appointment of a receiver while such action is pending, the conduct of such receivership, the conduct of such action, the collection of any judgment entered in such action and the settlement of such action shall be made by the Administrative Agent.  The costs and expenses of any such action shall be borne by the Lenders in accordance with each of their respective Proportionate Shares (without diminishing or releasing any obligation of the Borrower to pay for such costs).

 

(e) If, at the direction of the Required Lenders or otherwise as provided in Section 13.03(a) or Section 13.03(b), any action(s) is brought to foreclose any Deed of Trust, such action shall (to the extent permitted under applicable law and the decisions of the court in which such action is brought) be an action brought by the Administrative Agent for the Lenders, collectively, to foreclose all or a portion of the Deed of Trust and collect on the Notes.  Counsel selected by the Administrative Agent shall prosecute any such foreclosure at the direction of the Administrative Agent on behalf of the Administrative Agent and the Lenders and the Administrative Agent and the Lenders shall consult and cooperate with each other in the prosecution thereof.  All decisions concerning the conduct of such foreclosure, the manner of taking and holding title to any such Project (other than as set forth in subsection (f) below), and the commencement and conduct of any deficiency judgment proceeding shall be made by the Administrative Agent (subject to the rights of the Required Lenders under Section 13.03(a) and (b)), and all decisions concerning the acceptance of a deed in lieu of foreclosure and the opening and maximum bid on behalf of the Administrative Agent and the Lenders at the foreclosure sale of any Project shall be made by the Administrative Agent with the approval of the Required Lenders.  Notwithstanding anything to the contrary in this Agreement, prior to the completion of any such foreclosure of any Project, the Administrative Agent shall obtain and deliver to the Lenders a new Environmental Report or an update to an existing Environmental Report, as it deems appropriate, for such Project.  The costs and expenses of foreclosure, including such Environmental Report or update to Environmental Report, will be borne by the Lenders in accordance with their respective Proportionate Shares.  Notwithstanding any provision herein to the contrary, the Administrative Agent shall not, without written direction from the Required Lenders, complete any foreclosure of a Project as provided under Section 13.03(a) or 13.03(b) if any Lender delivers to the Administrative Agent prior thereto written evidence of the existence of any material environmental contamination at such Project in violation of Applicable Law (which environmental contamination is not reflected in the Environmental Reports delivered in connection with the closing of the Loans) and a demand, specifically referencing this Section, not to complete such foreclosure without the direction from the Required Lenders.  Notwithstanding anything to the contrary in this Agreement, the Administrative Agent shall not complete the foreclosure of the Projects unless the Required Lenders have directed the Administrative Agent with respect to the coverages and amounts of insurance to be obtained and maintained for the Projects, or if the Required Lenders fail to provide such direction to the Administrative Agent, the Administrative Agent shall have obtained insurance in at least the amounts and coverages as required by the Loan Documents, and in each case, until all the Lenders have funded to the Administrative Agent all the costs required for procuring such insurance policies.

 

(f) If all of the Projects or any Project is acquired by the Administrative Agent or its nominee as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the Obligations, the title to any such Project or Projects shall be held as required by the Required Lenders provided title is held in an entity which limits liability of the Lenders, or, in the absence of such direction of the Required Lenders, at the sole option of the Administrative Agent, be held in the name of the Administrative Agent, or a nominee or subsidiary of the Administrative Agent, as administrative agent, for the ratable benefit of the Lenders, or a limited liability company of which the Administrative Agent (or a nominee or subsidiary of the Administrative Agent, as administrative agent, for the ratable benefit of the Lenders) is the manager and the Lenders (or their permitted assignees) are the members in proportion to their Proportionate Shares, which shall be formed pursuant to a form of limited liability company agreement approved by the Required Lenders prior to the completion of such foreclosure, which agreement shall include provisions in all material respects similar to this Section 13.03 and Article XIII in relation to the duties, rights and immunities of the Administrative Agent (or a nominee or subsidiary of the Administrative Agent, in its capacity as the manager thereunder), and provided that such agreement is approved by the Required Lenders, in the event any Lender fails to execute and deliver such agreement in accordance with and after written request therefor from the Administrative Agent, each such Lender hereby grants to the Administrative Agent a power of attorney to execute and deliver such agreement on its behalf and to take on its behalf any other actions as may reasonably be required to form and qualify such company, which power of attorney is coupled with an interest and irrevocable.  The Lenders agree that, upon acquisition of the Projects as provided in this Article 13, the Administrative Agent shall (subject to Section 13.07) take such action with respect to the Projects as shall be directed by the Required Lenders, provided no such action required by the Required Lenders shall violate the Loan Documents or Applicable Law.

 

(g) Not later than one hundred twenty (120) days after acquisition by an entity to any Project (a “Title Holder”) as provided in Section 13.03(f) above, the Administrative Agent shall prepare and present to the Lenders (for approval by the Required Lenders), a proposed business plan and budget, in reasonable detail, for such Project for the portion of the calendar year remaining (or, if such plan shall be presented after October 31 of the then current year, for the period expiring at the end of the next full calendar year) which shall include and set forth in reasonable detail: estimated gross operating revenues, operating expenses, net operating income or net operating loss, a cash flow forecast, marketing plan, leasing plan and required maintenance and capital expenditures for the such Project as well as proposed activities with respect to the repositioning, conservation, sale and/or disposition of such Project.  Thereafter, no later than ninety (90) days after the end of each calendar year (or as soon as reasonably possible if title is acquired during the last quarter of any calendar year), the Administrative Agent shall prepare and present to the Lenders (for approval by the Required Lenders) a proposed business plan and budget for such Project including estimates covering the following two (2) years, containing the same type of information as required in the initial business plan and budget, and, if applicable, a comparison of actual operating results for such Project for the calendar year then ending to the estimates set forth in the prior year’s budget for such calendar year.  Once approved by the Required Lenders, the Administrative Agent and the Title Holder shall endeavor to operate and maintain the Project in accordance with the approved business plan and budget (the “Approved Business Plan”) and shall be authorized to make expenditures and pay expenses in accordance with the Approved Business Plan.  If the Required Lenders shall fail to agree on a business plan and budget, however, the following shall apply: (i) if the business plan and budget is the initial plan and budget, then the Administrative Agent, on behalf of the Lenders, may approve an interim budget to govern the operations of the Project until the Required Lenders approve the first budget; and, (ii) if the business plan and budget is other than the budget referred to in the preceding clause (i), then the Project shall be operated under the most recent Approved Business Plan until a new business plan and budget shall be approved by the Required Lenders, subject to adjustments as the Administrative Agent shall deem appropriate to take into account emergency or serious maintenance situations at the Project, any tenant improvement costs and leasing commissions for leases executed after approval of the most recently approved budget and any expenditures for the Project required by Applicable Law, which, if not made, may result in the imposition of a fine or penalty or other sanction against the Lenders, the Administrative Agent or the Title Holder or the Project.  The Administrative Agent shall not make any material changes to the Approved Business Plan without the consent of the Required Lenders.

 

(h) The Lenders acknowledge and agree that if title to any Project is obtained by the Administrative Agent or its nominee or limited liability company as provided above, such Project will not be held as a permanent investment but will be liquidated and the proceeds of such liquidation will be distributed in accordance with the Approved Business Plan as soon as practicable.  Upon the acquisition of title to a Project by a Title Holder, the Administrative Agent may make recommendations from time to time for sale of such Project and may, and at the request of the Required Lenders, shall employ or cause the Title Holder to employ one or more brokers as shall be reasonable under the circumstances and list such Project for sale.  Neither the Administrative Agent nor the Title Holder shall be authorized to accept any offer to purchase a Project without the consent of the Required Lenders except on the following conditions: (i) the offer shall be arms-length from an unrelated third party with conveyance by special warranty or quit claim deed; (ii) the offer shall be for all cash and for such entire Project; and (iii) the offer shall be in an amount at least equal to ninety-five percent (95%) of the amount determined by the most recent Appraisal for such Project.  Providing the foregoing conditions are met, the Administrative Agent and the Title Holder shall be authorized to negotiate a purchase and sale agreement for the sale of the Project which shall be on the foregoing terms and such other terms as are commercially reasonable.  Each Lender agrees to execute such certificates, instruments, contracts, documents and powers of attorney as the Administrative Agent may request in connection with any sale permitted hereby promptly upon presentation by the Administrative Agent.

 

(i) Upon demand therefor from time to time, each Lender shall contribute its share (based on its Proportionate Share) of all reasonable costs and expenses incurred by the Administrative Agent pursuant to the Approved Business Plan in connection with the construction, operation, management, maintenance, leasing and sale of such Project(s). In addition, the Administrative Agent shall render or cause to be rendered to each Lender, on a periodic basis (but in any event once per calendar quarter), an income and expense statement for each such Project, and each Lender shall promptly contribute its Proportionate Share of any operating loss for any such Project, and such other expenses and operating reserves as the Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the Approved Business Plan.

 

(j) To the extent there is net operating income from such Project(s), the Administrative Agent shall, in accordance with the Approved Business Plan, determine the amount and timing of distributions to the Lenders.

 

(k) All income or other money received after so acquiring title to or taking possession of any Project with respect to such Project, including income from the operation and management of such Project and the proceeds of a sale of such Project, shall be held by the Administrative Agent for the account of the Lenders and shall be applied, first, to the payment or reimbursement of the Administrative Agent for expenses incurred in accordance with the provisions of this Article XIII or for any other sums then due to the Administrative Agent hereunder or under any separate agreement among the Lenders and the Administrative Agent; second, to the payment of operating expenses with respect to any Project; third, to the establishment of reasonable reserves for the operation of any Project, including, without limitation, to fund any capital improvement, leasing and other reserves; fourth, to the payment or reimbursement of the Lenders for any advances made pursuant to Section 13.03(e) or (i); fifth, in accordance with clauses first through third of Section 13.03(a); and sixth to the Lenders in accordance with their respective Proportionate Shares.

 

13.04 Rights as a Lender

 

.  With respect to its Commitment and the Loans made by it, Eurohypo (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Administrative Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity.  Subject to the provisions of Sections 4.07 and 14.10, Eurohypo (and any successor acting as Administrative Agent) and any of its Affiliates may (without having to account therefor to any other Lender) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, investment banking, trust or other business with the Borrower (and any of its Affiliates) as if it were not acting as the Administrative Agent and Eurohypo (and any such successor) and any of its Affiliates may accept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

 

13.05 Indemnification

 

.  Each Lender, severally but not jointly, agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower, but without limiting the obligations of the Borrower under Section 14.03) in accordance with their Proportionate Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent in its capacity as Administrative Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Loan Document or any other documents contemplated by or referred to herein or therein or the Transactions (including the costs and expenses that the Borrower is obligated to pay under Section 14.03, but excluding, unless a Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof, provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence, bad faith or willful misconduct of the Administrative Agent.

 

13.06 Non-Reliance on Administrative Agent and Other Lenders

 

.  Each Lender, for itself, agrees that it has, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and its decision to enter into this Agreement and that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or under any other Loan Document.  The Administrative Agent, except as expressly set forth herein and in the other Loan Documents, shall not be required to keep itself informed as to the performance or observance by the Borrower of this Agreement or any of the other Loan Documents or any other document referred to or provided for herein or therein or to inspect the Properties or books of the Borrower.  Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder or under the other Loan Documents, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any of its Affiliates) that may come into the possession of the Administrative Agent or any of its Affiliates.  Without limiting the foregoing, the Administrative Agent shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any Borrower Party or any of their Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall, except as expressly set forth herein and in the other Loan Documents, have no obligation whatsoever to the Lenders or to any other Person to assure that the Projects exists or are owned by the Borrower or are cared for, protected or insured or that the Liens granted to the Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Administrative Agent in this Article XIII or in any of the Loan Documents, it being understood and agreed that in respect of the Projects, or any act, omission or event related thereto, the Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, and that the Administrative Agent shall have no duty or liability whatsoever to the Lenders, except to the extent resulting from its gross negligence, bad faith or willful misconduct.  Without limiting the provisions of Section 13.03(a), the Administrative Agent shall promptly forward to the Lenders (i) copies of any monthly, quarterly or annual reports that the Administrative Agent receives from the Borrower which the Borrower is required to submit to the Administrative Agent pursuant to Section 8.01; (ii) copies of any notice the Administrative Agent receives from the Borrower which is delivered by the Borrower pursuant to Section 8.02; and (iii) copies of any Annual Budget that the Administrative Agent receives from the Borrower which is submitted to the Administrative Agent for approval by the Administrative Agent and the Required Lenders pursuant to Section 8.16.  In addition to the foregoing, the Administrative Agent shall, upon the request of any Lender, request the Borrower to provide to the Administrative Agent copies of the most recent appraisals for any of the Projects obtained by the Borrower, if any, and the Administrative Agent shall promptly forward to the Lenders copies of any such appraisals that the Administrative Agent receives from the Borrower.  The Administrative Agent shall deliver to any Lender, promptly upon prior reasonable written request of any Lender, copies of any documents or other information in the possession of the Administrative Agent related to the Loans or the Projects.  Administrative Agent shall be deemed to have satisfied the foregoing obligation of this Section 13.06 so long as the Administrative Agent promptly makes such reports and/or information available to the Lenders on an Internet or intranet website to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).

 

13.07 Failure to Act

 

.  Except for action expressly required of the Administrative Agent hereunder and under the other Loan Documents, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Section 13.05 against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action, subject to the limitations on such obligations contained in such Section 13.05.

 

13.08 Resignation of Administrative Agent

 

.  It is agreed by the Lenders that subject to the terms of this Agreement, the Administrative Agent will remain the Administrative Agent under this Agreement and the other Loan Documents throughout the term of the Loans; provided, however, that (a) the Administrative Agent may (without being released from its obligations under this Agreement) assign all its rights as the Administrative Agent to any Affiliate or Related Entity of Eurohypo with an office in the United States through which it will act as the Administrative Agent for the Loans and who is knowledgeable and experienced in servicing real estate secured syndicated commercial loans in the United States, and such Affiliate or Related Entity shall then expressly assume in writing the obligations of Administrative Agent hereunder arising after the date of such assignment, (b) subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by giving at least thirty (30) days’ prior written notice thereof to the Lenders and the Borrower and (c) the Administrative Agent may be removed upon the consent of the Required Lenders (excepting therefrom the Administrative Agent in its capacity as a Lender) on account of the gross negligence, bad faith or willful misconduct of the Administrative Agent.  At such time that Eurohypo or any Related Entity of Eurohypo fails to hold minimum Loans and Commitments in an amount of at least twelve and one-half percent (12.5%) of the Outstanding Principal Balance, Eurohypo or such Related Entity shall immediately resign as the Administrative Agent hereunder, unless the Lenders unanimously direct Eurohypo to continue as the Administrative Agent hereunder.  Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent that shall be a Person that, provided that no Event of Default then exists, meets the qualifications of an Eligible Assignee with an office in the United States through which it will act as the servicer of the Loans; who is knowledgeable and experienced in servicing real estate secured syndicated commercial loans in the United States; who (together with its Affiliates and Related Entities and any Approved Funds managed by it or by any of its Affiliates or Related Entities) then holds or, at the time it becomes successor Administrative Agent hereunder will hold (and agrees in writing for the benefit of the Borrower and the Lenders to maintain for its own account, for so long as it shall remain the Administrative Agent and provided that no Event of Default has occurred), minimum Loans and Commitments in an amount not less than twelve and one-half percent (12.5%) of the Outstanding Principal Balance; and who agrees in writing for the benefit of the Borrower not to resign except in accordance with the provisions of this Loan Agreement.  If such successor Administrative Agent is not a Lender (or is a Lender, but such Lender does not comply with the requirements of the third sentence of this Section 13.08), as long as no Major Default exists, the Borrower shall have the right to approve such successor Administrative Agent, such approval not to be unreasonably withheld or delayed and which consent shall be deemed to have been given unless written notice of disapproval is delivered by the Borrower to the resigning Administrative Agent within five (5) Business Days after notice of such proposed successor Administrative Agent has been delivered to the Borrower.  If, in the case of a resignation by the Administrative Agent, no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, that shall be a Person that meets the requirements of the third sentence of this Section 13.08.  If any successor Administrative Agent is not a Lender (or is a Lender, but such Lender does not comply with the requirements of the third sentence of this Section 13.08), the Borrower, as long as no Major Default exists, shall have the right to approve such successor Administrative Agent, such approval not to be unreasonably withheld or delayed and which consent shall be deemed to have been given unless, in the case of a resignation, written notice of disapproval is delivered by the Borrower to the resigning Administrative Agent within five (5) Business Days after notice of such proposed successor Administrative Agent has been delivered to the Borrower.  Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and such successor Administrative Agent shall assume all obligations of the Administrative Agent hereunder arising after the date of such acceptance, and the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder; provided, however, that the retiring or removed Administrative Agent shall not be discharged from any liabilities which existed prior to the effective date of such resignation.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After any retiring Administrative Agent’s resignation hereunder as the Administrative Agent, the provisions of this Article XIII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent.

 

13.09 Consents under Loan Documents

 

.  Subject to the provisions of Section 14.05, the Administrative Agent may (a) grant any consent or approval required of it or (b) consent to any Modification or waiver under any of the Loan Documents.  If the Administrative Agent solicits any consents or approvals from the Lenders under any of the Loan Documents, each Lender shall within ten (10) Business Days of receiving such request, give the Administrative Agent written notice of its consent or approval or denial thereof; provided that, if any Lender does not respond within such ten (10) Business Days or within any such shorter period as required in this Agreement or any other Loan Document, such Lender shall be deemed to have authorized the Administrative Agent to vote such Lender’s interest with respect to the matter which was the subject of the Administrative Agent’s solicitation as the Administrative Agent elects.  Any such solicitation by the Administrative Agent for a consent or approval shall be in writing, shall include a description of the matter or thing as to which such consent or approval is requested and shall include the Administrative Agent’s recommended course of action or determination in respect thereof.

 

13.10 Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Borrower Party, the Administrative Agent (irrespective of whether the Loans shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 3.02 and 14.03) allowed in such judicial proceeding; and

 

(b) to collect and receive any monies or other property payable or deliverable on any such claims for the account of the Lenders and to distribute the same in accordance with this Agreement;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 3.02 and 14.03.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.

 

 

13.11 Authorization

 

.  The Administrative Agent is hereby authorized by the Lenders to execute, deliver and perform in accordance with the terms of each of the Loan Documents to which the Administrative Agent is or is intended to be a party and each Lender agrees to be bound by all of the agreements of the Administrative Agent contained in such Loan Documents.  The Borrower shall be entitled to rely on all written agreements, approvals and consents received from the Administrative Agent as being that also of the Lenders, without obtaining separate acknowledgment or proof of authorization of same.

 

13.12 Amendments Concerning Agency Function

 

.  Notwithstanding anything to the contrary contained in this Agreement, the Administrative Agent shall not be bound by any waiver, amendment, supplement or Modification of this Agreement or any other Loan Document which affects its duties, rights and/or functions hereunder or thereunder unless it shall have given its prior written consent thereto.

 

13.13 Liability of the Administrative Agent

 

.  The Administrative Agent shall not have any liabilities or responsibilities to the Borrower on account of the failure of any Lender (other than the Administrative Agent in its capacity as a Lender) to perform its obligations hereunder or to any Lender on account of the failure of the Borrower to perform its obligations hereunder or under any other Loan Document.

 

13.14 Transfer of Agency Function

 

.  Without the consent of the Borrower or any Lender, the Administrative Agent may at any time or from time to time transfer its functions as the Administrative Agent hereunder to any of its offices wherever located in the United States or to any subsidiary of the Administrative Agent with offices located in the United States; provided that the Administrative Agent shall promptly notify the Borrower and the Lenders thereof in writing.

 

13.15 Documentation Agents

 

.  No Lender identified on the cover page of or elsewhere in this Agreement as a “Documentation Agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to a Lender having that Lender’s Commitment under this Agreement and the other Loan Documents.

 

ARTICLE XIV.

 

 

MISCELLANEOUS

 

14.01 Non-Waiver; Remedies Cumulative

 

.  No failure on the part of the Administrative Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any other Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The remedies provided herein and in the other Loan Documents are cumulative and not exclusive of any remedies provided by law.

 

14.02 Notices

 

.

 

(a) All notices, requests, demands, statements, authorizations, approvals, directions, consents and other communications provided for herein and under the Loan Documents shall be given or made in writing and shall be deemed sufficiently given or served for all purposes as of the date (a) when hand delivered, (b) three (3) days after being sent by postage pre-paid registered or certified mail, return receipt requested, (c) one (1) Business Day after being sent by reputable overnight courier service, or (d) with a simultaneous delivery by one of the means in clause (a), (b) or (c) above, by facsimile, when sent, with confirmation and a copy sent by first class mail, in each case addressed to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to each other party hereto.  Unless otherwise expressly provided in the Loan Documents, the Borrower shall only be required to send notices, requests, demands, statements, authorizations, approvals, directions, consents and other communications to the Administrative Agent on behalf of all of the Lenders.

 

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II or notices pursuant to Section 13.03 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree (in writing) to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures by such party may be limited to particular notices or communications.

 

(c) Any person shall have the right to specify, from time to time, as its address or addresses for purposes of this Agreement, any other address or addresses upon giving notice thereof to each other person then entitled to receive notices or other instruments hereunder at least five (5) days before such change of address shall become effective for purposes of this Agreement.

 

14.03 Expenses, Etc

 

.  Subject to the limitation set forth in Section 14.26:

 

(a) The Borrower agrees to pay on demand or reimburse on demand to the applicable party all reasonable out-of-pocket costs and expenses of the Administrative Agent and the Arranger incurred prior to the Closing Date or otherwise in connection with the closing of the Loans (including customary post-closing follow-through) and in connection with the satisfaction of the requirements of Section 8.19 following the Closing Date, including, but not limited to, (i) the reasonable fees and expenses for Morrison & Foerster LLP, counsel to the Administrative Agent and Eurohypo; such legal fees to be paid on the Closing Date; provided, however, that payment of ten percent (10%) of such legal fees shall be deferred and payable promptly upon the Borrower’s receipt of a closing binder and legal invoices prepared by Morrison & Foerster LLP and payment of any such legal fees relating to the satisfaction of the requirements of Section 8.19 following the Closing Date shall be payable promptly following the Borrower’s receipt of any legal invoice therefor (if delivered subsequent to the invoices covering the ten percent (10%) retention referred to above), (ii) due diligence expenses, including title insurance reports and policies, surveys, title and lien searches and appraisals (including the Appraisal and the Environmental Reports) and (iii) fees and expenses for the services of an insurance consultant, in connection with:  the negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents and initial funding of the Loans hereunder and the creation and perfection of the Liens to be created by the Security Documents.

 

(b) The Borrower also agrees to pay on demand or reimburse on demand to the applicable party all reasonable out-of-pocket costs and expenses of the Administrative Agent incurred after the Closing Date (including, but not limited to, the reasonable fees and expenses of legal counsel, but excluding any travel expenses incurred for travel by the personnel of the Administrative Agent (but not any of its consultants when engaged in services for which the Borrower is required to reimburse the Administrative Agent hereunder, with the understanding that the Administrative Agent shall use good faith efforts to attempt to engage qualified local consultants to provide such services) and also excluding the Administrative Agent’s internal overhead) in connection with (i) any release of a Project under Section 2.09, (ii) the negotiation or preparation of any Modification or waiver of any of the terms of this Agreement or any of the other Loan Documents (whether or not consummated), (iii) the protection and maintenance of the perfection and priority of the Liens created pursuant to the Security Documents, (iv) the negotiation with any tenant, execution, delivery or recordation of any SNDA Agreement, (v) any review or inspection of the work undertaken pursuant to Section 8.21 (including, without limitation, any seismic review undertaken to measure the probable maximum loss with respect to the affected Projects following the completion of such work); any monitoring or evaluation of environmental conditions occurring at any Project following the occurrence of (A) any event for which notice is required under Section 8.11(b), (B) any violation by the Borrower of any of its covenants contained in Section 8.11(a) or (C) any act or occurrence for which the Borrower is obligated to indemnify the Administrative Agent or any Lender pursuant to the terms set forth in the Environmental Indemnity Agreement; any review, inspection or evaluation undertaken by the Restoration Consultant; and the preparation of any reports or studies in connection with any of the foregoing, (vi) any review of documents or requests, consideration for approval or disapproval or exercise of rights outside of the ordinary day-to-day administration of the Loans and the Loan Documents, and (vii) any other act, condition, request, delivery or other item, if any other applicable provision of this Agreement or the other Loan Documents provides for the costs and expenses of the Administrative Agent in connection therewith to be paid by the Borrower and are not in violation of the limitations contained herein.

 

(c) The Borrower also agrees to pay on demand or reimburse on demand to the applicable party all reasonable out-of-pocket costs and expenses of the Lenders and the Administrative Agent (including, but not limited to, the reasonable fees and expenses of legal counsel) in connection with (i) any Default and any enforcement or collection proceedings resulting therefrom, including all manner of participation in or other involvement with (A) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation proceedings, (B) judicial or regulatory proceedings and (C) workout, restructuring or other negotiations or proceedings (whether or not the workout, restructuring or transaction contemplated thereby is consummated) and (ii) the enforcement of this Section 14.03.

 

(d) The Borrower also agrees to pay on demand or reimburse on demand to the applicable party all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any Governmental Authority in respect of this Agreement or any of the other Loan Documents or any other document referred to herein or therein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Security Document or any other document referred to therein.

 

14.04 Indemnification

 

.  The Borrower hereby agrees to (i) protect and indemnify the Indemnified Parties from, and hold each of them harmless, from and against all damages, losses, claims, actions, liabilities (or actions, investigations or other proceedings commenced or threatened in respect thereof) penalties, fines, costs and expenses including reasonable attorneys’ fees and expenses (collectively and severally, “Losses”) which may be imposed upon, asserted against or incurred or paid by any of them resulting from the claims of any third party relating to or arising out of (A) the Projects, (B) any of the Loan Documents or the Transactions, (C) any ERISA Events, (D) any Environmental Losses and (E) any act performed or permitted to be performed by any Indemnified Party under any of the Loan Documents, except for Losses to the extent determined by a court of competent jurisdiction to be caused by the gross negligence, bad faith or willful misconduct of an Indemnified Party (but the effect of this exception only eliminates the liability of the Borrower with respect to such Indemnified Party (and if such Indemnified Party is not a Lender, the Lender on whose behalf such Indemnified Party was acting) to the extent such Indemnified Party has been adjudged to have so acted and not with respect to any other Indemnified Party), and (ii) reimburse each Indemnified Party on demand for any expenses (including the reasonable attorneys’ fees and disbursements) reasonably incurred in connection with the investigation of, preparation for or defense of any actual or threatened claim, action or proceeding arising therefrom (excluding any action or proceeding where such Indemnified Party is not a party to such action or proceeding out of which any such expenses arise unless such Indemnified Party is required to participate or respond in connection with such action or proceeding (e.g., by way of deposition, discovery requests, testimony, subpoena or similar reason)).  The Obligations shall not be considered to have been paid in full unless all obligations of the Borrower under this Section 14.04 shall have been fully performed (except for contingent indemnification obligations for which no claim has actually been made pursuant to this Agreement).  This Section 14.04 shall survive repayment in full of the Obligations and, as to any Project, the release of that Project as collateral for the Loans in accordance with Section 2.09 of this Agreement, and in addition, shall survive the assignment, sale or other transfer of the Administrative Agent’s or any Lender’s interest hereunder.

 

14.05 Amendments, Etc

 

.  Except as otherwise expressly provided in this Agreement or the other Loan Documents, this Agreement and the other Loan Documents may be Modified, or any provision or covenant waived, only by an instrument in writing signed by the Borrower and the Administrative Agent acting with the consent of the Required Lenders; provided; however, that, Administrative Agent may (without any Lender’s consent) give or withhold its agreement to any waivers or consents to the provisions or covenants of the Loan Documents provided that such actions do not, in Administrative Agent’s judgment reasonably exercised, materially adversely affect the Lenders, the value of any collateral or the Loans, taken as a whole, or represent a departure from Administrative Agent’s standard of care described in Section 13.01; provided further, that:  (a) no Modification or waiver shall, unless by an instrument signed by all of the Lenders affected thereby or by the Administrative Agent acting with the written consent of each Lender affected thereby: (i) extend the date fixed for the payment of principal of or interest on any Loan or any fee hereunder or under any of the other Loan Documents, including, without limitation, any extension of the Maturity Date, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon or any fee is payable hereunder, (iv) alter the rights or obligations of the Borrower to prepay Loans, (v) alter the manner in which payments or prepayments of principal, interest or other amounts hereunder shall be applied as between the Lenders or Types of Loans, (vi) alter the terms of this Section 14.05, (vii) Modify the definition of the term “Required Lenders” or Modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to Modify any provision hereof, (viii) alter the several nature of the Lenders’ obligations hereunder, (ix) release the Borrower or the Guarantor, or release or subordinate any material portion of the collateral or otherwise terminate any Lien under any Security Document providing for collateral security (except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering the collateral under the Security Documents, and to release (or terminate the liability of) the Borrower under the Loan Documents, and to release the Guarantor under the Guarantor Documents:  (A) as expressly provided in the Loan Documents and (B) upon payment of the Obligations in full in accordance with the terms of the Loan Documents), (x) agree to additional obligations being secured by such collateral security, (xi) alter the relative priorities of the obligations entitled to the benefits of the Liens created under the Security Documents, (xii) Modify the application of proceeds under the Loan in any manner that is not pro rata among the Lenders (after all fees, costs and other expenses due to the Administrative Agent have been paid) or otherwise expressly set forth in the Loan Documents or (xiii) Modify the definition of “Proportionate Share” or Modify the Proportionate Shares of the Lenders in any manner which is inconsistent with the defined term “Proportionate Share”; (b) any Modification of Article XIII, or of any of the rights or duties of the Administrative Agent hereunder, or any increase in the amount of the Loans (other than protective advances and expenses incurred by the Administrative Agent and the Lenders as permitted by the Loan Documents) shall require the consent of the Administrative Agent and all the Lenders; and (c) subject to clause (a)(x) above, no Modification shall increase the Commitment of any Lender without the consent of such Lender; and provided, further, that without the consent of the Required Lenders, the Administrative Agent shall not (I) waive any provision in the Loan Documents requiring Insurance Proceeds to be applied to Indebtedness when the Administrative Agent has determined that Borrower has not satisfied conditions for release of Insurance Proceeds for Restoration; (II) waive any provision in the Loan Documents requiring Condemnation Awards to be applied to Indebtedness when Condemnation Awards exceed the Insurance Threshold Amount; (III) waive any covenant of Borrower set forth in Section 9.02 (except for the waiver, in accordance with the Administrative Agent’s standard of care set forth in Article XIII hereof, of any matter which the Administrative Agent, pursuant to the express terms of Section 9.02, is required or permitted to approve) or grant any consent pursuant to Section 9.03 or 9.04 with respect to the incurrence of Indebtedness to be secured by a Lien encumbering any Project (except for the grant of consent, in accordance with the Administrative Agent’s standard of care set forth in Article XIII hereof, with respect to any matter which the Administrative Agent, pursuant to the express terms of Section 9.03 or 9.04, is required or permitted to approve); (IV) waive any material Default or Event of Default; (V) agree to increase any annual fee payable to the Administrative Agent under the Loan Documents, (VI) waive late charges payable by the Borrower hereunder more than three (3) times in any twelve month period; (VII) Modify any of the terms of Article XII; or (VIII) Modify the provisions of Sections 14.03(c), 14.04 or 14.07.  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, the Administrative Agent is hereby authorized by the Lenders to enter into Modifications to the Loan Documents which are ministerial in nature, including the preparation and execution of Uniform Commercial Code forms, Assignments and Assumptions and SNDA Agreements and any amendment to the definition of “Change of Control” that would eliminate the exclusions set forth in clause (i) or (ii) of such definition.

 

14.06 Successors and Assigns

 

.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

14.07 Assignments and Participations

 

.

 

(a) Consent Required for Assignments by the Borrower.  Except as otherwise expressly permitted by this Agreement, the Borrower may not assign any of its rights or obligations hereunder or under the Loan Documents without the prior consent of all of the Lenders and the Administrative Agent.

 

(b) Assignments by Lenders.

 

(i) Subject to the conditions set forth in subsection (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent of:

 

(A) the Borrower, whose consent shall not be unreasonably withheld, conditioned or delayed; provided that (1) such consent shall be deemed granted should the Borrower fail to respond within five (5) Business Days upon receipt of a notice of such assignment and (2) should the Borrower not give such consent, the Borrower shall provide to the Administrative Agent and the Lender requesting such assignment its specific reasons for such disapproval; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business (and which is not engaged in the business of acquiring direct or indirect ownership interests in commercial real estate projects), an Eligible Assignee or, if a Major Default exists, any other assignee; and

 

(B) the Administrative Agent, whose consent shall not be unreasonably withheld, conditioned or delayed; provided that no consent of the Administrative Agent shall be required for an assignment of all or a portion of any Commitment or Loans to (i) an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment or an Affiliate of the assigning Lender if also an Eligible Assignee, or (ii) an Affiliate of the assigning Lender who is not an Eligible Assignee (provided that in the case of an assignment to any such Affiliate, the assigning Lender will not be released from its obligations under the Loan Documents and Administrative Agent may continue to deal only with such assigning Lender).  Within ten (10) Business Days after the Administrative Agent shall have received a request by a Lender for an assignment requiring the Administrative Agent’s consent hereunder, the Administrative Agent shall either consent or refuse to consent to such assignment.  If the Administrative Agent shall fail to respond within such ten (10) Business Day period, then the Lender shall provide notice (a “Second Notice”) to the Administrative Agent of such failure, and if the Administrative Agent fails to respond to such Second Notice within five (5) Business Days after receipt of such notice, the Administrative Agent shall be deemed to have approved such assignment.

 

(ii) Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loan, the amount of the Commitment or Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if a Major Default exists;

 

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

 

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $4,500; and

 

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(iii) Subject to acceptance and recording thereof pursuant to subsection (b)(iv) of this Section 14.07, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, except in connection with any assignment to an Affiliate of such Lender, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement (except in connection with any such assignment to an Affiliate of such Lender), such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 5.01, 5.05, 5.06 and 14.04); provided, however, that in no event shall such assigning Lender be released with respect to any defaults by or liabilities of such Lender under the Loan Documents which accrued prior to such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 14.07 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (c) of this Section 14.07.

 

(iv) The Administrative Agent shall maintain at its Principal Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loan owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Administrative Agent shall record all entries in the Register promptly upon their being effected.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire, the processing and recordation fee referred to in subsection (b) of this Section 14.07 and any written consent to such assignment required by subsection (b) of this Section 14.07, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this subsection.

 

(c) Participations.

 

(i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other financial institutions (including, without limitation, life insurance companies), or an Affiliate of the Lender that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business (and which is not engaged in the business of acquiring direct or indirect ownership interests in commercial real estate projects) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any Modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of such Participant, agree to (1) increase or extend the term of such Lender’s Commitment to the extent that it affects such Participant, (2) extend the date fixed for the payment of principal of or interest on the related Loan or Loans, (3) reduce the amount of any such payment of principal or (4) reduce the rate at which interest is payable thereon to a level below the rate at which the Participant is entitled to receive such interest.  Subject to subsection (c)(ii) of this Section 14.07, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 5.01, 5.05 and 5.06 to the same extent, but subject to the same limitations, conditions and duties set forth in such sections, as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section 14.07.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 14.10 as though it were a Lender; provided that such Participant agrees to be subject to Section 14.10 as though it were a Lender.

 

(ii) A Participant shall not be entitled to receive any greater payment under Section 5.01 or 5.06 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.06 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees in writing, for the benefit of the Borrower, to comply with Section 5.06 as though it were a Lender.

 

(d) Pledges.  In addition to the assignments and participations permitted under the foregoing provisions of this Section 14.07:  (i) any Lender may (without notice to the Borrower, the Administrative Agent or any other Lender and without payment of any fee) assign and pledge all or any portion of its Loans and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank, and such Loans and Note shall be transferable as provided therein; (ii) any Lender may (upon notice to the Administrative Agent and without payment of any fee) assign and pledge all or any portion of its Loans and its Note as collateral for financing, and such Loans and Note shall be fully transferable as provided therein; and (iii) any Lender may (with the consent of the Administrative Agent, not to be unreasonably withheld, conditioned or delayed, but without notice to, or consent from Borrower) effectuate a Pfandbrief Transfer (as defined below).  No such assignment shall release the assigning Lender from its obligations hereunder.

 

(e) Notwithstanding anything to the contrary contained herein, the pledge or assignment by a Lender, including, without limitation, Eurohypo or any successor Administrative Agent (the “Transferring Lender”) of all or any part of its interest in the Loans (the “Transferred Interest”) to a trustee, administrator or receiver or their respective nominees, collateral agents or collateral trustees (a “Security Trustee”) of a mortgage pool securing covered mortgage bonds issued by an eligible German bank (Pfandbriefbanken) or any other Lender meeting the eligibility requirements and being permitted to issue covered mortgage bonds (Hypothekenpfandbriefe) under German bond law (Pfandbriefgesetz 2005, as the same may be amended or modified and in effect from time to time, and/or any substitute or successor legislation thereto) (any such pledge or assignment, a “Pfandbrief Transfer”) shall be subject to the following conditions:

 

(i) Any further pledge or assignment by the Security Trustee of the Transferred Interest or any acquisition of the Transferred Interest by any Person other than the Security Trustee (each, an “Additional Transfer”) shall be subject to the other requirements set forth in this Section 14.07 and shall require the prior written consent of the Administrative Agent and the Borrower in accordance with this Agreement.

 

(ii) Neither the Pfandbrief Transfer, nor any foreclosure on the Transferred Interest, nor any Additional Transfer, shall result in the release of the Transferring Lender from any of its obligations under this Agreement or the other Loan Documents (and the Transferring Lender shall remain responsible for all of the obligations originally incurred by it under this Agreement and the other Loan Documents with respect to the Transferred Interest), except, in the case of any such Additional Transfer that complies with the terms and provisions of the Loan Documents pursuant to which the Transferring Lender would be released from its obligations accruing from and after the Additional Transfer (including any required consent of the Borrower to such transfer), for the obligations accruing from and after such Additional Transfer.  Consequently, notwithstanding the Pfandbrief Transfer, nor any foreclosure on the Transferred Interest, nor any Additional Transfer, the Transferring Lender shall remain obligated to fund its share of all advances of the Loan, all expense reimbursements, all indemnification payments (including, without limitation, as required pursuant to Section 13.05) and all other amounts originally required to be funded by the Transferring Lender under the Loan Documents to the same extent as if no Pfandbrief Transfer, foreclosure on the Transferred Interest, or any Additional Transfer had occurred (except if such Additional Transfer complies with the terms and provisions of the Loan Documents pursuant to which the Transferring Lender would be released from its obligations accruing from and after the Additional Transfer (including any required consent of the Borrower to such transfer), in which case the Transferring Lender shall be released from any such obligations accruing from and after such Additional Transfer in accordance with the terms of the Loan Documents).

 

(iii) Notwithstanding the Pfandbrief Transfer, or any foreclosure on the Transferred Interest, or any Additional Transfer, the Transferring Lender (and not the Security Trustee or any other transferee or assignee) shall have the sole and exclusive right and power to exercise any and all rights of a Lender (whether contractual or otherwise) under, pursuant to or contemplated by the Loan Documents with respect to the Transferred Interest including without limitation, the right to grant any and all discretionary approvals, consents and voting rights under the Loan Documents that relate to the Transferred Interest, except that, in the case of an Additional Transfer that complies with the terms and provisions of the Loan Documents pursuant to which the Transferring Lender would be released from its obligations accruing from and after the Additional Transfer (including any required consent of the Borrower to such transfer), the transferee or assignee shall succeed to the rights and powers originally held by the Transferring Lender to exercise any and all approval, consent and voting rights under the Loan Documents with respect to the Transferred Interest.

 

(iv) The interest acquired by the Security Trustee pursuant to the Pfandbrief Transfer or any foreclosure on the Transferred Interest, and the interest acquired by any other Person pursuant to any Additional Transfer, shall remain subject to all rights, defenses, offsets, claims and counterclaims which Administrative Agent, any Lender or Borrower may have against the Transferring Lender, except, in the case of an Additional Transfer that complies with the terms and provisions of the Loan Documents pursuant to which the Transferring Lender would be released from its obligations accruing from and after the Additional Transfer (including any required consent of the Borrower to such transfer), for any rights, defenses, offsets, claims and counterclaims which Administrative Agent, any Lender or Borrower may have against the Transferring Lender as a result of any acts or occurrences from and after the date of such Additional Transfer.

 

(v) Notwithstanding the Pfandbrief Transfer, or any foreclosure on the Transferred Interest, or any Additional Transfer, Administrative Agent, any Lender and Borrower shall be entitled to deal exclusively with the Transferring Lender as the “Lender” with respect to the Transferred Interest, except in the case of an Additional Transfer which complies with the terms and provisions of the Loan Documents pursuant to which the Transferring Lender would be released from its obligations accruing from and after the Additional Transfer (including any required consent of the Borrower to such transfer), in which case Administrative Agent, any Lender or the Borrower shall be entitled to deal with the transferee or assignee of the Transferred Interest.  The Borrower, the Administrative Agent and the Lenders also hereby confirm and agree, with respect to any Pfandbrief Transfer or Additional Transfer, that (i) all notices and other communications to the Lenders shall be made to the Administrative Agent in the manner and at the address for the Administrative Agent specified in or pursuant to the Loan Agreement and (ii) the Borrower and the Administrative Agent shall be entitled to exclusively rely upon any certification, notice, document, authorization, instruction or other communication (including any thereof by telephone, telecopy, telegram or cable) made or given by the Administrative Agent notwithstanding any contrary or conflicting certification, notice, document, authorization, instruction or other communication made or give by the assignee of the Pfandbrief Transfer or Additional Transfer.

 

(vi) No Pfandbrief Transfer, nor any foreclosure on the Transferred Interest, nor any Additional Transfer shall affect or change in any way any of the rights or obligations with respect to the Transferred Interest.  Without limiting the foregoing, any rights or claims of the pledgee or transferee of the Transferred Interest against Administrative Agent shall be subject to the same limitations and exculpations as are set forth with respect to the rights and claims of a “Lender” against Administrative Agent contained herein (including, without limitation, Article XIII), and shall not in any event be greater than the rights or claims that could have been asserted by the Transferring Lender in accordance with the Loan Documents with respect to the Transferred Interest had such Pfandbrief Transfer, foreclosure on the Transferred Interest or Additional Transfer not occurred.

 

(vii) The Borrower, the Administrative Agent and Eurohypo also hereby confirm and agree that, notwithstanding any Pfandbrief Transfer, any foreclosure on the Transferred Interest, or any Additional Transfer involving the interest of Eurohypo as a Lender, nothing herein is intended to, or shall, modify or affect the rights, duties or obligations of Eurohypo AG, New York Branch, in its capacity as the Administrative Agent for the Lenders, and any assignment, resignation, removal and/or replacement of the Administrative Agent shall continue to be governed by, and subject to the terms and conditions set forth in, Section 13.08 (and other applicable provisions, if any) of this Agreement.  Furthermore, nothing herein shall constitute the Borrower’s consent to, or approval of, the appointment of any Security Trustee or any other Person as a successor Administrative Agent, or constitute a waiver of any of the conditions or other provisions of this Agreement applicable to the appointment of such a successor.

 

(viii) The pledgee or transferee of any interest pursuant to the Pfandbrief Transfer, any foreclosure on the Transferred Interest or any Additional Transfer shall be bound by the provisions of this Agreement as if it were a “Lender” hereunder.

 

(ix) Any Pfandbrief Transfer or Additional Transfer shall be at no cost or expense to the Borrower.  Without limiting the foregoing, at no cost to the Borrower, the Borrower and the Borrower Parties agree to execute within a reasonable time after request therefor is made by the Administrative Agent, any documents or amendments, amendments and restatements, and/or modifications to any Loan Documents (including, without limitation, amended, amended and restated, modified and/or additional promissory notes) and/or estoppel certificates that may be reasonably requested by the Administrative Agent and that are reasonably necessary in order to make the Loan Documents eligible under German bond law (Pfandbriefgesetz 2005, as the same may be amended or modified and in effect from time to time, and/or any substitute or successor legislation thereto).  The Transferring Lender shall promptly reimburse Administrative Agent for any and all out-of-pocket costs and expenses incurred by Administrative Agent in connection with Administrative Agent’s consideration of the request for the consent set forth herein and in connection with the negotiation and documentation of the same, including, without limitation, reasonable legal fees and expenses; provided, however, that any such documents, instruments, amendments, amendments and restatements, modifications and/or certificates shall not (i) modify the interest rate, Type of Loans, Interest Period, LIBO Rate, maturity date, amortization, prepayment rights, release provisions or any of the other economic or business terms of the Loans or the Loan Documents, (ii) impose additional covenants, obligations or liabilities on any Borrower Party, Guarantor or any Affiliate of any Borrower Party or Guarantor or require any such Person to incur any additional costs or expenses, (iii) modify the requirements of the Loan Documents with respect to interest rate hedging or insurance, (iv) change the collateral or require additional collateral for the Loans, (v) require any changes to accounting methods used by any Borrower Party, Guarantor or any Affiliate of any Borrower Party or Guarantor, (vi) waive, decrease or impair any rights or remedies of Borrower, Guarantor or Property Manager under the Loan Documents or (vii) require any Borrower Party, Guarantor or any Affiliate of any Borrower Party or Guarantor to violate any Applicable Law.

 

(f) Provision of Information to Assignees and Participants.  A Lender may furnish any information concerning the Borrower, the Projects, the Loans, the Borrower’s Member, the Guarantor or any Borrower Party in the possession of such Lender from time to time to assignees, pledgees and participants (including prospective assignees, pledgees and participants), subject, however, to the party receiving such information confirming in writing that such party and such information is subject to the provisions of Section 14.24.

 

(g) No Assignments to the Borrower or Affiliates.  Anything in this Section 14.07 or Section 14.27 to the contrary notwithstanding, each Lender agrees for itself that it shall not assign or participate any interest in any Loan held by it hereunder to the Borrower or any of its Affiliates without the prior consent of each Lender.

 

14.08 Survival

 

.  The obligations of the Borrower under Sections 3.02(e), 5.01, 5.05, 5.06, 14.03, 14.04 and 14.12, and the obligations of the Lenders under Sections 13.05, shall survive the repayment of the Obligations, the termination of the Commitments and, as to any Project, the release of that Project as collateral for the Loans in accordance with Section 2.09 of this Agreement, and in addition, in the case of any Lender that may assign any interest under the Loan Documents in accordance with the terms thereof including any Lender’s interest in its Commitment or Loan hereunder, shall survive the making of such assignment, notwithstanding that such assigning Lender may cease to be a “Lender” hereunder.  In addition, each representation and warranty made herein or pursuant hereto by the Borrower shall survive the making of such representation and warranty, and no Lender shall be deemed to have waived, by reason of making any Loan, any Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Lender or the Administrative Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Loan was made.

 

14.09 Reserved

 

.

 

14.10 Right of Set-off

 

.

 

(a) Upon the occurrence and during the continuance of any Event of Default, each of the Lenders is, subject (as between the Lenders) to the provisions of subsection (c) of this Section 14.10, hereby authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower) and to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and other indebtedness at any time owing, by such Lender in any of its offices, in Dollars or in any other currency, to or for the credit or the account of the Borrower against any and all of the respective obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether or not such Lender or any other Lender shall have made any demand hereunder and although such obligations may be contingent or unmatured and such deposits or indebtedness may be unmatured.  Each Lender and the Administrative Agent acknowledges that it is aware of the implications of the anti-deficiency laws and “one form of action” laws of various jurisdictions in which the Collateral may be located.  These laws, in general, restrict or prohibit the exercise of remedies under loans secured by real property, and the violation of those laws can result in severe consequences to a lender, including a loss of the real property security.  These laws include, for example, Section 726 of the California Code of Civil Procedure.  Therefore, anything obtained in this Section 14.10 to the contrary notwithstanding, no Lender shall exercise any right of set-off against any Borrower Party or Guarantor with respect to the Obligations under the Loan Documents without the prior written consent of all of the Lenders.  In the event that any Lender exercises any right of set-off without all of the Lenders’ prior consent, such Lender shall protect, indemnify, defend and hold harmless the Administrative Agent and each of the other Lenders from and against any liability, loss, cost, damage, or injury that may result from such Person’s exercise of its right of set-off.  This Section 14.10 shall inure only for the benefit of the Lenders and the Administrative Agent, and may not be relied upon by any third party, including but not limited to the Borrower and its Subsidiaries.

 

(b) Each Lender shall promptly notify the Borrower and the Administrative Agent after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of the Lenders under this Section 14.10 are in addition to other rights and remedies (including other rights of set-off) which the Lenders may have.

 

(c) If an Event of Default has resulted in the Loans becoming due and payable prior to the stated maturity thereof, each Lender agrees that it shall turn over to the Administrative Agent any payment (whether voluntary or involuntary, through the exercise of any right of setoff or otherwise) on account of the Loans held by it in excess of its ratable portion of payments on account of the Loans obtained by all the Lenders.

 

14.11 Remedies of Borrower

 

.  It is expressly understood and agreed that, notwithstanding any Applicable Law or any provision of this Agreement or the other Loan Documents to the contrary, the liability of the Administrative Agent and each Lender (including their respective successors and assigns) and any recourse of the Borrower against the Administrative Agent and each Lender shall be limited solely and exclusively to their respective interests in the Loans and/or Commitments or the Projects.  Without limiting the foregoing, in the event that a claim or adjudication is made that the Administrative Agent, any of the Lenders, or their agents, acted unreasonably or unreasonably delayed acting in any case where by Applicable Law or under this Agreement or the other Loan Documents, the Administrative Agent, any Lender or any such agent, as the case may be, has an obligation to act reasonably or promptly, or otherwise violated this Agreement or the Loan Documents, the Borrower agrees that none of the Administrative Agent, the Lenders or their agents shall be liable for any incidental, indirect, special, punitive, consequential or speculative damages or losses resulting from such failure to act reasonably or promptly in accordance with this Agreement or the other Loan Documents.

 

14.12 Brokers

 

.  The Borrower hereby represents to the Administrative Agent and each Lender that it has not dealt with any broker, underwriter, placement agent, or finder in connection with the Transactions.  The Borrower hereby agrees that it shall pay any and all brokerage commissions or finders fees owing to any broker or finder engaged by Borrower or any of its Affiliates in connection with the Transactions and agrees and acknowledges that payment of all such brokerage commissions or finders fees shall be the Borrower’s sole responsibility.  The Borrower hereby agrees to protect and indemnify and hold the Administrative Agent and each Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind in any way relating to or arising from a claim by any broker or finder engaged by Borrower or any of its Affiliates that such Person acted on behalf of the Borrower and is entitled to compensation in connection with the Transactions.

 

14.13 Estoppel Certificates

 

.

 

(a) The Borrower, within ten (10) days after the Administrative Agent’s request, shall furnish to the Administrative Agent a written statement, duly acknowledged, certifying to the Administrative Agent and each Lender and/or, subject to the terms of Section 14.07, any proposed assignee of any portion of the interests hereunder:  (i) the amount of the Outstanding Principal Amount then owing under this Agreement and each of the Notes, (ii) the terms of payment and Stated Maturity Date of the Loans (or if earlier, the Maturity Date), (iii) the date to which interest has been paid under each of the Notes, (iv) whether, to the Borrower’s knowledge, any offsets or defenses exist against the repayment of the Loans and, if any are alleged to exist, a reasonably detailed description thereof, (v) the extent to which the Loan Documents have been Modified by the Borrower and (vi) such other information as the Administrative Agent shall reasonably request.

 

(b) The Administrative Agent, within ten (10) days after the Borrower’s reasonable request therefor, shall furnish to the Borrower a written statement, duly acknowledged, certifying to any prospective permitted purchaser of an interest in the Borrower: (i) the amount of the Outstanding Principal Amount, (ii) the terms of payment and Stated Maturity Date of the Loans (or if earlier, the Maturity Date), (iii) the date to which interest has been paid under each of the Notes, (iv) whether, to the actual knowledge of the Person signing on behalf of the Administrative Agent, there are any Defaults on the part of the Borrower under this Agreement or under any of the other Loan Documents, and, if any are alleged to exist, a detailed description thereof and (v) the extent to which the Loan Documents have been Modified.

 

14.14 Preferences

 

.  To the extent that the Borrower makes a payment or payments to the Administrative Agent and/or any Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by the Administrative Agent or a Lender, as the case may be.

 

14.15 Certain Waivers

 

.  The Borrower hereby irrevocably and unconditionally waives (a) promptness and diligence, (b) notice of any actions taken by the Administrative Agent or any Lender hereunder or under any other Loan Document or any other agreement or instrument relating thereto except to the extent (i) otherwise expressly provided herein or therein or (ii) the Borrower is not, pursuant to Applicable Law, permitted to waive the giving of such notice, (c) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of the Borrower’s obligations hereunder and under the other Loan Documents, the omission of or delay in which, but for the provisions of this Section 14.15, might constitute grounds for relieving the Borrower of any of its obligations hereunder or under the other Loan Documents, except to the extent otherwise expressly provided herein or to the extent that the Borrower is not, pursuant to Applicable Law, permitted to waive the giving of such notice, (d) any requirement that the Administrative Agent or any Lender protect, secure, perfect or insure any lien on any collateral for the Loans or exhaust any right or take any action against the Borrower or any other Person or against any collateral for the Loans, (e) any right or claim of right to cause a marshalling of the Borrower’s assets and (f) until the Obligations are paid in full and discharged, all rights of subrogation or contribution, whether arising by contract or operation of law or otherwise by reason of payment by the Borrower pursuant hereto or to the other Loan Documents.

 

14.16 Entire Agreement

 

.  This Agreement, the Notes and the other Loan Documents constitute the entire agreement between the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and all understandings, oral representations and agreements heretofore or simultaneously had among the parties are merged in, and are contained in, such documents and instruments.

 

14.17 Severability

 

.  If any provision of this Agreement shall be held by any court of competent jurisdiction to be unlawful, void or unenforceable for any reason as to any Person or circumstance, such provision or provisions shall be deemed severable from and shall in no way affect the enforceability and validity of the remaining provisions of this Agreement.

 

14.18 Captions

 

.  The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

 

14.19 Counterparts

 

.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

 

14.20 GOVERNING LAW

 

. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS (OTHER THAN THE DEED OF TRUST RELATED TO THE BISHOP SQUARE PROJECT AND THE BLOCKED ACCOUNT CONTROL AGREEMENT (AS DEFINED IN THE PROJECT-LEVEL ACCOUNT SECURITY AGREEMENT RELATED TO THE BISHOP SQUARE PROJECT) RELATED TO THE BISHOP SQUARE PROJECT) ARE TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (AS PERMITTED BY SECTION 1646.5 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR SUCCESSOR PROVISION), WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL LAWS OF THE STATE OF CALIFORNIA TO GOVERN THE RIGHTS AND DUTIES OF THE PARTIES; EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS AFFECTING ANY PROJECT CREATED PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED, TO THE EXTENT SO PROVIDED IN SUCH LOAN DOCUMENTS.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THE LOAN DOCUMENTS.

 

14.21 SUBMISSION TO JURISDICTION

 

.  THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY (I) AGREE THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, ANY SECURITY DOCUMENT, OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN A COURT OF RECORD IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES OR IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SUCH STATE AND COUNTY, (II) CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, (III) WAIVE ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (IV) AGREE AND CONSENT THAT ALL SERVICE OF PROCESS UPON THE BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH STATE OR FEDERAL COURT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE BORROWER, AT THE ADDRESS FOR NOTICES PURSUANT TO SECTION 14.02 HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.  NOTHING IN THIS SECTION 14.21 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER OR THE PROPERTY OF THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTIONS.

 

14.22 WAIVER OF JURY TRIAL; COUNTERCLAIM

 

.  EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS.  THE BORROWER FURTHER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY LEGAL PROCEEDING BROUGHT BY OR ON BEHALF OF THE ADMINISTRATIVE AGENT OR THE LENDERS WITH RESPECT TO THIS AGREEMENT, THE NOTES , THE OTHER LOAN DOCUMENTS OR OTHERWISE IN RESPECT OF THE LOANS, ANY AND EVERY RIGHT THE BORROWER MAY HAVE TO (A) INTERPOSE ANY COUNTERCLAIM THEREIN, OTHER THAN A MANDATORY OR COMPULSORY COUNTERCLAIM, AND (B) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING.  NOTHING CONTAINED IN THE IMMEDIATELY PRECEDING SENTENCE SHALL PREVENT OR PROHIBIT THE BORROWER FROM INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST THE ADMINISTRATIVE AGENT OR THE LENDERS WITH RESPECT TO ANY ASSERTED CLAIM.  THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVE ANY DEFENSE OR OBJECTION TO THE BORROWER INSTITUTING OR MAINTAINING SUCH A SEPARATE ACTION AGAINST THE ADMINISTRATIVE AGENT OR THE LENDERS FOR ANY CLAIM WHICH THE BORROWER IS PRECLUDED FROM INTERPOSING AS A COUNTERCLAIM IN OR CONSOLIDATING WITH ANY PROCEEDING COMMENCED BY THE ADMINISTRATIVE AGENT OR THE LENDERS DESCRIBED IN THIS SECTION 14.22, BUT THE DEFENSES AND OBJECTIONS SO WAIVED ARE LIMITED SOLELY TO DEFENSES AND OBJECTIONS BASED ON THE ASSERTION OF SUCH CLAIM IN A SEPARATE ACTION AND DO NOT INCLUDE ANY OTHER DEFENSES OR OBJECTIONS, WHETHER PROCEDURAL OR SUBSTANTIVE.

 

14.23 Limitation of Liability

 

.

 

(a) Neither the Borrower, nor any past, present or future member in, partner in, or manager of the Borrower, nor any owner of any direct or indirect Equity Interests in the Borrower, shall be personally liable for payments due hereunder or under any other Loan Document or for the performance of any obligation of the Borrower hereunder or thereunder, or breach of any representation or warranty made by the Borrower hereunder or thereunder.  Notwithstanding the foregoing provisions of this Section 14.23(a), the Borrower (but not any past, present or future member in, partner in, or manager of the Borrower, nor any owner of any direct or indirect Equity Interests in the Borrower) shall be personally (and on a full recourse basis) liable for and shall protect, indemnify and defend the Administrative Agent and the Lenders from and against, and shall hold the Administrative Agent and the Lenders harmless of, from and against any deficiency, liability, loss, damage, costs, and expenses (including legal fees and disbursements) suffered by the Administrative Agent and/or the Lenders and caused by, or related to or as a result of any of the following:  (i) the commission of a criminal act by or on behalf of the Borrower; (ii) fraud, intentional misrepresentation or intentionally inaccurate certification made at any time in connection with the Loan Documents or the Loans by or on behalf of the Borrower; (iii) misapplication or misappropriation of cash flow or other revenue derived from or in respect of the Projects, including security deposits, Insurance Proceeds, Condemnation Awards, or any rental, sales or other income derived directly or indirectly from the Projects in violation of the Loan Documents by or on behalf of the Borrower; (iv) intentional or bad faith commission of waste to or of the Projects or any portion thereof by or on behalf of the Borrower; (v) any violation of Section 8.11(a) or resulting from a failure to perform under the Environmental Indemnity; (vi) interference with foreclosure following an Event of Default by or on behalf of the Borrower; (vii) any Transfers (other than a Taking, provided that the provisions of Sections 10.02 and 10.03 of this Agreement are complied with) in violation of the Loan Documents; and/or (viii) any failure by Borrower to maintain its status as a Limited Purpose Entity.  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, (A) neither Administrative Agent nor the Lenders shall be deemed to have waived any right which Administrative Agent or any Lender may have under Sections 506(a), 506(b), 1111(b) or any other provision of the United States Bankruptcy Code, as such sections may be amended, to file a claim for the full amount due to Administrative Agent or such Lender under the Loan Documents or to require that all collateral shall continue to secure the amounts due under the Loan Documents, and (B) the Obligations shall be fully recourse to Borrower in the event that (I) the Borrower, the Borrower’s Member (if the Lenders’ ability to exercise remedies under this Agreement are limited as a result thereof) or Guarantor files a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law or (II) the Borrower, the Borrower’s Member (if the Lenders’ ability to exercise remedies under this Agreement are limited as a result thereof) or Guarantor files an answer consenting to or joining in any involuntary petition filed against the Borrower, the Borrower’s Member or Guarantor by any other Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition filed, or otherwise colludes with any party in filing any involuntary petition, against the Borrower, the Borrower’s Member or Guarantor by any Person.

 

(b) Nothing contained in this Section shall impair the validity of the indebtedness, obligations or Liens arising under the Loan Documents. Notwithstanding anything to the contrary contained herein, the Administrative Agent may pursue any power of sale, bring any foreclosure action, any action for specific performance, or any other appropriate action or proceedings against the Borrower or any other Person for the purpose of enabling the Administrative Agent and the Lenders to realize upon the collateral for the Loans (including, without limitation, any Rents and Net Proceeds to the extent provided for in the Loan Documents) or to obtain the appointment of a receiver.

 

(c) Notwithstanding anything to the contrary contained herein, the Guarantor shall have personal liability on the terms contained in the Guarantor Documents (to the extent provided therein).

 

14.24 Confidentiality

 

.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information that may be disclosed (a) to it and its Subsidiaries’ and Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by Applicable Laws or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 14.24, to (i) any assignee or pledgee of or Participant in, or any prospective assignee or pledgee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 14.24 or of arrangements entered into pursuant hereto or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower; provided, however, the obligation to maintain the confidentiality of the Information provided hereunder shall expire (i) twelve (12) months after the date upon which the Obligations hereunder are indefeasibly paid in full, or (ii) on such date that the Projects are acquired by the Administrative Agent or its nominee as a result of a foreclosure of the Projects or a deed or assignment in lieu of foreclosure, except for any Information which is proprietary to the Borrower, its Subsidiaries or Affiliates and is not related to the Projects.  Without limiting the foregoing, the Borrower shall respond to any request by any Lender for approval of disclosure of Information within five (5) Business Days after Borrower receives any such request.  For the purposes of this Section 14.24, “Information” means all written information received from or on behalf of the Borrower relating to the Borrower, its Subsidiaries or Affiliates or their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis (and obtained from a Person not known by the Administrative Agent or such Lender to have disclosed such information in violation of a contractual confidentiality obligation of such Person owed to the Borrower) prior to disclosure by the Borrower.  The Administrative Agent and each Lender, to the extent required to maintain the confidentiality of Information as provided in this Section 14.24, shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as a commercial banker exercising reasonable and customary business practices would accord to its own confidential information.  Notwithstanding anything herein to the contrary, the information subject to this Section 14.24 shall not include, and the Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transactions as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans and transactions contemplated hereby.  Subject to the terms set forth in this sentence, Borrower authorizes Administrative Agent and each of the Lenders to issue, at their own expense, press releases, advertisements and other promotional materials in connection with Administrative Agent’s or such Lender’s own promotional and marketing activities, so long as such materials describe the Loans in a manner which is consistent with any accurate description of the Loans contained in any press release or public filing issued by the Borrower; provided, however, that prior to issuing any such press release, advertisement or other promotional materials, the Lender seeking to issue the same shall first deliver the proposed form of the same to the Administrative Agent for its review and submission to the Borrower, and provided, further, that no such press release, advertisement or other promotional materials shall be issued unless the Borrower has approved the form of the same (which approval shall not be unreasonably withheld, conditioned or delayed, and which approval shall be granted so long as the information set forth therein is consistent with the description of the Loans contained in any press release or public filing issued by the Borrower).

 

14.25 Usury Savings Clause

 

.  It is the intention of the Borrower, the Administrative Agent and the Lenders to conform strictly to the usury and similar laws relating to interest from time to time in force, and all Loan Documents between the Borrower, the Administrative Agent and the Lenders, whether now existing or hereafter arising and whether oral or written, are hereby expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid in the aggregate to the Lenders as interest (whether or not designated as interest, and including any amount otherwise designated by or deemed to constitute interest by a court of competent jurisdiction) hereunder or under the other Loan Documents or in any other agreement given to secure the Loans, or in any other document evidencing, securing or pertaining to the Loans, exceed the maximum amount (the “Maximum Rate”) permissible under Applicable Laws.  If under any circumstances whatsoever fulfillment of any provision hereof, of this Agreement or of the other Loan Documents, at the time performance of such provisions shall be due, shall involve exceeding the Maximum Rate, then, ipso facto, the obligation to be fulfilled shall be reduced to the Maximum Rate.  For purposes of calculating the actual amount of interest paid and/or payable hereunder in respect of laws pertaining to usury or such other laws, all sums paid or agreed to be paid to the Lenders for the use, forbearance or detention of the Loans evidenced hereby, outstanding from time to time shall, to the extent permitted by Applicable Law, be amortized, pro-rated, allocated and spread from the date of disbursement of the proceeds of the Notes until payment in full of all of such indebtedness, so that the actual rate of interest on account of such Loans is uniform through the term hereof.  If under any circumstances any Lender shall ever receive an amount which would exceed the Maximum Rate, such amount shall be deemed a payment in reduction of the principal amount of the applicable Loans and shall be treated as a voluntary prepayment under this Agreement (without prepayment penalty or premium) and shall be so applied in accordance with the provisions of this Agreement, or if such excessive interest exceeds the outstanding amount of the applicable Loans and any other Obligations, the excess shall be deemed to have been a payment made by mistake and shall be refunded to the Borrower.

 

14.26 Cooperation with Syndication

 

.  The Borrower acknowledges that Arranger intends to syndicate a portion of the Commitments to one or more Lenders (the “Syndication”) and in connection therewith, the Borrower will take all actions as Arranger may reasonably request to assist Arranger in its Syndication effort.  Without limiting the generality of the foregoing, the Borrower shall, at the request of Arranger (i) facilitate the review of the Loan and the Projects by any prospective Lender; (ii) assist Arranger and otherwise cooperate with Arranger in the preparation of information offering materials (which assistance may include reviewing and commenting on drafts of such information materials and drafting portions thereof); (iii) deliver updated information on the Borrower and the Projects; (iv) make representatives of the Borrower available to meet with prospective Lenders at tours of the Projects and bank meetings; (v) facilitate direct contact between the senior management and advisors of the Borrower and any prospective Lender; and (vi) provide Arranger with all information reasonably deemed necessary by it to complete the Syndication successfully.  The Borrower agrees to take such further action, in connection with documents and amendments to the Loan Documents, as may reasonably be required to effect such Syndication.  The Borrower shall not be responsible for any costs or expenses incurred by the Administrative Agent, the Arranger, any Lender or any other Person in connection with such Syndication, other than Arranger’s attorneys’ fees incurred through the closing of the Loan.

 

14.27 [Reserved

 

.]

 

14.28 Controlled Account

 

.  The Borrower hereby agrees with the Administrative Agent, as to any Controlled Account into which this Agreement requires the Borrower to deposit funds, as follows:

 

(a) Establishment and Maintenance of the Controlled Account.

 

(i) Each Controlled Account (A) shall be a separate and identifiable account from all other funds held by the Depository Bank and (B) shall contain only funds required to be deposited pursuant to this Agreement or any other Loan Document.  Any interest which may accrue on the amounts on deposit in a Controlled Account shall be added to and shall become part of the balance of such Controlled Account.  The Borrower, the Administrative Agent and the applicable Depository Bank shall enter into an agreement (the “Controlled Account Agreement”), substantially in the form of Exhibit O attached hereto (with such changes thereto as may be required by the Depository Bank and satisfactory to the Administrative Agent, including, without limitation, revisions necessary to utilize a separate deposit account control agreement reasonably satisfactory to the Administrative Agent, the Depository Bank and the Borrower) which shall govern the Controlled Account and the rights, duties and obligations of each party to the Controlled Account Agreement.

 

(ii) The Controlled Account Agreement shall provide that (A) the Controlled Account shall be established in the name of the Administrative Agent, as agent for the Lenders, (B) the Controlled Account shall be subject to the sole dominion, control and discretion of the Administrative Agent, and (C) neither the Borrower nor any other Person, including, without limitation, any Person claiming on behalf of or through the Borrower, shall have any right or authority, whether express or implied, to make use of or withdraw, or cause the use or withdrawal of, any proceeds from the Controlled Account or any of the other proceeds deposited in the Controlled Account, except as expressly provided in this Agreement or in the Controlled Account Agreement.

 

(b) Deposits to and Disbursements from the Controlled Account.  All deposits to and disbursements of all or any portion of the deposits to the Controlled Account shall be in accordance with this Agreement and the Controlled Account Agreement.  The Borrower shall pay any and all fees charged by Depository Bank in connection with the maintenance of the Controlled Account required to be established by or for it hereunder, and the performance of the Depository Bank’s duties.

 

(c) Security Interest.

 

(i) The Borrower hereby grants a perfected first priority security interest in favor of the Administrative Agent for the ratable benefit of the Lenders in each Controlled Account established by or for it hereunder and all financial assets and other property and sums at any time held, deposited or invested therein, and all security entitlements and investment property relating thereto, together with any interest or other earnings thereon, and all proceeds thereof, whether accounts, general intangibles, chattel paper, deposit accounts, instruments, documents or securities (collectively, “Controlled Account Collateral”), together with all rights of a secured party with respect thereto (even if no further documentation is requested by the Administrative Agent or the Lenders or executed by the Borrower).

 

(ii) The Borrower covenants and agrees:

 

(A) to do all acts that may be reasonably necessary to maintain, preserve and protect the Controlled Account Collateral;

 

(B) to pay promptly when due all material taxes, assessments, charges, encumbrances and liens now or hereafter imposed upon or affecting any Controlled Account Collateral;

 

(C) to appear in and defend any action or proceeding which may materially and adversely affect the Borrower’s title to or the Administrative Agent’s interest in the Controlled Account Collateral;

 

(D) following the creation of each Controlled Account established by or for the Borrower and the initial funding thereof, other than to the Administrative Agent pursuant to this Agreement or a Controlled Account Agreement, not to transfer, assign, sell, surrender, encumber, mortgage, hypothecate, or otherwise dispose of any of the Controlled Account Collateral or rights or interests therein, and to keep the Controlled Account Collateral free of all levies and security interests or other liens or charges except the security interest in favor of the Administrative Agent granted hereunder;

 

(E) to account fully for and promptly deliver to the Administrative Agent, in the form received, all documents, chattel paper, instruments and agreements constituting the Controlled Account Collateral hereunder, endorsed to the Administrative Agent or in blank, as requested by the Administrative Agent, and accompanied by such powers as appropriate and until so delivered all such documents, instruments, agreements and proceeds shall be held by the Borrower in trust for the Administrative Agent, separate from all other property of the Borrower; and

 

(F) from time to time upon request by the Administrative Agent, to furnish such further assurances of the Borrower’s title with respect to the Controlled Account Collateral, execute such written agreements, or do such other acts, all as may be reasonably necessary to effectuate the purposes of this agreement or as may be required by law, or in order to perfect or continue the first-priority lien and security interest of the Administrative Agent in the Controlled Account Collateral.

 

(iii) All interest earned on the Controlled Account shall be retained in such Controlled Account subject to the Borrower’s withdrawal rights set forth herein.  The Borrower shall treat all interest earned on the Controlled Account as its income for federal income tax purposes.

 

(iv) Upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may (and, upon the instruction of the Required Lenders, shall):

 

(A) without any advertisement or notice to or authorization from the Borrower (all of which advertisements, notices and/or authorizations are hereby expressly waived), withdraw, sell or otherwise liquidate the funds deposited into any Controlled Account, and apply the proceeds thereof to the unpaid Obligations in such order as the Administrative Agent may elect in its sole discretion, without liability for any loss, and the Borrower hereby consents to any such withdrawal and application as a commercially reasonable disposition of such funds and agrees that such withdrawal shall not result in satisfaction of the Obligations except to the extent the proceeds are applied to such sums;

 

(B) without any advertisement or notice to or authorization from the Borrower (all of which advertisements, notices and/or authorizations are hereby expressly waived), notify any account debtor on any Controlled Account Collateral pledged by the Borrower pursuant hereto to make payment directly to the Administrative Agent;

 

(C) foreclose upon all or any portion of the Controlled Account Collateral pledged by the Borrower or otherwise enforce the Administrative Agent’s security interest in any manner permitted by law or provided for in this Agreement;

 

(D) sell or otherwise dispose of all or any portion of the Controlled Account Collateral pledged by the Borrower at one or more public or private sales, whether or not such Controlled Account Collateral is present at the place of sale, for cash or credit or future delivery, on such terms and in such manner as the Administrative Agent may determine;

 

(E) recover from the Borrower all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred or paid by the Administrative Agent in exercising any right, power or remedy provided by this subsection (iv); and

 

(F) exercise any other right or remedy available to the Administrative Agent or the Lenders under Applicable Law or in equity.

 

(v) [Reserved.]

 

14.29 Financing Statements

 

.  The Borrower authorizes the Administrative Agent to file such financing statements (and any continuation statements with respect thereto) as the Administrative Agent may deem necessary in order to perfect or maintain the perfection of any security interest granted or to be granted to the Administrative Agent pursuant to any of the Loan Documents, in such jurisdictions as the Administrative Agent may elect.

 

14.30 Severance of Loan

 

.  Eurohypo shall have the right, at any time with the unanimous consent of the Lenders, but at no additional cost to the Borrower, to direct the Administrative Agent, with respect to all or any portion of the Loan, to (a) cause the Notes, the Deeds of Trust and the other Security Documents to be severed and/or split into two or more separate notes, deeds of trust and other security agreements, so as to evidence and secure one or more senior and subordinate mortgage loans, (b) create one more senior and subordinate notes (i.e., an A/B or A/B/C structure) secured by the Deeds of Trust and the other Security Documents, (c) create multiple components of the Notes (and allocate or reallocate the Outstanding Principal Amount of the Loans amount among such components or among the components of the Notes delivered upon the Closing Date) or (d) otherwise sever the Loan into two or more loans secured by the Deeds of Trust and the other Security Documents; in each such case, in whatever proportions and priorities as Eurohypo may so direct in its discretion to the Administrative Agent; provided, however, that in each such instance (i) the Outstanding Principal Amount of all the Notes evidencing the Loans (or (in any case involving the splitting, modification, componentization or other severance of any previously-split, componentized or severed Note) components of such Notes) immediately after the effective date of such splitting, modification, componentization or other severance, equals the Outstanding Principal Amount of the Loans (or (in any case involving the splitting, modification, componentization or other severance of any previously-split, componentized or severed Note) the applicable component thereof) immediately prior to such splitting, modification, componentization or other severance, (ii) the weighted average of the interest rates for all such Notes (or, if applicable, components of such Notes) immediately after the effective date of such splitting, modification, componentization or other severance equals the interest rate of the original Note (or the applicable component thereof) immediately prior to such splitting, modification, componentization or other severance thereof, (iii) there shall be no modification of the Maturity Date, the Types of Loans available to be selected by the Borrower (provided that the Applicable Margins on the relevant Types may be modified, and may differ for each of such split, modified, componentized or otherwise severed Notes or components, so long as the restrictions set forth in clause (ii) above are not violated), the due dates for mandatory principal payments, prepayment terms, Events of Default (other than cross defaulting of any severed Notes or Security Documents) or any other modifications which would result, in the aggregate, in an increase in the economic obligations of the Borrower with respect to all Loans outstanding hereunder following such splitting, modification, componentization or other severance as compared to the obligations of the Borrower immediately prior thereto (other than changes in the interest rate or Applicable Margins which do not violate the restrictions in clause (ii) above), including, without limitation, any recourse provisions, and (iv) except for modifications which do not violate the restrictions set forth in clauses (ii) and (iii) above, such modification shall not result, in the aggregate, in an increase in any liability or obligation, or any change in any substantive rights, of the Borrower, any Borrower Party, the Guarantor or any Named Principal under the Loan Documents following such splitting, modification, componentization or other severance as compared to the respective liabilities, obligations or rights of such parties immediately prior thereto.  If requested by the Administrative Agent in writing, subject to the provisions of Section 2.04(b), the Borrower shall execute within ten (10) Business Days after such request, a severance agreement, amendments to or amendments and restatements of any one or more Loan Documents, and such documentation as the Administrative Agent may reasonably request to evidence and/or effectuate any such splitting, modification, componentization or other severance, all in form and substance reasonably satisfactory to Eurohypo, the Administrative Agent and the Borrower.

 

14.31 Additional REIT Provisions

 

.

 

(a) The Borrower shall have the right from time to time upon notice to, but without the consent of, the Administrative Agent to change the Borrower’s Manager to the REIT or any other REIT Subsidiary determined by the REIT.  Upon the occurrence of such change, the Borrower shall notify the Administrative Agent of the name and principal place of business or chief executive office of the new Borrower’s Manager within ten (10) Business Days after any change in the same.

 

(b) Notwithstanding the provisions of Section 1.02(b), the Borrower shall have the right from time to time upon notice to, but without the consent of, the Administrative Agent, to change its fiscal year, including the last days of its fiscal year and fiscal quarters, to correspond with those of the REIT.  The Borrower shall provide written notice thereof to the Administrative Agent within ten (10) Business Days after the occurrence of such change.

 

(c) [Reserved.]

 

(d) The Borrower shall have the right to terminate (or assign to the new property manager) the existing Property Management Agreement for each Project and to replace, pursuant to this Section 14.31(d), the Property Manager by the REIT or by a management company controlled directly or indirectly by the REIT (including, without limitation, the Operating Partnership of the REIT or any other wholly-owned REIT Subsidiary).  If any Project is managed by the REIT or a REIT Subsidiary, then the Borrower may dispense with the requirement of entering into a property management agreement or may enter into a new property management agreement for one or more of the Projects on such terms as it deems satisfactory (which may include, without limitation, a separate cost sharing agreement delegating responsibilities for property management to the REIT or a REIT Subsidiary); provided that, if a property management agreement is entered into, such agreement shall in all events be subordinate to the Deeds of Trust and the other Loan Documents, and, within thirty (30) days after entering into a new property management agreement, the Borrower and the new property manager will execute and deliver to the Administrative Agent a Property Manager’s Consent, with such changes thereto as may be reasonably necessary for the REIT or its Affiliates to comply with tax or other Applicable Laws pertaining to their status.

 

 [Signature Pages Follow]

  

  

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

BORROWER

 

Douglas Emmett 2010, LLC,

 

a Delaware limited liability company

 

By:           __________________

Name:           William Kamer

Title:           Chief Financial Officer

 

Address for Notices:

 

Douglas Emmett 2010, LLC

 

c/o Douglas Emmett Properties, LP

 

808 Wilshire Boulevard, Suite 200

 

Santa Monica, California  90401

 

Attention:  Jordan L. Kaplan and William Kamer

 

Telecopier No.:  (310) 255-7702

 

  

  

 

LENDERS

 

EUROHYPO AG, NEW YORK BRANCH, as a Lender

 

By:_________________________

Name:

Title:

 

By:_________________________

Name:

Title:

 

Address for Notices to Eurohypo AG,

 

New York Branch:

 

Eurohypo AG, New York Branch

 

1114 Avenue of the Americas

 

New York, New York  10036

 

Attention: Legal Director

 

Telecopier No.: (866) 267-7680

 

With copies to:

 

Eurohypo AG, New York Branch

 

1114 Avenue of the Americas

 

New York, New York  10036

 

Attention: Head of Portfolio Operations

 

Telecopier No.: (866) 267-7680

 

- and -

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California  90013

Attention: Thomas R. Fileti, Esq.

Telecopier No.: (213) 892-5454

  

  

 

 

WELLS FARGO BANK, N.A., as a Lender

 

By:_________________________

Name:

Title:

 

 

Address for Notices to Wells Fargo Bank, N.A.:

 

Wells Fargo Bank, N.A.

 

11601 Wilshire Blvd., Suite 1700

 

Los Angeles, California  90025

 

Attention:  Beth Cebra

 

Telecopier No.:  (310) 444-7617

  

  

 

 

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, CONNECTICUT BRANCH, as a Lender

 

By:_________________________

Name:

Title:

 

By:_________________________

Name:

Title:

 

 

Address for Notices to Bank of Ireland:

 

Bank of Ireland

 

New York Representative Office

 

405 Lexington Avenue, 64th Floor

 

New York, New York  10174

 

Attention:  Warnick Olney

 

Telecopier No.:  (212) 616-1045

 

With copies to:

 

Sonnenschein Nath & Rosenthal LLP

 

Two World Financial Center

 

225 Liberty Street

 

New York, New York  10281

 

Attention:  Gary A. Goodman, Esq.

 

Telecopier No.: (212) 768-6800

 

  

  

 

 

LANDESBANK HESSEN-THUERINGEN GIROZENTRALE, as a Lender

 

By:_________________________

Name:

Title:

 

By:_________________________

Name:

Title:

 

 

Address for Notices to Landesbank Hessen-Thueringen Girozentrale:

 

Landesbank Hessen-Thueringen

 

New York Branch

 

420 Fifth Avenue

 

New York, New York  10018

 

Attention:  William Rogers

 

Telecopier No.:  (212) 703-5296

 

With copies to:

 

Sonnenschein Nath & Rosenthal LLP

 

Two World Financial Center

 

225 Liberty Street

 

New York, New York  10281

 

Attention:  Gary A. Goodman, Esq.

 

Telecopier No.: (212) 768-6800

  

  

 

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, as a Lender

 

	
  

	
By:

	
Cornerstone Real Estate Advisers Inc.,

 

	
  

	
a Delaware corporation, its Authorized Agent

 

By:_________________________

Name:

Title:

 

 

Address for Notices to Massachusetts Mutual Life Insurance Company:

Massachusetts Mutual Life Insurance Company

c/o Cornerstone Real Estate Advisers LLC

One Financial Plaza

Hartford, Connecticut  06103

Attention:          Finance Group Loan Servicing

Loan No. 10708

With a copy to:

 

	
  

	
Massachusetts Mutual Life Insurance Company

	
  

	
c/o Cornerstone Real Estate Advisers LLC

	
  

	
One Financial Plaza

	
  

	
Hartford, Connecticut  06103

	
  

	
Attention:

	
Paralegal, Finance Group Loan Servicing

	
  

	
Loan No.  10708

  

  

 

 

PNC BANK, NATIONAL ASSOCIATION, as a Lender

 

By:_________________________

Name:

Title:

 

 

Address for Notices to PNC Bank:

 

PNC Bank, National Association

 

249 Fifth Avenue

 

P1-POPP-19-2

 

Pittsburgh, Pennsylvania 15222

 

Attention:  Paul Jamiolkowski

 

Telecopier No.:  (412) 762-6500

 

With copies to:

 

Ballard Spahr LLP

 

1735 Market Street, 51st Floor

 

Philadelphia, Pennsylvania  19103

 

Attention:  Carl H. Fridy, Esq.

 

Telecopier No.:  (215) 864-9178

 

  

  

 

 

HSBC REALTY CREDIT CORPORATION (USA), a Delaware corporation

 

By:_________________________

Name:

Title:

 

 

Address for Notices to HSBC Realty Credit Corporation (USA):

 

HSBC Realty Credit Corporation (USA)

 

660 S. Figueroa Street, Suite 800

 

Los Angeles, California 90017

 

Attention:  Patrick McNicholas

 

Telecopier No.:  (213) 553-8057

 

With copies to:

 

HSBC Realty Credit Corporation (USA)

 

One HSBC Center, 26th Floor

 

Buffalo, New York 14203

 

Attention:  Loan Administration

 

and to:

 

Freeman, Freeman & Smiley LLP

 

1920 Main Street, Suite 1050

 

Irvine, California 92614

 

Attention:  Jill Draffin, Esq.

 

Telecopier No.:  (949) 252-2776

  

  

 

 

ADMINISTRATIVE AGENT

 

EUROHYPO AG, NEW YORK BRANCH,

 

as Administrative Agent

 

By:_________________________

Name:

Title:

 

By:_________________________

Name:

Title:

 

Address for Notices to

 

Eurohypo as Administrative Agent:

 

Eurohypo AG, New York Branch

 

1114 Avenue of the Americas

 

New York, New York  10036

 

Attention: Legal Director

 

Telecopier No.: (866) 267-7680

 

With copies to:

 

Eurohypo AG, New York Branch

 

1114 Avenue of the Americas

 

New York, New York  10036

 

Attention: Head of Portfolio Operations

 

Telecopier No.: (866) 267-7680

 

- and -

 

Morrison & Foerster LLP

 

555 West Fifth Street, Suite 3500

 

Los Angeles, California  90013

 

Attention: Thomas R. Fileti, Esq.

 

Telecopier No.: (213) 892-5454

 

  

  

 

SCHEDULE 1A

 

LIST OF PROJECTS

 

	
1.

	
Village on Canon, 301 N. Camden Dr., Beverly Hills, California

 

	
2.

	
Camden Medical Arts, 414 N. Camden Dr., Beverly Hills, California

 

	
3.

	
Saltair/San Vicente, 12011 San Vicente Blvd., Brentwood, California

 

	
4.

	
One Westwood, 10990 Wilshire Blvd., Westwood, California

 

	
5.

	
9601 Wilshire Blvd., Beverly Hills, California

 

	
6.

	
Santa Monica Square, 201 Santa Monica Blvd., Santa Monica, California

 

	
7.

	
Bishop Square, 1001 & 1003 Bishop St., Honolulu, Oahu, Hawaii

 

  

  

 

SCHEDULE 1B

 

LEGAL DESCRIPTION OF THE

 

PROJECTS

 

[See attached]

 

  

  

 

SCHEDULE 1B-1

 

LEGAL DESCRIPTION

 

Village on Canon, 301 N. Camden Dr., Beverly Hills, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

 

LOTS 13 THROUGH 18 INCLUSIVE, IN BLOCK 6 OF BEVERLY, IN THE CITY OF BEVERLY HILLS, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11 PAGE 94 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

Assessors Parcel Number:                                           4343-012-019

  

  

 

SCHEDULE 1B-2

LEGAL DESCRIPTION

Camden Medical Arts, 414 N. Camden Dr., Beverly Hills, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

 

LOTS 10 AND 11 IN BLOCK 1 OF BEVERLY, IN THE CITY OF BEVERLY HILLS, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11 PAGES 94 AND 95 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assessors Parcel Number: 4343-018-023

  

  

 

SCHEDULE 1B-3

 

LEGAL DESCRIPTION

 

Saltair/San Vicente, 12011 San Vicente Blvd., Brentwood, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

PARCEL 1:

LOT 76 OF WESTGATE ACRES, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 7 PAGES 90 AND 91, OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

PARCEL 2:

 

LOT 6 OF TRACT 13059, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 271 PAGES 18 AND 19 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

 

 

 

 

 

 

 

 

Assessors Parcel Number: 4404-023-019

  

  

 

 

SCHEDULE 1B-4

LEGAL DESCRIPTION

One Westwood, 10990 Wilshire Blvd., Westwood, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

 

 

PARCEL 1:

PARCEL "A" OF PARCEL MAP L.A. NO. 3197, FILED IN BOOK 73 PAGES 56 AND 57 OF PARCEL MAPS BEING A SUBDIVISION OF LOTS 9 AND 10 IN BLOCK 2 OF TRACT NO. 8235, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 114 PAGES 91 THROUGH 93 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT THEREFROM ALL BUILDINGS AND IMPROVEMENTS LOCATED ON SAID LAND, WHICH BUILDINGS AND IMPROVEMENTS ARE "LAND" UNDER THE TERMS OF THIS POLICY.

PARCEL 2:

ALL BUILDINGS AND IMPROVEMENTS LOCATED ON THE FOLLOWING DESCRIBED LAND: PARCEL "A" OF PARCEL MAP L.A. NO. 3197 FILED IN BOOK 73 PAGES 56 AND 57 OF PARCEL MAPS, BEING A SUBDIVISION OF LOS 9 AND 10 IN BLOCK 2 OF TRACT NO. 8235, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 114 PAGES 91 THROUGH 93 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, WHICH BUILDINGS AND IMPROVEMENTS ARE "LAND" UNDER THE TERMS OF THIS POLICY.

PARCEL 3:

THAT PORTION OF THAT CERTAIN FUTURE STREET WITHIN PARCEL "A", PARCEL MAP L.A. 3197, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, FILED IN BOOK 73 PAGES 56 AND 57 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES COUNTY, AND THAT PORTION OF VETERAN AVENUE, VARIABLE WIDTH, BOUNDED AND DESCRIBED AS FOLLOWS:

  

  

 

COMMENCING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET, IN PARCEL "A", SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, SAID NORTHWESTERLY TERMINUS BEING THE POINT OF BEGINNING OF A TANGENT CURVE IN THE EASTERLY LINE OF SAID FUTURE STREET, SHOWN ON SAID MAP AS BEING CONCAVE TO THE EAST, HAVING A RADIUS OF 20 FEET AND AN ARC LENGTH OF 37.68 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 28 DEGREES 54 MINUTES 51 SECONDS, AN ARC DISTANCE OF 10.09 FEET TO A POINT, SAID POINT TO BE THE TRUE POINT OF BEGINNING FOR PURPOSES OF THIS DESCRIPTION; THENCE CONTINUING NORTHERLY AND NORTHEASTERLY ALONG SAID CURVE TO ITS NORTHEASTERLY TERMINUS IN THE NORTHERLY LINE OF SAID PARCEL "A"; THENCE TANGENT TO SAID CURVE, SOUTH 72 DEGREES 20 MINUTES 58 SECONDS WEST 9.46 FEET TO THE BEGINNING OF A TANGENT CURVE IN THE WESTERLY LINE OF SAID PARCEL "A", SHOWN ON SAID MAP AS BEING CONCAVE TO THE EAST, HAVING A RADIUS OF 20 FEET AND AN ARC LENGTH OF 37.68 FEET; THENCE SOUTHWESTERLY ALONG SAID LAST-MENTIONED CURVE THROUGH A CENTRAL ANGLE OF 30 DEGREES 56 MINUTES 43 SECONDS, AN ARC DISTANCE OF 10.80 FEET; THENCE SOUTH 63 DEGREES 25 MINUTES 18 SECONDS WEST 1.96 FEET; THENCE SOUTH 26 DEGREES 34 MINUTES 42 SECONDS EAST 13.21 FEET TO THE TRUE POINT OF BEGINNING.

EXCEPT THEREFROM THOSE PORTIONS LYING ABOVE A HORIZONTAL PLANE HAVING AN ELEVATION OF 296.65 FEET.

ALSO, THAT PORTION OF SAID FUTURE STREET IN PARCEL "A" AND THAT PORTION OF SAID VETERAN AVENUE BOUNDED AND DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWESTERLY TERMINUS OF SAID CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET, SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, SAID TERMINUS BEING THE POINT OF BEGINNING OF THAT CERTAIN TANGENT CURVE IN THE EASTERLY LINE OF SAID FUTURE STREET, SHOWN ON SAID MAP AS BEING CONCAVE TO THE EAST, HAVING A RADIUS OF 20 FEET AND AN ARC LENGTH OF 37.68 FEET; THENCE NORTHERLY ALONG SAID LAST-MENTIONED CURVE, THROUGH A CENTRAL ANGLE OF 22 DEGREES 31 MINUTES 35 SECONDS, AN ARC DISTANCE OF 7.86 FEET; THENCE SOUTH 63 DEGREES 25 MINUTES 18 SECONDS WEST 14.52 FEET; THENCE SOUTH 26 DEGREES 34 MINUTES 42 SECONDS EAST 42.08 FEET; THENCE NORTH 63 DEGREES 25 MINUTES EAST 14.52 FEET; THENCE NORTH 26 DEGREES 34 MINUTES 42 SECONDS WEST 32.35 FEET TO THE NORTHEASTERLY LINE OF SAID FUTURE STREET; THENCE NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST ALONG SAID NORTHEASTERLY LINE 1.95 FEET TO THE POINT OF BEGINNING.

EXCEPT THEREFROM THOSE PORTIONS LYING ABOVE A HORIZONTAL PLANE HAVING AN ELEVATION 296.65 FEET,

ALSO, THAT PORTION OF SAID FUTURE STREET IN PARCEL "A", AND THAT PORTION OF SAID VETERAN AVENUE BOUNDED AND DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN SAID CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, DISTANT 1.95 FEET SOUTHEASTERLY MEASURED ALONG SAID NORTHEASTERLY LINE FROM THE NORTHWESTERLY TERMINUS OF SAID CERTAIN COURSE; THENCE SOUTH 35 DEGREES 36 MINUTES 10 SECONDS EAST ALONG SAID NORTHEASTERLY LINE 32.76 FEET; THENCE SOUTH 63 DEGREES 25 MINUTES 18 SECONDS WEST 5.14 FEET; THENCE NORTH 26 DEGREES 34 MINUTES 42 SECONDS WEST 32.35 FEET TO THE POINT OF BEGINNING.

EXCEPT THEREFROM THOSE PORTIONS LYING ABOVE A HORIZONTAL PLANE HAVING AN ELEVATION 300.86 FEET.

ALSO, THAT PORTION OF SAID VETERAN AVENUE BOUNDED AND DESCRIBED AS FOLLOWS:

COMMENCING AT A POINT IN SAID CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, DISTANT 34.71 FEET SOUTHEASTERLY MEASURED ALONG SAID NORTHEASTERLY LINE FROM THE NORTHWESTERLY TERMINUS OF SAID CERTAIN COURSE; THENCE SOUTH 63 DEGREES 25 MINUTES 18 WEST 3.58 FEET TO A POINT, SAID POINT TO BE THE TRUE POINT OF BEGINNING FOR PURPOSES OF THIS DESCRIPTION; THENCE SOUTH 63 DEGREES 85 MINUTES 18 SECONDS WEST 16.08 FEET; THENCE SOUTH 26 DEGREES 34 MINUTES 42 SECONDS EAST 107.12 FEET TO A POINT IN THE WESTERLY PROLONGATION OF THE SOUTHERLY LINE OF SAID PARCEL "A"; THENCE NORTH 72 DEGREES 20 MINUTES 53 SECONDS EAST ALONG SAID WESTERLY PROLONGATION 16.28 FEET; THENCE NORTH 26 DEGREES 34 MINUTES 42 SECONDS WEST 109.65 FEET TO THE TRUE POINT OF BEGINNING.

EXCEPT THEREFROM THAT PORTION LYING ABOVE HORIZONTAL PLANE HAVING AN ELEVATION OF 293.75 FEET.

ALSO, THAT PORTION OF SAID FUTURE STREET IN PARCEL "A"; AND THAT PORTION OF SAID VETERAN AVENUE BOUNDED AND DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN SAID CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, DISTANT 34.71 FEET SOUTHEASTERLY MEASURED ALONG SAID NORTHEASTERLY LINE FROM THE NORTHWESTERLY TERMINUS OF SAID CERTAIN COURSE; THENCE SOUTH 63 DEGREES 25 MINUTES 18 SECONDS WEST 3.58 FEET; THENCE SOUTH 26 DEGREES 34 MINUTES 42 SECONDS EAST 109.65 FEET TO A POINT IN SAID WESTERLY PROLONGATION OF THE SOUTHERLY LINE OF PARCEL "A"; THENCE NORTH 72 DEGREES 20 MINUTES 53 SECONDS EAST ALONG SAID WESTERLY PROLONGATION 18.05 FEET; THENCE NORTH 26 DEGREES 34 MINUTES 42 SECONDS WEST 22.71 FEET TO A POINT IN SAID NORTHEASTERLY LINE OF SAID FUTURE STREET; THENCE NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST ALONG SAID NORTHEASTERLY LINE 90.86 FEET TO THE POINT OF BEGINNING.

EXCEPT THEREFROM THOSE PORTIONS LYING ABOVE A HORIZONTAL PLANE HAVING AN ELEVATION 296.33 FEET.

ALSO THAT PORTION OF SAID FUTURE STREET IN PARCEL "A" BOUNDED AND DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN SAID CERTAIN COURSE IN THE NORTHEASTERLY LINE OF SAID FUTURE STREET SHOWN ON SAID MAP AS HAVING A BEARING AND LENGTH OF NORTH 35 DEGREES 36 MINUTES 10 SECONDS WEST 149.03 FEET, DISTANT 125.57 FEET SOUTHEASTERLY MEASURED ALONG SAID NORTHEASTERLY LINE FROM SAID NORTHWESTERLY TERMINUS OF SAID CERTAIN COURSE; THENCE CONTINUING SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE 23.58 FEET TO SAID SOUTHERLY LINE OF PARCEL "A"; THENCE SOUTH 72 DEGREES 20 MINUTES 53 SECONDS WEST 3.74 FEET; THENCE NORTH 26 DEGREES 34 MINUTES 42 WEST 22.71 FEET TO THE POINT OF BEGINNING.

EXCEPTING THEREFROM THAT PORTION LYING ABOVE A HORIZONTAL PLANE HAVING AN ELEVATION OF 300.23 FEET.

Assessors Parcel Number:                                           4324-002-027

  

  

 

SCHEDULE 1B-5

 

LEGAL DESCRIPTION

 

9601 Wilshire Blvd., Beverly Hills, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

 

 

 

LOTS 8, 9, 10, 11, 12, 13 AND 14, IN BLOCK 18, OF BEVERLY, IN THE CITY BEVERLY HILLS, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11, PAGES 94 AND 95 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

 

 

 

 

 

 

 

 

 

 

Assessors Parcel Number:                                           4343-021-014

  

  

 

SCHEDULE 1B-6

 

LEGAL DESCRIPTION

 

Santa Monica Square, 201 Santa Monica Blvd., Santa Monica, California

 

All of that certain real property located in the County of Los Angeles, State of California described as follows:

 

LOTS “M” AND “N” AND “O” IN BLOCK 147 OF SANTA MONICA, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGES 80 AND 81 AND IN BOOK 39 PAGE 45 ET SEQ., OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

 

 

 

 

 

 

 

Assessors Parcel Number:                                           4291-013-023

  

  

 

SCHEDULE 1B-7

 

LEGAL DESCRIPTION

 

Bishop Square, 1001 & 1003 Bishop St., Honolulu, Oahu, Hawaii

 

All of that certain real property located in the County of Honolulu, State of Hawaii described as follows:

 

PARCEL FIRST:

     All of that certain parcel of land (being portion of the land(s) described in and covered by Royal Patent No. 54, Land Commission Award No, 644 to William Smith Dany) situate, lying and being on the Northerly side of Alakea Street, between King and Hotel Streets, Honolulu, City and County of Honolulu, State of Hawaii, being PARCEL "A", and thus bounded and described:

     Beginning at spike on the South corner of this parcel of land and the West corner of Land Court Application 1600, the coordinates of said point of beginning referred to Government Survey Triangulation Station "PUNCHBOWL" being 1,290.60 feet South and 3,759.03 feet West, thence running by azimuths measured clockwise from true South:

1.   142 °      38'          40"       84.36   feet along Parcel B;

2.   232 °      05'                       39.40   feet along the remainder of L.C. Aw. 644, R.P. 54 to William Smith Dany;

3.   321 °      15'                       81.90   feet along Land Court Application 341;

4.     48 °      40'                       41.48   feet along Land Court Application 1600 to the point of beginning and containing an area of 3,358 square feet, more or less.

PARCEL SECOND:

     All of that certain parcel of land (being portions of the land(s) described in and covered by Royal Patent No. 3614, Land Commission Award No. 144, Apana 1 to Kapalaouanui (Napaloanui), Royal Patent No. 54, Land Commission Award No. 644 to William Smith Dany and Royal Patent 4547, Land Commission Award No. 820 to Heirs of George Beckley) situate, lying and being on the Northerly side of Alakea Street, between King and Hotel Streets, Honolulu, City and County of Honolulu, State of Hawaii, being PARCEL "B", and thus bounded and described:

     Beginning at an "--->" cut in concrete at the East corner of this parcel of land, the South corner of Land Court Application 1600 and being also on the Northerly side of Alakea Street, the coordinates of said point of beginning referred to Government Survey Triangulation Station "PUNCHBOWL" being 1,340.62 feet South and 3,714.20 feet West, thence running by azimuths measured clockwise from true South:

1.     51 °      03'                     109.45   feet along the Northerly side of Alakea Street;

 

 

2.   140 °      07'                     155.10   feet along Land Court Application 337-A;

3.   233 °      01'                       39.90   feet along the remainder of Ap. 1 to L.C. Aw. 144, R.P. 3514 to Kapalaoanui (Napaloanui);

4.   234 °      00'                       30.50   feet along Ap. 1 of L.C. Aw. 1975, R.P. 23 to R. W. Wood;

5.   232 °      05'                       40.60   feet along same, along remainder of L.C. Aw. 644, R.P. 54 to William Smith Dany;

6.   322 °      38'       40"           84.36   feet along Parcel A to a spike;

7.   318 °      08'                        67.17   feet along Land Court Application 1600 to the point of beginning and containing an area of 16,637 square feet, more or less.

PARCEL THIRD:

     All of that certain parcel of land situate on the southwest side of Hotel Street, Honolulu, City and County of Honolulu, State of Hawaii, containing an area of 6,197 square feet, as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 341 of Charles M. Cooke, Limited;

PARCEL FOURTH:

     All of that certain parcel of land situate at the west corner of Hotel and Alakea Streets, Honolulu, City and County of Honolulu, State of Hawaii, containing an area of 11,207 square feet, more or less, as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1600 of  Alexander Young Estate, Limited;

PARCEL FIFTH:

     All of those certain parcels of land situate at King and Alakea Streets, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

     LOT:   1-A, area 6,046.0 square feet, as shown on Map 3, and

                2,    area  8,699.0 square feet, as shown on Map 2, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 337 of Morris Rosenbledt, Trustee, and Land Court Application No. 337-A of the Trustees under the Will and of the Estate of Bathsheba Maria Allen, deceased.

PARCEL SIXTH:

     All of that certain parcel of land situate at King and Alakea Streets, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

     Lot 1-A, area 8,433.0 square feet, as shown on Map 2, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1099 of the Trustees under the Will and of the Estate of James Campbell, deceased.

  

  

 

PARCEL SEVENTH:

     All of that certain parcel of land situate on the Northeast side of King Street between Alakea and Bishop Streets, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

     Lot A-1, area 18,070.0 square feet, as shown on Map 2, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 336 (amended) of Mary Ann Lemon and others

PARCEL EIGHTH:

     All of that certain parcel of land situate on the Northeast side of King Street between Alakea and Bishop Streets, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

     Lot B, area 283.0 square feet, as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 336 (amended) of Mary Ann Lemon and others

PARCEL NINTH:

     All of that certain parcel of land (being portions of the land(s) described in and covered by Royal Patent Number 3614, Land Commission Award Number 144 to Napalaoanui, Royal Patent Number 54, Land Commission Award Number 644 to William Smith Dany, Royal Patent Number 66, Land Commission Award Number 1975, Royal Patent Number 299, Land Commission Award Number 113 to A. Paki, Apana 2 to R.W. Wood, Royal Patent Number 23, Land Commission Award Number 1975, Apana 1 to R.W. Wood, Royal Patent Number 36, Land Commission Award Number 189 to Harriet S. Davis and Royal Patent Grant Number 533 to Edward Brown and all of Royal Patent Number 1769, Land Commission Award Number 629 to Stephen Reynolds) situate, lying and being on the Southeasterly side of Bishop Street, between King and Hotel Streets, Honolulu, City and County of Honolulu, State of Hawaii, and thus bounded and described:

     Beginning at the East corner of this parcel of land, being also the North corner of Land Court Application 341 and on the Southwest side of Hotel Street, the coordinates of said point of beginning referred to City and County Survey Street Monument the intersection of Alakea Street and Hotel Street being 101.92 feet North and 150.97 feet West and thence measured clockwise from true South:

1.       46 °      50'                       67.70   feet along Ld. Ct. App. 341;

2.     321 °      15'                         8.25   feet along Ld. Ct. App. 341;

3.       52 °      05'                       80.00   feet along R.P. 54, L.C. Aw. 644 to W.S. Dany (Wm. D. Smith);

4.       54 °      00'                       30.50   feet along R.P. 54, L.C. Aw. 644 to W.S. Dany (Wm. D. Smith), along R.P. 3614, L.C. Aw. 144 to Napalaoanui;

5.       53 °      01'                       39.90   feet along the remainder of R.P. 3614, L.C. Aw. 144 to Napalaoanui;

6.     140 °      07'                       10.95   feet along Lot 1-A of Ld. Ct. App. 337-A;

7.       52 °      08'       30"          34.76   feet along Lot 1-A of Ld. Ct. App. 337-A;

8.       47 °      21'                       50.74   feet along Lot 2 of Ld. Ct. App. 337-A;

9.       48 °      20'                       32.85   feet along Lot A of Ld. Ct. App. 336;

10.     50 °      00'                       67.25   feet along Lot A of Ld. Ct. App. 336;

11.     50 °      15'                       21.54   feet along Lot A of Ld. Ct. App. 336;

12.     50 °      50'                       15.50   feet along Lot A of Ld. Ct. App. 336;

13.     51 °      16'                       50.04   feet along Lot A of Ld. Ct. App. 336;

14.   142 °      55'                     112.75   feet along the Northeast side of King Street;

15.   232 °      50'                     459.50   feet along the Southeast side of Bishop Street to a copper bolt;

16.   304 °      48'                       98.83   feet along the Southwest side of Hotel Street to the point of beginning and containing an area of 50,645 square feet, more or less.

     EXCEPTING AND RESERVING therefrom Lot 1-B, area 50.0 square feet, more or less, as shown on Land Court Application No. 337 and 337-A.

     FURTHER EXCEPTING AND RESERVING therefrom the premises hereinafter described, as conveyed to the City and County of Honolulu by Deed dated August 29, 1989, recorded in the Bureau of Conveyances of the State of Hawaii in Book 23713, Page 657, said premises being more particularly described as follows:

     All of that certain parcel of land (being portions of the land(s) described in and covered by Royal Patent Number 1769, Land Commission Award Number 629 to Stephen Reynolds, and Royal Patent Number 299, Land Commission Award Number 113 to A. Paki) situate, lying and being at Honolulu, City and County of Honolulu, State of Hawaii, being LOT B, and thus bounded and described as per survey of Richard K. Kawasaki, Registered Professional Land Surveyor, dated August 25, 1989, to-wit:

     Beginning at the Northerly corner of this piece of land and on the Southeasterly side of Bishop Street, the coordinates of said point of beginning referred to Government Survey Triangulation Station "PUNCHBOWL", being 1,317.29 feet South and 4,169.70 feet West, and thence running by azimuths measured clockwise from true South:

1.   Along the East side of Bishop Street and King Street intersection, along the remainder of L.C. Aw. 113 to A. Paki, on a curve to the left with a radius of 20.00 feet, the chord azimuth and distance being:

          7 °      51'       30"            28.27   feet;

2.   322 °      53'                         92.21   feet along the Northeasterly side of the new King Street boundary, along the remainders of L.C. Aw. 113 to A. Paki, and L.C. Aw. 629 to Stephen Reynolds;

3.     51 °      16'                         20.45   feet along Lot A (Map 1) of Land Court Application No. 336;

4.   142 °      55'                       112.75   feet along the Northeasterly side of the present King Street boundary;

5.   232 °      50'                         40.35   feet along the Southeasterly side of the present Bishop Street boundary to the point of beginning and containing an area of 2,380 square feet, more or less.

PARCEL TENTH:

     All of that certain parcel of land situate at King and Alakea Streets, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:

     Lot 1-B, area 50.0 square feet, as shown on Map 3, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 337 of Morris Rosenbledt, Trustee, and Land Court Application No. 337-A of the Trustees under the Will and of the Estate of Bathsheba Maria Allen, deceased.

AS TO PARCELS FIRST THRU TENTH, INCLUSIVE:

     Being all of the land conveyed by the following:

     SPECIAL WARRANTY DEED

     Grantor:                                        Bishop Square Associates, a Hawaii joint venture

     Grantee:                                       Douglas Emmett 2010, LLC, a Delaware limited liability company

     Dated:                                          June 29, 2010

     Recorded:                                    July 1, 2010

     Recorded:                                    Document No. 3975579, and Document No. 2010-092561

     Transfer Certificate of Title No. 987,284.

 

 

  

  

 

SCHEDULE 1.01(1)

 

ALLOCATED LOAN AMOUNTS

 

	  	  
	
PROPERTY

	
ALLOCATED LOAN AMOUNT

	
Projects

	  
	
Village on Canon

	
$33,583,208

	
Camden Medical Arts

	
$28,605,697

	
Saltair/San Vicente

	
$15,472,264

	
One Westwood

	
$45,577,211

	
9601 Wilshire

	
$112,143,929

	
Santa Monica Square

	
$25,487,256

	
Bishop Square

	
$139,130,435

	
Total

	
$400,000,000

 

  

  

  

SCHEDULE 1.01(2)

 

APPLICABLE LENDING OFFICES

 

1.           Eurohypo AG, New York Branch:

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

Eurohypo AG, New York Branch

 

1114 Avenue of the Americas

 

New York, New York  10036

 

	
2.  

	
Wells Fargo Bank, NA.:

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

Wells Fargo Bank, N.A.

 

11601 Wilshire Blvd., Suite 1700

 

Los Angeles, California  90025

 

	
3.  

	
The Governor and Company of the Bank of Ireland, Connecticut Branch

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

The Governor and Company of the Bank of Ireland,

 

Connecticut Branch

 

300 First Stamford Place

 

Stamford, Connecticut  06902

 

	
4.  

	
Landesbank Hessen-Thueringen Girozentrale

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

Landesbank Hessen-Thueringen Girozentrale

 

420 Fifth Avenue, 24th Floor

 

New York, New York  10018

 

	
5.  

	
PNC Bank, National Association

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

PNC Bank, National Association

 

249 Fifth Avenue

 

P1-POPP-19-2

 

Pittsburgh, Pennsylvania  15222

 

	
6.  

	
HSBC Realty Credit Corporation (USA)

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

 

HSBC Realty Credit Corporation (USA)

 

660 S. Figueroa Street, Suite 800

 

Los Angeles, California  90017

 

	
7.  

	
Massachusetts Mutual Life Insurance Company

 

(a)           Lending Office for Base Rate Loans and Eurodollar Loans:

Massachusetts Mutual Life Insurance Company

c/o Cornerstone Real Estate Advisers LLC

One Financial Plaza

Hartford, Connecticut  06103

 

 

  

  

 

SCHEDULE 1.01(3)

 

APPRAISED AMOUNTS

 

	  	  
	
PROPERTY

	
APPRAISED AMOUNT

	
Village on Canon

	
$56,000,000

	
Camden Medical Arts

	
$47,700,000

	
Saltair/San Vicente

	
$25,800,000

	
One Westwood

	
$76,000,000

	
9601 Wilshire

	
$187,000,000

	
Santa Monica Square

	
$42,500,000

	
Bishop Square

	
$232,000,000

 

 

  

  

 

SCHEDULE 1.01(4)

 

COMMITMENTS AND PROPORTIONATE SHARES

 

	
LENDER

	
PROPORTIONATE SHARE

	
TOTAL COMMITMENT

	  	  	  
	
EUROHYPO AG, NEW YORK BRANCH

	
25%

	
$100,000,000

	
WELLS FARGO BANK, N.A.

	
21.25%

	
$85,000,000

	
BANK OF IRELAND

	
12.5%

	
$50,000,000

	
LANDESBANK HESSEN-THUERINGEN GIROZENTRALE

	
12.5%

	
$50,000,000

	
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

	
10%

	
$40,000,000

	
PNC BANK, NATIONAL ASSOCIATION

	
8.75%

	
$35,000,000

	
HSBC REALTY CREDIT CORPORATION (USA)

	
10%

	
$40,000,000

	
Totals

	
100%

	
$400,000,000

 

  

  

 

SCHEDULE 1.01(5)

 

CERTAIN ELIGIBLE ASSIGNEES

 

	
1.

	
Landesbank Hessen-Thüringen Girozentrale

 

	
2.

	
Aareal Bank AG

 

	
3.

	
Massachusetts Mutual Life Insurance Company

 

	
4.

	
General Electric Capital Assurance Company

 

	
5.

	
General Electric Capital Markets Group Inc.

 

	
6.

	
Landesbank Baden-Württemberg

 

	
7.

	
Metropolitan Life Insurance Company

 

	
8.

	
MetLife Bank, N.A.

 

	
9.

	
PB Capital

 

	
10.

	
Bank of America

 

	
11.

	
Bank of Montreal

 

	
12.

	
Bayerische Landesbank

 

	
13.

	
KeyBank Commercial Real Estate

 

	
14.

	
New York Life Insurance Co.

 

	
15.

	
New York State Teachers Retirement System

 

	
16.

	
Principal Capital Management

 

	
17.

	
Prudential Capital Group

 

	
18.

	
Union Bank REIG

 

	
19.

	
Wells Fargo

 

	
20.

	
Wurttembergische Hypothekenbank Aktiengesellschaft

 

	
21.

	
PNC

 

	
22.

	
Barclays Capital Real Estate Inc.

 

	
23.

	
Teachers Insurance and Annuity Association

 

	
24.

	
PB (USA) Realty Corporation

 

	
25.

	
The Governor and Company of the Bank of Ireland

 

	
26.

	
Westdeutsche Immobilienbank AG

 

	
27.

	
DG Hyp Deutsche Genossenschafts-Hypothekenbank AG

 

	
28.

	
Münchener Hypothekenbank eG

 

	
29.

	
HSBC Bank USA

 

  

  

 

SCHEDULE 1.01(6)

 

LIST OF ENVIRONMENTAL REPORTS

 

All of the Phase I Environmental Site Assessment reports were performed by Partner Engineering and Science, Inc. (except with respect to Bishop Square, which was prepared by MHP, Inc.).

 

1.           Village on Canon                                                                dated June 23, 2010

 

2.           Camden Medical Arts                                                                dated June 23, 2010

 

3.           Saltair/San Vicente                                                                dated June 23, 2010

 

4.           One Westwood                                                                dated June 23, 2010

 

5.           9601 Wilshire                                                                dated June 23, 2010

 

6.           Santa Monica Square                                                                dated June 23, 2010

 

7.           Bishop Square                                                                dated May 18, 2010

 

  

  

 

SCHEDULE 1.01(7)

 

LIST OF PROPERTY CONDITION REPORTS

 

All Property Condition Assessment reports were prepared by Partner Engineering and Science, Inc. (except with respect to Bishop Square, which was prepared by MHP, Inc.).

 

1.           Village on Canon                                                                dated June 23, 2010

 

2.           Camden Medical Arts                                                                dated June 23, 2010

 

3.           Saltair/San Vicente                                                                dated June 23, 2010

 

4.           One Westwood                                                                dated June 23, 2010

 

5.           9601 Wilshire                                                                dated June 23, 2010

 

6.           Santa Monica Square                                                                dated June 23, 2010

 

7.           Bishop Square                                                                dated June 21, 2010

 

  

  

 

SCHEDULE 1.01(8)

 

LIST OF PROPERTY MANAGEMENT AGREEMENTS

	
1.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for 9601 Wilshire Blvd.

	
2.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for Santa Monica Square.

	
3.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for Camden Medical Arts.

	
4.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for Saltair/San Vicente.

	
5.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for One Westwood.

	
6.  

	
Property Management Agreement dated, September 30, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management, LLC, as Agent, for Village on Canon.

	
7.  

	
Property Management Agreement dated, June 29, 2010, by and between Douglas Emmett 2010, LLC, as Owner, and Douglas Emmett Management Hawaii, LLC, as Agent, for Bishop Square.

  

  

 

SCHEDULE 1.01(9)

 

TITLE COMPANIES

 

	
Company

	
Primary Liability

	
Secondary Liability

	
Total

	
Chicago Title Insurance Company

	
$20,000,000

	
$180,000,000

	
$200,000,000

	
Fidelity National Title Insurance Company

	
$0

	
$200,000,000

	
$200,000,000

	
TOTAL

	
$20,000,000

	
$380,000,000

	
$400,000,000.00

 

  

  

 

SCHEDULE 7.04

 

FINANCIAL CONDITION EVENTS

 

None.

 

  

  

 

SCHEDULE 7.05

 

PENDING LITIGATION

	
 

Served/Filed

 

	
 

Caption

	
 

Nature of Action

	
 

Building

	
 

Status

 

	  	
 

SMALL CLAIMS:

 

	  	  	  
	
Date Served:

10/8/2008

 

	
Abraham Forouzan vs. DMI

 

Small Claims:  08W01835

 

	
Plaintiff alleged he was owed $715 for security system removal and wall repair.

 

	
 

Executive Tower

 

	
Hearing held 11/26/2008; DEM paid $785 judgment.

 

	
Date Served:

Unknown; service accepted at property

	
Revekka Yevdayev

 

Small Claims:  09S00474

	
Plaintiff was a sub-tenant on month-to-month. She filed in Small Claims requesting $7,500.

 

	
 

Cornerstone Plaza

	
DEM paid $1,030.28 judgment.

 

	
Date Served:

7/62010

 

	
Catherine Peck vs. DEM

 

Small Claims:  10W01160

 

	
Plaintiff, a former residential tenant, alleges she is owed $3,142 for return of security deposit, times 2, plus damages, for late return of her security deposit.

 

	
Barrington Plaza

	
Hearing scheduled for 8/20/2010.

	  	  	  	  	  

  

  

 

	
 

Served/Filed

 

	
 

Caption

	
 

Nature of Action

	
 

Building

	
 

Status

 

	  	
 

SUPERIOR COURT:

 

	  	  	  
	
Date Served:

4/16/2009

	
Peter Schick, vs. Shores Barrington, LLC, et al.

 

LASC:   SC102632

 

	
Plaintiff, a former residential tenant, alleges discrimination.

	
 

The Shores

	
This was originally an unlawful detainer matter, in which DE prevailed. Plaintiff has filed retaliatory lawsuits alleging, among other things, discrimination.  DE prevailed at trial and Plaintiff has appealed.

 

	
Date Served:

2/23/2010

	
National Union Fire Insurance Company vs. Arden Realty, Inc., DEI, DEM, DEB, et al.

 

LASC:  LC088390

 

	
Slip-and-Fall matter – Plaintiff alleges that an employee of its insured, First Private Bank Trust, slipped from, or was dislodged from, the toilet seat in the handicapped stall in the restroom of her employer, incurring injury and suffering.

 

	
 

16000 Ventura Boulevard

 

	
Insurance carrier is handling defense.

 

	
 

DEM Has Not Been Served

 

	
Centimark Corporation vs. DEM

 

LASC:  SC106853

 

	
We do not have any information on this claim and have not been served.

	
 

Unknown

	  
	
Date Served:

6/8/2010

	
Ashley Helfrich vs. Shores Barrington, LLC, et al.

 

LASC:  BC439020

 

	
Plaintiff, a former residential tenant, alleges she suffered health issues due to mold.

	
 

555 Barrington

 

	
This was originally an unlawful detainer proceeding and Plaintiff vacated the premises 11/18/2009.  Insurance carrier is handling the defense.

 

  

  

 

	
 

Served/Filed

 

	
 

Caption

	
 

Nature of Action

	
 

Building

	
 

Status

 

	
DEM Has Not Been Served

 

	
Miroslava Martinez vs. DEM

 

LASC: SC108374

 

	
Incident report filed 6/10/2008.  Slip-and-fall – Plaintiff alleges she slipped on wet pavement near the parking entrance to the building.

 

	
 

8383 Wilshire

	
Awaiting service of process.  Notice of Incident on 6/16/2008 was sent to insurance carrier.

	
Date Served:

6/22/2010

 

	
Merilyn Hunt Collins vs. DEI, DEM, et al.

 

LASC:  LC090130

 

	
Plaintiff alleges she was injured when elevator doors closed on her while exiting the elevator.

 

	
 

Sherman Oaks Galleria

 

 

	
Insurance carrier handling defense.

 

	
Date Served:

11/19/2009

	
Kazon Brown vs. Elevator Dynamics, Inc. DEM; et al.

 

LASC:  SC103838

 

	
Plaintiff alleges he was injured when elevator failed to operate properly.

	
Beverly Hills Medical Center

	
Insurance carrier handling defense.

 

	
 

Date Served:

11/23/2009

	
 

Verna Ahlo vs. Douglas Emmett Management, Hawaii, et al.

 

Case No. 09-1-2690-11 DHM

First Circuit Court

State of Hawaii

 

	
 

Slip-and-Fall

 

	
 

Bishop Place

	
 

Insurance carrier handling defense.

 

 

	
 

Date Served:

5/17/2010

	
 

Giannetti Architecture & Interiors vs Douglas Emmett

 

Case No. SC106462

LA Superior Court – West District

 

	
 

Subrogation claim relating to a sprinkler leak

	
 

Brentwood Medical Plaza

	
 

Insurance carrier handling defense.

 

 

  

  

 

SCHEDULE 7.09

 

ENVIRONMENTAL MATTERS

 

1.           Matters listed on Schedule 8.11.

 

  

  

 

SCHEDULE 7.22

 

RENT ROLL

 

[See Attached]

 

  

  

 

SCHEDULE 8.11

 

LIST OF UNDERGROUND STORAGE TANKS

 

UNDERGROUND STORAGE TANKS

 

1) Village on Canon - none

 

2) Camden Medical Arts - none

 

3) Saltair San Vicente - none

 

4)  One Westwood - one 4,000 Water tank

 

5)  9601 Wilshire - none

 

 

6) Santa Monica Square - none

 

 

7) Bishop Square - none

 

ABOVE GROUND STORAGE TANKS

 

1) Village on Canon - one 35 gallon diesel fuel tank

 

2) Camden Medical Arts - one 100 gallon diesel fuel tank

 

3) Saltair San Vicente - none

 

4)  One Westwood - one 550 gallon diesel fuel tank

 

5)  9601 Wilshire - one 150 gallon diesel fuel tank

 

 

6) Santa Monica Square- one 150 gallon diesel fuel tank

 

 

7) Bishop Square - one 100 gallon and one 55 gallon diesel fuel tank

  

  

 

SCHEDULE 8.21

 

REQUIRED WORK

The Borrower shall commence, and thereafter implement and complete with commercially reasonable diligence the planning and subsequent implementation of the following work, in accordance with the applicable schedule set forth below, and in accordance with the recommendations of the Borrower’s structural and/or environmental engineers.  All such work shall be performed by licensed personnel in accordance with all Applicable Laws and shall be completed free and clear of mechanics’, materialmen’s and other Liens.  Upon completion of such work, the Borrower shall deliver to the Administrative Agent a true and correct copy of the signed final inspection on the building permit for such work from the applicable municipality (if applicable) as well as a certificate signed by the Borrower certifying that such work has been completed in compliance with the requirements of this Agreement.  Such work shall be performed in accordance with the provisions of Section 8.21 and any other applicable provisions of this Agreement.  The Borrower shall upon the request of the Administrative Agent provide reasonably detailed information concerning the status of the progress of such work.

	
Project

	
Description of Work

	
Required Date for Completion

	
Bishops Square

	
Install drip pans under the AST

	
Within 90 days of the Closing Date

	
Village on Canon

	
Repair fireproofing @ parking level P1

	
Within 90 days of the Closing Date

	
Saltair/San Vicente

	
Repair tripping hazards near generator

	
Within 90 days of the Closing Date

	
Santa Monica Square

	
Repair louver in west side alley

	
Within 1 year of the Closing Date

	
One Westwood

	
Address and repair water intrusion on the 6th, 7th, and 8th level sub grade garage area, repair damaged and corroded metal decking and any active leak at planter

	
Within 1 year of the Closing Date

 

 

  

  

 

SCHEDULE 9.04

 

EXISTING INDEBTEDNESS

 

1.  Non-delinquent Taxes and Other Charges in respect of the Projects.

 

2.  Security deposits and tenant improvement allowances under Approved Leases.

 

3.  Indebtedness arising under the terms of the Permitted Title Exceptions encumbering a Project.

 

4.  Borrower’s obligations arising under the ground lease of the One Westwood Project.

  

  

 

Schedule 9.12

 

OTHER EXISTING NON-CONFORMING USES

 

Non-conforming uses reflected in the Zoning and Site Requirements Summary reports.  All Zoning and Site Requirements Summaries were prepared by The Planning & Zoning Resource Corporation.

 

1.           Village on Canon                                                     dated July 26, 2010, updated August 13, 2010

 

2.           Camden Medical Arts                                                     dated July 26, 2010, updated September 10, 2010

 

3.           Saltair/San Vicente                                                     dated July 21, 2010

 

4.           One Westwood                                                     dated July 20, 2010

 

5.           9601 Wilshire                                                     dated July 26, 2010

 

6.           Santa Monica Square                                                     dated July 22, 2010

 

7.           Bishop Square                                                     dated July 23, 2010

 

  

  

 

EXHIBIT A

 

[Form of Assignment and Assumption]

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement identified below (as amended, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Loan Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the Loan Transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.           Assignor:                                      ______________________________

 

2.           Assignee:                                      ______________________________

[and is an Affiliate of [identify Lender]1]

 

	
  

	
3.

	
Borrower:

	
Douglas Emmett 2010, LLC, a Delaware limited liability company

 

	
  

	
4.

	
Administrative Agent:

	
Eurohypo AG, New York Branch, as the administrative agent under the Loan Agreement

 

	
  

	
5.

	
Loan Agreement:

	
The $400,000,000 Loan Agreement dated as of ______ __, 2010 among Douglas Emmett 2010, LLC, a Delaware limited liability company, Lenders parties thereto, and Eurohypo AG, New York Branch, as Administrative Agent

 

	
  

	
6.

	
Assigned Interest:

 

	
Aggregate Amount of Assignor’s Outstanding Loan

	
Amount of Loan Assigned

	
Proportionate Share Assigned2

	
$

	
$

	
%

 

Effective Date:   _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

 

[NAME OF ASSIGNOR]

 

By:______________________________

Name:

Title:

 

ASSIGNEE

 

[NAME OF ASSIGNEE]

 

By:______________________________

Name:

Title:

 

Applicable Lending Office

 

Address for Notices:

 

Telephone No.:                                (   )

Telecopier No.:                                (   )

  

	
1

	
Select as applicable.

  
2Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

  

  

 

 

[Consented to and]3 Accepted:

 

EUROHYPO AG, NEW YORK BRANCH,

 

as Administrative Agent

 

By___________________________

Name:

Title:

 

By___________________________

Name:

Title:

 

[Consented to:]4

 

Douglas Emmett 2010, LLC,

 

a Delaware limited liability company

 

By:           __________________

Name:           William Kamer

Title:           Chief Financial Officer

 

  

	
3

	
To be added only if the consent of the Administrative Agent is required by the terms of the Loan Agreement.

  

	
4

	
To be added only if the consent of the Borrower is required by the terms of the Loan Agreement.

  

  

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the Transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the Transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it satisfies the requirements, if any, specified in the Loan Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (v) it satisfies the requirements of an Eligible Assignee as defined in the Loan Agreement, and (vi) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.   Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.  General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

  

  

 

EXHIBIT B

 

[Limited Indemnity and Guarantee]

 

  

  

 

EXHIBIT C

 

[Form of Cash Trap Account Security Agreement]

 

  

  

 

EXHIBIT D-1

 

[Form of Deed of Trust]

 

  

  

 

EXHIBIT D-2

 

[Form of Mortgage (Hawaii)]

 

  

  

 

EXHIBIT E

 

[Form of Environmental Indemnity]

 

  

  

 

EXHIBIT F

 

[Form of General Assignment]

 

  

  

 

EXHIBIT G-1

 

[Form of Hedge Agreement Pledge (Required)]

 

  

  

 

EXHIBIT G-2

 

[Form of Hedge Agreement Pledge (Optional)]

 

  

  

 

EXHIBIT H

 

[Form of Note]

 

NOTE

 

September __, 2010

 

Los Angeles, California

 

FOR VALUE RECEIVED, Douglas Emmett 2010, LLC, a Delaware limited liability company (the “Company”), hereby promises to pay to the order of __________________ (the “Lender”), for account of its respective Applicable Lending Office provided for by the Loan Agreement referred to below, at the principal office of Eurohypo AG, New York Branch, at 1114 Avenue of the Americas, New York, New York 10036, the principal sum of _______________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Company under the Loan Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates and on the dates provided in the Loan Agreement.

 

This Note is one of the Notes referred to in the Loan Agreement dated as of September __, 2010 (as Modified and in effect from time to time, the “Loan Agreement”) among the Company, the lenders party thereto (including the Lender) and Eurohypo AG, New York Branch, as Administrative Agent, evidences a Loan made by the Lender thereunder and is secured by the Deeds of Trust.  Terms used but not defined in this Note have the respective meanings assigned to them in the Loan Agreement.

 

The Loan Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Loan upon the terms and conditions specified therein.  The Company may prepay this Note in whole or in part subject to and in accordance with the terms set forth in the Loan Agreement.

 

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection upon default, the Company agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting or attempting to collect this Note, including attorneys’ fees and disbursements.

 

All parties to this Note, whether principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor.

 

The sale, assignment, transfer or pledge of this Note by the Lender to any other Person is subject to the restrictions set forth in Section 14.07 of the Loan Agreement.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of California.

 

The liability of the Company and certain other parties for the Company’s obligations hereunder is subject to the limitation on liability provisions of Section 14.23(a) of the Loan Agreement.

 

Douglas Emmett 2010, LLC,

 

a Delaware limited liability company

 

By:           __________________

Name:           William Kamer

Title:           Chief Financial Officer

 

  

  

 

EXHIBIT I

 

[Form of Project-Level Account Security Agreement]

 

  

  

 

EXHIBIT J

 

[Form of Property Manager’s Consent]

 

  

  

 

EXHIBIT K

 

[Form of Subordination, Non-Disturbance and Attornment Agreement]

 

  

  

 

EXHIBIT L

 

[Form of Notice of Conversion or Continuation]

 

_________ __, 201_

 

Eurohypo AG, New York Branch, as Administrative Agent

for the Lenders party to the Loan Agreement

referred to below

1114 Avenue of the Americas

New York, NY 10036

Attn:

 

Ladies and Gentlemen:

 

Reference is made to that certain Loan Agreement dated as of September __, 2010 (as Modified and in effect from time to time, the “Loan Agreement”) by and among the undersigned, Eurohypo AG, New York Branch, as Administrative Agent, and the Lenders party thereto.  Terms used but not defined in this Interest Election Request have the respective meanings assigned to such terms in the Loan Agreement.

 

Pursuant to Section 4.05 of the Loan Agreement, the undersigned notifies you that it hereby elects to Continue or Convert Loans as follows:

 

	
  

	
1.

	
Effective Date of Election:

	
_________ __, 201_

 

	
  

	
2.

	
Amount, Type and Interest Period of Eurodollar Loans to be Continued as Eurodollar Loans:

 

	
  

	


	
Eurodollar Loans in the aggregate amount of $____________ to be Continued as Eurodollar Loans with an Interest Period of ___ months

 

	
  

	
3.

	
Amount, Type and Interest Period of Base Rate Loans to be Converted to Eurodollar Loans:

 

	
  

	


	
Base Rate Loans in the aggregate amount of $____________ to be Converted to Eurodollar Loans with an Interest Period of ___ months

 

	
  

	
4.

	
Amount and Type of Eurodollar Loans to be Converted to Base Rate Loans:

 

	
  

	


	
Eurodollar Loans in the aggregate amount of $____________ to be Converted to Base Rate Loans

  

  

 

 

You are hereby irrevocably instructed to continue and/or convert such Loans in accordance with the foregoing instructions.

 

The undersigned hereby certifies that no Default exists.

 

Douglas Emmett 2010, LLC,

 

a Delaware limited liability company

 

By:           __________________

Name:           William Kamer

Title:           Chief Financial Officer

 

  

  

 

EXHIBIT M

 

Survey Requirements

Eurohypo must obtain an acceptable as-built survey (the “Survey”) meeting the requirements set forth below accompanied by a certificate in the form prescribed by Eurohypo from time to time.

 

A.      As-Built Survey. The Survey shall satisfy the following requirements:

 

	
  

	
1.

	
The Survey for the property shall be prepared by a land surveyor licensed to practice surveying in the jurisdiction where the property is located and done pursuant to the 2005 ALTA/ACSM Minimum Standard Detail Requirements for Land Title Surveys (the “ACSM Standards”) including items 2, 3, 4, 6, 7(a), 7(b)(1)(c), 8, 9, 10, 11(a) (as to utilities, surface matters only), 13 and 16 of Table A thereof.  In certain cases, other Table A items may be required.

 

	
  

	
2.

	
The Survey shall be dated no more than thirty (30) days prior to closing, must be certified to Eurohypo AG, New York Branch, as the Administrative Agent for the Lenders party to the Loan Agreement with the Borrower (the “Administrative Agent”) and to the Lenders, and to their respective successors and/or assigns, must contain the certification set forth in the ACSM Standards, and must be signed and sealed by the surveyor.  A copy of the certification contained in the ACSM Standards is set forth below.

 

	
  

	
3.

	
The Survey shall also be certified to the title insurance company insuring title in the transaction, shall be satisfactory to the title insurance company, shall refer to the title insurance commitment by number and effective date, and shall list every recorded exception appearing in the title insurance commitment, with a note stating whether the exception affects the property, and if so whether the exception is plottable.  If the exception is plottable, it must be plotted on the Survey.  Any appurtenant easement that is plottable must also be plotted on the Survey.

 

	
  

	
4.

	
Where the loan is a construction loan, the proposed locations of all improvements shown on the site plan shall be plotted on the Survey, and identified as proposed improvements; and the Survey shall indicate the locations of all necessary utility lines and the distances from the property to the proposed connections to distribution lines.

 

	
  

	
5.

	
The Survey shall contain a note concerning the flood zone designation of the property in substantially the following form:  “Said described property is located within an area having a Zone Designation _______________ by the Secretary of Housing and Urban Development, on Flood Insurance Rate Map No. ____________, with a date of identification of __________, for Community Number __________, in ___________ County, State of ___________, which is the current Flood Insurance Rate Map for the community in which said property is situated.”

 

	
  

	
6.

	
All set back, side yard and rear yard lines shown on the recorded plat or set forth in the applicable zoning ordinance shall be drawn on the Survey, and identified by recording number or zoning ordinance, as the case may be.

 

	
  

	
7.

	
The number of regular and handicap parking spaces located on the property shall be stated on the Survey, and all parking spaces shall be drawn on the Survey to the extent possible.

	
  

	
B.

	
SURVEY CERTIFICATION REQUIREMENTS.  The Survey shall be prepared by a land surveyor licensed to practice surveying in the jurisdiction where the Mortgaged Property is located, shall be dated no more than thirty (30) days prior to the Closing Date and shall contain the following certification:

 

To Eurohypo AG, New York Branch, as the Administrative Agent for the Lenders party to the Loan Agreement with ___________ (the Borrower) (the “Administrative Agent”) and to such Lenders, and to their respective successors and/or assigns, (name of title insurance company), (name of others as instructed by client):

 

This is to certify that this map or plat and the survey on which it is based were made in accordance with “Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,” jointly established and adopted by ALTA and NSPS in 2005, and includes items 2, 3, 4, 6, 7(a), 7(b)(1)(c), 8, 9, 10, 11(a) (as to utilities, surface matters only), 13 and 16 of Table A thereof.  Pursuant to the Accuracy Standards as adopted by ALTA and NSPS and in effect on the date of this certification, undersigned further certifies that in my professional opinion, as a land surveyor registered in the State of _____________, (a) the Relative Positional Accuracy of this survey does not exceed that which is specified therein; (b) the information shown on the Survey is correct as of the last revision date; (c) the property description included in the Survey (the “Land”) is identical to the property description attached to the Title Company’s Commitment dated ___________________ (Order No. _______________) (the “Title Commitment”) and the Survey is a correct representation of the property; (d) the Survey correctly shows the size and location of all buildings, structures, and visible improvements, if any; (e) all visible indications of and recorded rights of way, easements, set-backs and other significant matters of a similar nature of which the Surveyor has been advised or is aware, including, without limitation, those matters shown on the Title Commitment, whether burdening or benefiting the Land, have been correctly plotted and identified on the Survey, and there are no visible indications of or recorded rights of way, easements, set-backs, discrepancies, conflicts, encroachments on or off the Land, or overlapping of visible improvements except as shown on the Survey; (f) all evidence showing use of the Land by occupants other than the Owner or lessees specifically identified in the Title Commitment is noted on the Survey; (g) all streets or roads adjoining the Land are shown, and the Land has access to and from [name of road(s)], which is(are) a paved, public roadway(s), currently in use as such and maintained by [name of maintaining authority], as shown on the Survey; (h) if the Land is composed of several parcels, all interior lines, calls and distances are correctly set forth on the Survey and there are no gaps or unclosed interior lines; and (i) all visible and recorded evidence of easements or rights of way benefiting the Land or across adjoining land are indicated on the Survey.

 

Date: _______________

 

	
  

	
(signed)_______________________(seal)

 

	
  

	
Registration No.

 

Date:_______________

 

	
  

	
(signed)_______________________(seal)

 

	
  

	
Registration No.

 

  

  

 

EXHIBIT N

 

[FORM OF LEASE INFORMATION SUMMARY]

 

LEASE INFORMATION TO BE FURNISHED AND

 

CERTIFIED TO BY THE BORROWER

Note:  If any item listed below is not referred to in the Lease, please indicate by using the symbol “NR”; items which are not under any circumstances applicable should be designated by the symbol “NA”.  If the Lease is the Borrower’s standard form, this abstract should so indicate, and only the items proper to the Lease under consideration and any deviations from the standard form need be referred to.

 

Borrower:

 

Premises:                      ___________________

___________________

 

Standard Form Lease:  Yes ____  No ____

 

Type of Lease:                                Office ____  Retail ____

 

Date:

 

Article, Page

 

or Section:

 

________

 

Tenant:

 

________                      1.           Trade Name:

 

________                      2.           Date of Lease:

 

________                      3.           Premises:

 

________                                a.           Location:

 

________                                b.           Area (sq. ft.):

 

4.           Term:

 

________                                a.           Basic:

 

________                                b.           Renewals:

 

5.           Rent:

 

________                                a.           Minimum Annual Rent:

 

________                                           1.           Original Term:

 

________                                           2.           Renewal Term:

 

________                                b.           Percentage Rent:  (Gross Receipts X Rate-Base)

 

________                                           1.           Rate:

 

________                                           2.           Base:

 

________                                c.           Tax escalation:

 

________                                d.           Applicable Operating Expense Escalation:

 

________                      6.           Allowances by Landlord:

 

________                                a.           Construction Work Letter:

 

________                                b.           Other:

 

________                      7.           Permitted Use:

 

________                      8.           Conditions Precedent to Lease Commencement:

 

________                                a.           Key Tenant Requirements:

 

________                                b.           Completion of Tenant Improvements:

 

________                                c.           Other:

 

9.           Construction:

 

________                                a.           Scope of Landlord’s Work:

 

________                                b.           Period for Completion of Landlord’s Work:

 

________                                c.           Scope of Tenant’s Work:

 

________                                d.           Period for Completion of Tenant’s Work:

 

10.           Rent Abatement or Concessions:

 

11.           Rent Setoff:

 

12.           Tenant’s Cancellation Rights:

 

________                                a.           Condemnation:

 

________                                           _________% of leased premises:

 

________                                           _________% of common area:

 

________                                           Other:

 

________                                b.           Casualty, whether or not restored.

 

	
  

	
________

	
c.

	
Destruction ______% of leased premises during last ________ years of _______ term.

 

________                                d.           Other:

 

________                      13.           Subordination:

 

________                                a.           Subordination provided:

 

________                                b.           Conditioned on Non-Disturbance:

 

________                                c.           Attornment:

 

________                      14.           Options:

 

________                                a.           Additional Space:

 

________                                b.           Purchase:

 

________                      15.           Exclusivity Rights or Other Restrictions on Landlord:

  

  

 

 

CERTIFICATE

The undersigned (“Borrower”) hereby certifies that the foregoing information is true and correct, that tenant’s use of the leased premises in accordance with its lease will not violate use restrictions contained in any other leases affecting the Premises and that the use by tenants of their premises in accordance with their respective leases does not violate use restrictions contained in this lease.  This Certificate is made with the intent that it be relied upon by Eurohypo AG, New York Branch, as administrative agent, and the Lenders that are party to that certain Loan Agreement, dated September ___, 2010 among Eurohypo AG, New York Branch, as Administrative Agent, certain Lenders thereto and the Borrower.

 

Douglas Emmett 2010, LLC,

 

a Delaware limited liability company

 

By:           __________________

Name:           William Kamer

Title:           Chief Financial Officer

 

  

  

 

EXHIBIT O

 

[Form of Controlled Account Agreement]ex101.htm

 

MINING OPTION AGREEMENT

 

(Santa Rita Property)

 

 

THIS MINING OPTION AGREEMENT made as of October 30th, 2010 (the “Agreement”);

 

BY AND BETWEEN:

 

Hans Peter Flueck, an individual having an address of 18912-121st Ave., Edmonton, Alberta, (facsimile: 780,454-0934);

 

 (the “ Optionor”)

 

OF THE FIRST PART

 

	
AND:

	 

 

COASTAL PACIFIC MINING CORP., a Canadian corporation, of 927 Drury Ave N.E., Calgary, Alberta  T2E 0M3(facsimile : 403-313-5449)

 

 (the “Optionee”)

 

OF THE SECOND PART

 

BACKGROUND

 

	
A.  

	
The Optionor is the owner of record and the beneficial owner of the claims comprising the Property.

 

	
B.  

	
The Optionee wishes to option the Property from the Optionor.

 

In consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each of the parties) the parties hereto covenant and agree each with the other as follows:

 

1. Interpretation

 

1.1. Definitions.  In this Agreement:

 

	
(a)  

	
“Acts” means all legislation, as amended from time to time, of the jurisdiction in which the Property is located, applicable to the Property, including title to, and Mining Operations on, the Property.

 

	
(b)  

	
“Affiliate” has the meaning set out in the Canada Business Corporations Act, as amended from time to time.

 

	
(c)  

	
“Agreement” means this agreement, including the recitals, and schedules, all as amended, supplemented or restated from time to time.

 

	
(d)  

	
“AMI” means the area outlined in the Operating Agreement and shall constitute an Area of Mutual Interest, between the Partnership and the Operator which shall remain in force and effect for the term of the Operating Agreement.

 

	
(e)  

	
“Approval Date” means the date which is the first Business Day after all the applicable Regulatory Authorities have issued their Regulatory Approvals.

 

	
(f)  

	
 “Business Day” means a day other than a Saturday, Sunday or statutory holiday in Alberta.

  

1

  

 

	
(g)  

	
“Effective Date” means November 1, 2010.

 

	
(h)  

	
“Encumbrances” means security interests, liens, royalties, charges, mortgages, pledges and encumbrances of any nature or kind whatsoever, whether written or oral, direct or indirect.

 

	
(i)  

	
 “Expenditures” means all costs, expenses and charges, direct or indirect, of or incidental to the Mining Operations incurred by the Optionee, which costs, expenses and charges shall be determined in accordance with the Optionee’s accounting practices applicable from time to time to the extent that those practices are consistent with Canadian generally accepted accounting principles.

 

	
(j)  

	
“Government” means any federal, provincial, regional, municipal or other government, governmental department, regulatory authority, commission, board, bureau, agency or instrumentality that have lawful authority to regulate or administer or govern a business, property or affairs of any person, and for the purposes of this Agreement also includes any corporation or other entity owned or controlled by any of the foregoing and any stock exchange in which shares of a party are listed for trading.

 

	
(k)  

	
“MDU” means map designated unit.

 

	
(l)  

	
“Minerals” means the end products produced or derived from operating the Property as a mine.

 

	
(m)  

	
“Mining Operations” means every kind of work done on or in respect of the Property or the Minerals derived from the Property during the Option Period by or under the direction of the Optionee including, without limiting the generality of the foregoing, the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, assaying, prospecting, designing, examining, equipping, improving, surveying, shaft-sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, surveying and bringing any mining claims to lease or patent, reclaiming and all other work usually considered to be prospecting, exploration, development, mining and reclamation work; in paying wages and salaries of workers engaged in the work and in supplying food, lodging, transportation and other reasonable needs of the workers; in paying assessments or premiums for workers' compensation insurance, contributions for unemployment insurance or other pay allowances or benefits customarily paid in the district to those workers; in paying rentals, licence renewal fees, taxes and other governmental charges required to keep the Property in good standing; in purchasing or renting plant, buildings, machinery, tools, appliances, equipment or supplies and in installing, erecting, detaching and removing them; mining, milling, concentrating, rehabilitation, reclamation, and environmental protections and in the management of any work which may be done on the Property or in any other respect necessary for the due carrying out of the prospecting, exploration and development work.

 

	
(n)  

	
 “Operator” has the meaning as set out in Schedule “B” appended hereto.

 

	
(o)  

	
“Option” has the meaning set out in Section 3.1 of this Agreement.

 

	
(p)  

	
“Option Period” means the period commencing on the Effective Date and ending on the earlier of November 1, 2012, and the date on which the Option is terminated or lapses in accordance with this Agreement.

 

	
(q)  

	
“Payment Shares” means a total of 5,000,000 common shares in the capital stock of the Optionee, payable pursuant to the terms of this Agreement.

 

	
(r)  

	
“Permitted Encumbrance” means

 

	
(i)  

	
easements, rights of way, servitudes or other similar rights in land including, without limiting the generality of the foregoing, rights of way and servitudes for railways, sewers,

  

2

  

 

drains, gas and oil pipelines, gas and water mains, electrical light, power, telephone, telegraph or cable television conduits, poles, wires and cables;

 

	
(ii)  

	
the right reserved to or vested in any Government or Regulatory Authority or other public authority by the terms of any or by any statutory provision, to terminate, revoke or forfeit any of the lease or mining claims or to require annual or other periodic payments as a condition of the continuance thereof;

 

	
(iii)  

	
rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate in any manner, and all applicable laws, rules and orders of any governmental authority;

 

the reservations, limitations, provisos and conditions in any original grants from the Crown or interests therein and statutory exceptions to title.

 

	
(iv)  

	
“Property” means all of the subject claims in the District of Acobambilla, in the Republic of Peru more particularly described in Scheduled “A” attached hereto, and, when the context so implies, the lands and premises subject thereto, and includes any replacement or successor permit or claims, and all mining leases and other mining interests derived from any such permit covering the same area of land.

 

	
(s)  

	
 “Regulatory Authorities” means any and all securities regulatory authorities having jurisdiction over this Agreement and the transactions contemplated herein.

 

1.2. Headings.  The division of this Agreement into Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and includes any variation or amendment hereto from time to time and any agreement supplemental hereto.  Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

 

1.3. Legislation.  Any reference to a provision in any legislation is a reference to that provision as now enacted, and as amended, re-enacted or replaced from time to time, and in the event of such amendment, re-enactment or replacement of any reference to that provision shall be read as referring to such amended, re-enacted or replaced provision.

 

1.4. Extended Meanings.  In this Agreement words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa and words importing persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and corporations. All references to mineral claims shall include map designated units.

 

1.5. Currency.  All references to currency herein are to lawful money of Canada, unless otherwise specified.

 

1.6. Non-Merger. The provisions contained in this Agreement shall survive the Effective Date and the completion of the transactions contemplated by this Agreement and shall not merge in any conveyance, transfer, assignment, novation agreement or other document or instrument delivered pursuant hereto or in connection herewith.

 

1.7. Construction Clause. This Agreement has been negotiated and approved by counsel on behalf of all parties hereto and, notwithstanding any rule or maxim of construction to the contrary, any ambiguity or uncertainty will not be construed against any party hereto by reason of the authorship of any of the provisions hereof.

 

1.8. No partnership. Nothing contained in this Agreement shall be construed as creating a partnership of any kind or as imposing on any party any partnership duty, obligation or liability to any other party.

  

3

  

2. Representations, Warranties and Covenants

 

2.1. Representations, Warranties and Covenants of the Optionor.  The Optionor represents, warrants and covenants to the Optionee that:

 

	
(a)  

	
he is domiciled at the address set forth beside his name on the first page of this Agreement;

 

	
(b)  

	
the Optionor has good and sufficient authority to enter into and deliver this Agreement and to transfer its legal and beneficial interest in the Property as required under this Agreement to the Optionee;

 

	
(c)  

	
there is no contract, option or any other right of another form binding upon the Optionor to option, sell, transfer, assign, pledge, charge, mortgage, explore or in any other way option, dispose of or encumber all or part of the Property or any portion thereof or interest therein other than pursuant to the provisions of this Agreement;

 

	
(d)  

	
the execution, delivery and performance of this Agreement by the Optionor, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any agreements in regard to the property entered into by the Optionor; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionor’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

 

	
(e)  

	
the Optionor is the registered and beneficial owner of 100% of the right, title and working interest in and to the Property, which, to the best of the Optionor’s knowledge without having made any inquiries, is free and clear of all Encumbrances except for those Permitted Encumbrances;

 

	
(f)  

	
the Property is properly and accurately described in Schedule “A” hereto and is in good standing under the laws of the jurisdiction in which the Property is located up to and including at least the expiry dates set forth in Schedule “A”;

 

	
(g)  

	
the Optionor is not a non-resident for the purposes of Section 116 of the Income Tax Act [R.S.C. 1985], c.1 (5th supp.), as amended from time to time. ;

 

	
(h)  

	
this Agreement has been duly authorized, executed and delivered by the Optionor and constitutes a valid and binding obligation of the Optionor enforceable against the Optionor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; and

 

	
(i)  

	
the Optionor shall, during the Option Period:

 

	
(i)  

	
promptly provide the Optionee with any and all notices and correspondence from  Government or Regulatory Authorities in respect of the Property;

 

	
(ii)  

	
co-operate with the Optionee in obtaining any permits or licences required by authorities in the  in which the Property is situated;

 

	
(iii)  

	
not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionor hereunder; and

 

2.2. Representations, Warranties and Covenants of the Optionee.  The Optionee represents, warrants and covenants to the Optionor that:

 

	
(a)  

	
the Optionee is a corporation duly incorporated, organized and subsisting under the laws of Alberta with the corporate power to own its assets and to carry on its business in the jurisdiction in which the Property is located;

 

  

4

  

 

	
(b)  

	
the Optionee has all necessary power and authority to own or lease its assets and carry on its business as presently carried on, to carry out its obligations herein and to enter into this Agreement and any agreement or instrument referred to in or contemplated by this Agreement and to do all such acts and things as are required to be done, observed or performed by it, in accordance with the terms of this Agreement and any agreement or instrument referred to in or contemplated by this Agreement;

 

	
(c)  

	
the execution, delivery and performance of this Agreement by the Optionee, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any of the articles, by-laws or other constating documents of the Optionee; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionee’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

 

	
(d)  

	
this Agreement has been duly authorized, executed and delivered by the Optionee and constitutes a valid and binding obligation of the Optionee enforceable against the Optionee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought;

 

	
(e)  

	
the Optionee shall promptly apply for and use it reasonable best efforts to obtain all approvals, orders or acceptances required in connection with this Agreement, including, but not limited to those required by the Exchange, any Government or Regulatory Authorities, the shareholders of the Optionee and the Agency; and the Optionee shall deliver to the Optionor copies of all such approvals, orders and acceptances, as the case may be, forthwith upon receipt of them by the Optionee; and

 

	
(f)  

	
the Optionee shall, during the Option Period:

 

	
(i)  

	
promptly provide the Optionor with any and all notices and correspondence from Government or Regulatory Authorities in respect of the Property;

 

	
(ii)  

	
issue the Payment Shares in a timely manner in accordance with this Agreement;

 

	
(iii)  

	
co-operate with the Optionor in obtaining any permits or licences required by authorities in the regions which have authorization over the Property;

 

	
(iv)  

	
deliver to the Optionor, from time to time, copies of any and all geological reports and assay results that pertain to the Property, within thirty (30) days of receipt of the aforementioned data;

 

	
(v)  

	
not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionor hereunder; and

 

	
(vi)  

	
maintain its corporate existence.

 

2.3. Reliance and Survival.  The representations, warranties and acknowledgements set out in this Section 2 have been relied on by the parties in entering into this Agreement.  All representations and warranties made herein will survive the delivery of this Agreement to the parties and the completion of the transactions contemplated hereby and, notwithstanding such completion, will continue in full force and effect for the benefit of the parties to whom they are provided, as the case may be, indefinitely.

  

5

  

3. Grant of Option

 

3.1. Grant of Option. The Optionor grants to the Optionee an exclusive option (the “Option”) with respect to the Property, for the period commencing on the Effective Date and expiring on  November 1, 2012, subject to Sections 3.7 and 5 herein, to acquire an undivided fifty (50) percent interest in the Property. This right may be exercised in the manner referred to in Section 9.

 

3.2. Consideration. In consideration of the grant of the Option, the Optionee shall issue to the Optionor the cash payments and the Payment Shares as follows:

 

	
(i)  

	
$50,000 cash payment and a total of 1,000,000 Payment Shares upon execution of this Agreement;

 

	
(ii)  

	
$100,000 cash payment two months from the Effective Date of this Agreement;

 

	
(iii)  

	
$175,000 cash payment and a total of 2,000,000 Payment Shares twelve (12) months from the Effective Date of this Agreement;

 

	
(iv)  

	
$175,000.00 and a total of 2,000,000 Payment Shares twenty-four (24) months from the Effective Date of this Agreement.

 

 The Payment Shares shall be issued as fully paid and non-assessable, free and clear of all Encumbrances except for any resale restrictions under applicable securities laws.

 

3.3. Working Right. During the Option Period, the Optionee shall have the exclusive working right on the Property, and to permit any other person or persons as it may in its sole discretion decide to, enter on and conduct the Mining Operations on the Property as the Optionee in its sole discretion may decide. The Optionee shall have quiet and exclusive possession during the Option Period with full power and authority to the Optionee, its servants, agents, workers or contractors, to carry on Mining Operations in searching for minerals in such manner as the Optionee in its discretion may determine, including the right to erect, bring and install on the Property all buildings, plant, machinery, equipment, tools, appliances or supplies as the Optionee shall deem necessary and proper and the right to remove therefrom reasonable quantities of rocks, ores and minerals and to transport them for the purposes of sampling, metallurgical testing and assaying. The Optionee shall conduct all Mining Operations in a careful and miner-like manner and in compliance in all material respects with all Acts, regulations, by-laws, orders and judgments and all applicable directives, rules, consents, permits, orders, guidelines and policies of any Government or Regulatory Authority with jurisdiction over the Property.

 

3.4. Maintenance of the Option.  In order to maintain in force the Option granted to it, and to exercise the Option, the Optionee must:

 

	
(a)  

	
incur Expenditures in an aggregate amount of $3,000,000 as follows:

 

	
(i)  

	
subject to section 3.6 herein, at least $1,500,000  before November 1, 2011;

 

	
(ii)  

	
at least an additional $1,500,000 before November 1, 2012.

 

	
(b)  

	
during the Option Period, keep the Property in good standing by paying all taxes, assessments and other charges and by doing all other acts and things that may be necessary in that regard., which payments shall be made from the Expenditures as detailed in 3.4(a) above.

 

Subject to section 3.6 herein, if the incurred Expenditures are less than the required Expenditures as per Section 3.4, the Optionee must pay to the Optionor an amount equal to the difference between the required Expenditures and the Expenditures actually incurred by the Optionee (the “Shortfall Payment”)  by certified cheque by the respective dates specified in all of Section 3.4  in order to maintain the Option, in addition to the payment of an administration fee equal to five (5) percent of the Shortfall Payment.

 

3.5 Lapse or acceleration of Option. In addition to the provisions of termination set out in Section 5 herein, the Optionee may let the working right and Option lapse by failing to incur Expenditures or perform any of the obligations set out in Section 3.4, provided only that the Optionee’s obligations under Section 5.3 are satisfied.  Further, the Optionee may accelerate any or all of the Expenditures.

  

6

  

3.6 Earned Interest.  Upon the required cash and stock payments and the completion of the first year exploration program in the amount of $1,500,000, the Optionee shall earn an irrevocable twenty-five percent (25%) interest in and to the Property.

 

3.7 Agency. Subject to and in accordance with this Agreement and Schedules “B” and “C”, the Optionee hereby irrevocably appoints the Optionor or his agreed to assignee to conduct the Mining Operations contemplated by this Agreement as agent for the Optionee.  For greater certainty, the Optionee shall remain liable as principal under this Agreement, notwithstanding the appointment of the Optionor as its agent for the purpose of conducting the Mining Operations.

 

4. Optionee Conduct

 

4.1. Maintenance of Property. During the Option Period, the Optionee shall carry out sufficient assessment work to maintain the Property in good standing and pay all taxes, assessments and other charges lawfully levied or assessed against the Property, which expenditures shall be covered in the Expenditures defined in 3.4(a) above. The Optionor shall transmit promptly to the Optionee any notices pertaining to the taxes, assessments and other charges.

 

4.2. Abandonment. The Optionee may at any time, during the Option Period, abandon any one or more of the claims which comprise the Property. The Optionee shall give the Optionor notice in writing of any abandonment. If any of the claims comprising the Property are abandoned (including the termination of this Option Agreement without the Optionee having exercised the Option), the Optionee will retransfer such claims to the Optionor (if they are then in the name of the Optionee), which shall be in good standing for a period of at least ninety days from the notice of abandonment.

 

4.3. Assessments. The Optionee shall, during the Option Period, in consultation with the Optionor, file, in whole or in part, the assessment credits as may become available from Mining Operations conducted on the Property during the Option Period. If the Optionee and Optionor do not agree on the assessment credits to be filed, the Optionor's decision shall prevail.

 

4.4. Insurance.

 

	
(a)  

	
The Optionee shall provide, maintain and pay for the following insurance which costs shall be covered in the Expenditures defined in 3.4(a) above.  Said insurance shall be placed with an insurance company or companies and in a form as may be acceptable to the Optionor:

 

	
(i)  

	
comprehensive general liability insurance protecting the Optionee and Optionor and their respective employees, agents, contractors, invitees and licencees against damages arising from personal injury (including death) and from claims for property damage which may arise directly or indirectly out of the operations of the Optionee and Optionor under this Agreement, including coverage for liability arising out of products, whether manufactured or supplied by the Optionee and Optionor, completed operations, contingent employer's liability and contractual liability, and

 

	
(ii)  

	
automobile insurance on the Optionee's owned and non-owned vehicles, if any, protecting the Optionee and its employees, agents, contractors, invitees and licencees against damages arising from bodily injury (including death) and from claims for property damage arising out of the operations of the Optionee and Optionor under this Agreement.

 

	
(b)  

	
Each policy of insurance contemplated in this Section shall:

 

  

7

  

 

	
(i)  

	
be in an amount acceptable to the Optionor and in any event not less than $1,000,000 inclusive of any one occurrence;

 

	
(ii)  

	
and the policy of insurance referred to in  Section 4.4(a)(i) shall:

 

	
1.  

	
include a standard form of cross-liability clause;

 

	
2.  

	
contain a clause waiving the insurer's right of subrogation against the Optionor; and

 

	
3.  

	
indicate that the insurer will give the Optionor thirty days' prior written notice of cancellation or termination of the coverage.

 

	
(c)  

	
The Optionee shall provide the Optionor with such evidence of insurance as the Optionor may request.

 

4.5. Access. The Optionee shall, during the Option Period, submit to the Optionor periodic progress reports of Mining Operations completed on the Property, which reports shall be submitted not less than quarterly on an annual basis and shall provide the Optionor with access to all records, data and information relating to the Property which is in the possession of the Optionee. The Optionor may, at its own risk and expense and at reasonable times agreed to by the Optionee, enter on the Property and examine the Mining Operations; provided, that the Optionor will not, in the opinion of the Optionee, interfere with it.

 

4.6. Environmental Matters. During the Option Period, the Optionee shall:

 

	
(a)  

	
receive, handle, use, store, treat, ship and dispose of any and all environmental contaminants (as established from time to time by applicable legislation or regulation or by-law) in strict compliance with all applicable environmental, health or safety laws, regulations, order or approvals; and will remove prior to the lapse or termination of the Option, from and off the Property all environmental contaminants.

 

	
(b)  

	
not release into the environment, or deposit, discharge, place, or dispose of at, on or near the Property any hazardous or toxic materials, substances, pollutants, contaminants or wastes as a result of the mining operations conducted by it; and

 

	
(c)  

	
not use the Property, not permit any other person to use the Property as a landfill or waste disposal site.

 

4.7. Environmental assessment. Whenever requested by the Optionor, the Optionee shall provide the Optionor with access, during reasonable business hours and on reasonable prior notice, to the Property for the purpose of conducting an environmental assessment of the Property, provided that the assessment is conducted in a manner that will not unreasonably interfere with the Optionee’s operations. The environmental assessment shall be at the Optionor’s sole expense. If the environmental assessment conducted by the Optionor reveals any release of hazardous substances on or under the Property that, in the opinion of the Optionor, acting reasonably, occurred after the date hereof, then the Optionor may give written notice to the Optionee of remedial measures as the Optionor may, based on the results of the environmental assessment, consider necessary, which measures the Optionee shall, at its expense, promptly undertake. If the Optionee fails to undertake diligently the remedial measures specified by the Optionor within 60 days of the receipt of notice, the Optionor may immediately terminate the Option.

 

5. Termination

 

The lapse or termination of the Option pursuant to this Section shall not have the effect of forfeiting, terminating or waiving in any respect the Optionee’s obligation to issue to the Optionor the Payment Shares in full.

  

8

  

5.1. Termination. The Option and this Agreement shall automatically terminate and be of no force and effect if, during the Option Period:

 

	
(a)  

	
With the exception of a default under Section 5.1(b) herein, the Optionee is in default in any material respect of any term or condition of this Agreement and fails to cure such default within ten (10) Business Days of receiving notice from the Optionor specifying the particulars of such default;

 

	
(b)  

	
the Optionee fails to incur all of the Expenditures within the time periods set out herein;

 

	
(c)  

	
the Optionee fails to carry out the assessment work or pay the taxes, assessments and other charges described in Section 3.4 and fails to cure such default within 30 days of receiving notice from the Optionor specifying the particulars of such default;

 

	
(d)  

	
the Optionee fails to make the Exploration Program Advances as set out in this Agreement; or

 

	
(e)  

	
the Optionee fails to file the required assessment credits in respect of the Mining Operations in a timely manner, as prescribed herein and by the jurisdiction to which fees must be paid.

 

5.2. Any termination under this Section shall occur automatically, without any further action by the Optionor. The lapse of the Option pursuant to this Section shall not have the effect of forfeiting, terminating or waiving in any respect the Optionee’s obligation to issue to the Optionor the Payment Shares in full.Surrender of Rights.  Subject to Section 5.3, the Optionee may at any time during the Option Period give the Optionor written notice of its intentions to surrender all of its rights hereunder, whereupon the Option and this Agreement shall terminate and the working right herein shall lapse.

 

5.3. Obligations on Termination.  Notwithstanding any other provisions of this Agreement, in the event of lapse, termination or surrender of the Option and termination of this Agreement, the Optionee shall:

 

	
(a)  

	
ensure that any claims or map designated units comprising the Property are in good standing for a period of at least 90 days from the lapse, termination or surrender of the Option and/or this Agreement, as the case may be, and upon request of the Optionor, retransfer the Property to the Optionor (if it is then in the name of the Optionor) free and clear of all Encumbrances;

 

	
(b)  

	
ensure that the Property is in at least the same state concerning environmental and hazardous conditions as the Property was on the date of this Agreement and that it is free and clear of all liens, claims and encumbrances that may have been created by the Optionee;

 

	
(c)  

	
thereupon issue the balance of any Payment Shares to be issued thereafter, and pay any amounts payable thereafter, in each case pursuant to Section 3.2;

 

	
(d)  

	
deliver to the Optionor any and all reports, maps, assessment reports and maps, samples, assay results, drill cores, data and other information of any kind whatsoever pertaining to the Property or related to Mining Operations which have not been previously delivered to the Optionor;

 

	
(e)  

	
remove all materials supplies and equipment from the Property; provided however, that the Optionee may retain ore and, at the cost of the Optionee, dispose of any such materials, supplies or equipment not removed from the Property within 90 days of receipt of such notice by the Optionee; and

 

	
(f)  

	
not engage in any form of conduct, or make any statements or representations that disparage or may disparage or otherwise harm the Optionor’s reputation, good will or commercial interest.

 

5.4. Survival of provisions. The Optionee and Optionor shall remain liable to one another for all claims, matters, demands and causes of action arising prior to the termination of this Agreement that relate in any way to the provisions of this Agreement, and in particular, without limiting the generality of the foregoing, the provisions of Section 6 and section 3.2 of this Agreement shall survive any termination of this Agreement.

  

9

  

6. Indemnification

 

6.1. Indemnity.

 

	
(a)  

	
The Optionee shall and does hereby indemnify and save the Optionor harmless from and against all losses, liabilities, claims, demands, damages, expenses, suits, injury or death in any way referable to Mining Operations conducted by or on behalf of the Optionee after the date hereof; provided that the Optionor shall not be indemnified for any loss, liability, claim, demand, damage, expense, suit, injury or death resulting from the negligence or wilful misconduct of the Optionor or its employees, agents or contractors. For further clarity, the parties intend that the Optionee shall be responsible for all liabilities, known or unknown, contingent or otherwise, which were incurred or arose during the Option Period, relating to or arising out of:

 

	
(i)  

	
the conduct of activities in, on or under the Property;

 

	
(ii)  

	
the environmental protection, clean-up, remediation, and reclamation of the Property including, but not limited to, the obligations and liabilities arising out of or related to:

 

	
1.  

	
the disturbance or contamination of land, water (above or below surface) or the environment by exploration, mining, processing or waste disposal activities;

 

	
2.  

	
any failure to comply with all past, current or future governmental or regulatory authorizations, licenses, permits, and orders and all non-governmental prohibitions, covenants, contracts and indemnities;

 

	
3.  

	
any act or omission causing or resulting in the spill, discharge, leak, emission, ejection, escape, dumping or release of hazardous or toxic substances, materials, or wastes as defined in any federal, provincial, or local law or regulation in connection with or emanating from the Property; and

 

	
4.  

	
the long-term reclamation and remediation of the Property and the care and monitoring of the Property, and the posting and maintaining of bonds or other financial assurances required in connection therewith.

 

	
(b)  

	
Each party hereto shall indemnify and save harmless the other, as well as its officers, directors and shareholders, from and against any and all claims, losses, liabilities, damages, fees, fines, penalties, interests, deficiencies, costs and expenses, of any nature or kind whatsoever (collectively, the “Claims”), arising by virtue or in respect of any breach of covenant contained herein or failure to comply with any provision herein, or any inaccuracy, misstatement, misrepresentation or omission made by such party in connection with any matter set out herein, and any and all actions, suits, proceedings, demands, claims, costs, legal and other expenses related or incidental thereto.

 

	
(c)  

	
Notwithstanding any other provision of this Agreement and any termination of this Agreement, the indemnities provided herein shall remain in full force and effect until all possible liabilities of the persons indemnified thereby are extinguished by the operation of law and will not be limited to or affected by any other indemnity obtained by such indemnified persons from any other person.

 

	
(d)  

	
No investigation made by or on behalf of either of the parties hereto at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation, warranty or covenant made by the other party herein or pursuant hereto.  No waiver by either of the parties hereto of any condition herein, in whole or in part, shall operate as a waiver of any other condition herein.

  

10

  

7. Force majeure

 

7.1. Force majeure. Notwithstanding anything contained in this Agreement to the contrary, if any party is prevented from or delayed in performing any obligation under this Agreement and failure is occasioned by any cause beyond its reasonable control, excluding only lack of finances then, subject to Section 7.2, the time for the observance of the condition or performance of the obligation in question shall be extended for a period equivalent to the total period the cause of the prevention or delay persists or remains in effect regardless of the length of the total period.

 

7.2. Notice. Any party claiming suspension of its obligations shall promptly notify the other party to that effect and shall take all reasonable steps to remove or remedy the cause and effect of the force majeure described in the notice in so far as it is reasonably able so to do and as soon as possible; provided, that the terms of settlement of any labour disturbance or dispute, strike or lock-out shall be wholly in the discretion of the party claiming suspension of its obligations by reason thereof; and that party shall not be required to accede to the demands of its opponents in any labour disturbance or dispute, strike or lock-out solely to remedy or remove the force majeure thereby constituted.

 

7.3. Extension. The extension of time for the observance of conditions or performance of obligations as a result of force majeure shall not relieve the Optionee from its obligations to keep the Property in good standing, and to issue the Payment Shares within the prescribed periods.

 

8. Financial Reporting

 

8.1. Audit. An audit shall be prepared annually by the Optionee.  Each annual audit shall be final and not subject to adjustment unless the Optionor delivers to the Optionee written exceptions in reasonable detail within six months after the Optionor receives the report.  The Optionor, or its representative duly authorized in writing, at its expense, shall have the right to audit the books and records of the Optionee related to Net Smelter Returns to determine the accuracy of the Report, but shall not have access to any other books and records of the Optionee.  The audit shall be conducted by a chartered or certified public accountant of recognized standing.  The Optionee shall have the right to condition access to its books and records on execution of a written agreement by the auditor that all information will be held in confidence and used solely for purposes of audit and resolution of any disputes related to the Report.  A copy of the Optionor’s report shall be delivered to the Optionee upon completion, and any discrepancy between the amount actually paid by the Optionee and the amount which should have been paid according to the Optionor’s report shall be paid in a timely manner, one party to the other.  If the discrepancy requires a payment to the Optionor of an amount in excess of 10% of the amount which was paid to the Optionor for the audited period, the entire cost of the audit shall be borne by the Optionee, and the Optionee shall reimburse the Optionor accordingly; otherwise, the Optionor shall bear the entire cost of the audit.

 

8.2. No restriction on staking.  Nothing contained in this Agreement shall have the effect of restricting in any way the entitlement of the Optionor to stake or otherwise acquire, directly or indirectly, interests and rights in MDUs and mining claims, and licenses, leases, grants, concessions, permits and patents relating to a mineral property.

 

9. Formation of Joint Venture

 

9.1. Option Exercise. If the Optionee has made the payments and issued the Payment Shares referred to in Section 3.2 and incurred the Expenditures referred to in Section 3.4, all within the prescribed periods, and filed the required assessment credits as contemplated herein, then the Optionee has the right, by giving written notice to the Optionor on or before November 1, 2012, to become the owner of a 50% undivided interest in all or that part(s) of the Property as the Optionee may elect.

 

9.2. Joint Venture. If the Optionee exercises its right under Section 9.1, and becomes the owner of a 50% undivided interest in the Property, the Optionee and Optionor shall be deemed conclusively without executing any

  

11

  

further agreement, to have formed a joint venture (the “Joint Venture”) for the purposes of further exploring the Property and, if deemed warranted, of developing, constructing and operating a mine on the Property or a part of it and marketing the Minerals derived therefrom all according to the terms and conditions contained in a customary joint venture agreement (the “Joint Venture Agreement”).  The Joint Venture Agreement shall govern the subsequent relationship of the Optionee and Optionor in all subsequent Mining Operations on the Property. Each party shall use its reasonable best efforts to execute and deliver to the other, promptly after the Optionee exercises its right under Section 9.1, a Joint Venture Agreement.

 

9.3. Initial interests and expenditures. On the date of formation of the Joint Venture the parties shall, for purposes of the Joint Venture Agreement, be deemed to have the following initial interest and to have incurred, as prior exploration costs, moneys under this Option Agreement in the amounts as  follows:

 

	  	

 

Undivided Interest

	

 

Deemed Expenditures

	
Optionee

	
50%

	
$1,500,000

	
Optionor

	
50%

	
$1,500,000

 

9.4. Title to Property. The title to the Property shall be recorded on the formation of the Joint Venture in each of the names of the Optionor and Optionee as to their respective undivided interests

 

10. Notices & Payments

 

10.1. Notice.  Any demand, notice or other communication (the “Notice”) to be made or given in connection with this Agreement shall be made or given in writing and may be made or given by personal delivery or facsimile addressed to the recipient at the addresses or facsimile numbers of the parties provided on the first page of this Agreement or such other address or individual as may be designated by notice by any party to the other.  Any Notice made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, and if made or given by facsimile, on the day, other than a day which is not a Business Day, following the day it was sent. 

 

10.2. Payments.  Payments hereunder shall be made addressed to the recipient at the addresses of the recipient parties provided on the first page of this Agreement or such other address or individual as may be designated by notice by the recipient party in accordance with Section 10.1.  If any payment herein becomes due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day.

 

11. Public Announcements

 

11.1. Public Announcements.  The Optionee shall not, without the prior consent of the Optionor, make any disclosure regarding the existence, purpose, scope, content, terms or conditions of this Agreement or other agreements relating thereto save to the extent such disclosure comprises information substantially already publicly available or unless it is necessary for any party to make such disclosure in order to comply with a statutory obligation or the requirements of a competent government or statutory agency or Regulatory Authority; provided that, where practicable, a copy of any proposed announcement or statement shall be furnished to the Optionor in advance of the proposed date of publication, and the Optionee shall make every reasonable effort to incorporate the Optionor’s comments prior to dissemination.

  

12

  

12. General Provisions

 

12.1. Entire Agreement.  This Agreement, including all the Schedules hereto, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or other agreements among the parties in connection with the subject matter hereof except as specifically set forth herein and therein. Each party acknowledges that this Agreement is entered into after full investigation and that no party is relying on any statement or representation made by any other which is not embodied in this agreement. Each party acknowledges that it shall have no right to rely on any amendment, promise, modification, statement or representation made or occurring subsequent to the execution of this Agreement unless it is in writing and executed by each of the parties.

 

13. Authority.   Each party represents and warrants to the other party that it has the authority to enter into this Agreement and that execution and delivery of this Agreement has been duly approved by resolution of the board of directors.  Each individual (the “Authorized Signatory”) executing this Agreement on behalf of each party represents and warrants that he or she is duly authorized to execute and deliver this Agreement on behalf of said party.

 

13.1. Assignment of Interest.  The Optionee may not sell, transfer or otherwise dispose of all or any portion of its interest in and to the Property and this Option Agreement without the prior written consent of the Optionor, which consent may be unreasonably withheld.

 

13.2. First Right of Refusal.  The Optionor shall grant to the Optionee the first right of refusal to purchase or option the Optionor’s interest in the Property on terms which shall have been offered by any third party.  The Optionor shall notice Optionee of his intent to sell and the Optionee shall have 30 days to meet the terms of agreement to sell and to pay any consideration required thereunder.

 

13.3. Right to Purchase.  In the event of Optionor’s death, the Optionee shall have the right to purchase at fair market value, based on an independent third party appraisal, the Optionor’s interest and rights to the Property.

 

13.4. Encumbrances. During the Option Period, neither the Optionor nor the Optionee shall grant an Encumbrance, other than a Permitted Encumbrance, in their respective interest in the Property.

 

13.5. Confidentiality of information. During the Option Period, the Optionee shall keep all information and data concerning or derived from the Mining Operations confidential and, except to the extent required by law, regulation or policy of any Regulatory Authority, or in connection with the filing of an annual information form or a prospectus by the Optionee or any of its Affiliates, no information derived from the Mining Operations shall be disclosed to any person other than an Affiliate without the prior consent of the Optionor, which consent shall not unreasonably be withheld or delayed. Each party shall, where practicable, use reasonable commercial efforts to cause the text of any news releases or other public statements which a party desires to make with respect to the Property to be made available to the other party prior to publication and the other party shall have the right to make suggestions for changes therein.

 

13.6. Waiver.  The failure of a party in any one or more instances to insist upon strict performance of any of the terms of this Agreement or to exercise any right or privilege arising under it shall not preclude it from requiring by reasonable notice that any other party duly perform its obligations or preclude it from exercising such a right or privilege under reasonable circumstances, nor shall waiver in any one instance of a breach be construed as an amendment of this Agreement or waiver of any later breach.

 

13.7. Enurement. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

  

13

  

13.8. Further Assurances.  The parties hereto shall from time to time at the request of any of the other parties hereto and without further consideration, execute and deliver all such other additional assignments, transfers, instruments, notices, releases and other documents and shall do all such other acts and things as may be necessary or desirable to assure more fully the consummation of the transactions contemplated hereby.

 

13.9. Time.  Time shall be of the essence of this Agreement.

 

13.10. Expenses. Each party shall be responsible for its own expenses in connection with negotiating and settling this Agreement.

 

13.11. Amendment.  This Agreement may be amended or varied only by agreement in writing signed by each of the parties.

 

13.12. Arbitration.

 

	
(a)  

	
If there is a dispute between the parties with respect to this Agreement, or the interpretation of this Agreement, the Optionee and the Optionor shall, firstly, be obligated to use best efforts to reconcile and settle each and every dispute.  In the event that a settlement or agreement cannot be reached between the parties, the aggrieved party (“Claimant”) shall, pursuant to Section 10.1 herein, deliver an arbitration notice (“Arbitration Notice”) to the other party (the “Respondent”) detailing the nature of the dispute, the facts and the relevant evidence.  Within 7 days that the Respondent receives the Arbitration Notice, each of the Claimant and the Respondent shall appoint a nominee.  The two nominees so appointed shall, within 21 days of the date of the Arbitration Notice, in turn select a single arbitrator (the “Arbitrator”) to settle all matters arising from the dispute.  In the event that either the Claimant or Respondent, or their selected nominees, fail to appoint the Arbitrator within the prescribed periods, the party in default of the time provisions shall automatically accept the arbitrator selected by the party not in default, as being the Arbitrator to settle all matters arising from the dispute.

 

	
(b)  

	
The Claimant shall deposit with the Arbitrator a full and complete formal statement of claim, which shall not be subject to amendment at any time during the arbitration process unless otherwise permitted by the Arbitrator, within 30 days of the date that the Arbitrator was selected.  Unless otherwise required by the Regulatory Authorities, neither the Claimant nor the Respondent shall announce publicly the alleged claims or dispute until such time as a formal statement of claim has been deposited with the Arbitrator.

 

	
(c)  

	
Each of the Claimant and the Respondent shall jointly instruct the Arbitrator to create an arbitration protocol in a timely manner dealing with the timing and procedures (including security for costs) of all matters that are subject to the dispute, taking into consideration: (i) the fact that each of the Claimant and the Respondent are reporting issuers, as that term is described in applicable securities legislation, and; (ii) the seasonality of the Mining Operations and what correlative effects the process may have on logistics.

 

	
(d)  

	
The award made by the Arbitrator shall be final and binding upon the parties, and shall in all respects be kept and observed.  The Arbitrator shall have the authority to award and direct that the parties, or either of them, execute and deliver such releases, conveyances, deeds, assurances and other documents as the Arbitrator thinks fit, and these releases, conveyances, deeds, assurances and other documents shall be executed and delivered accordingly

 

	
(e)  

	
All costs of the arbitral proceedings shall be in the discretion of the Arbitrator who may direct to and by whom, and in what manner, (including allocation between the parties) the costs or any part of them shall be paid, it being the intention of the parties that the first principle in the exercise of the Arbitrator’s discretion shall be that the costs of the arbitral proceedings shall follow the event

  

14

  

 

of the award.  The costs of the arbitral proceedings and the award shall include, but not be limited to, the sum of (i) the Arbitrator’s fees and applicable taxes, (ii) all actual, reasonable legal fees and disbursements of the Arbitrator and the parties to the dispute, and (iii) a sum equal to the product of $200 multiplied by the number of days in the period commencing on the date that is 90 days prior to the date of the arbitral hearing (or trial) and ending on the last date of such hearing or trial.

 

	
(f)  

	
The Arbitrator may proceed ex parte in case either party, or any of their witnesses, shall at any time neglect or refuse to attend the arbitration proceedings after 7 days’ notice in writing under the hand of the Arbitrator given to each party or to the parties’ solicitor, unless the party, prior to the time fixed to attend, presents to the Arbitrator what the latter considers sufficient cause for failure to attend.

 

	
(g)  

	
The Arbitrator and any nominee under Subsection 12.11(a) must be a resident of Alberta and  either of a practising notary, lawyer, advocate, accountant, professor, in the province of Alberta, or a retired justice of any of the courts of Alberta.  An Arbitrator selected outside of the jurisdiction of Alberta may only be effective if agreed to in writing by each of the Claimant and the Respondent. The language to be used in the arbitral proceedings shall be English.

 

	
(h)  

	
Any award made by the Arbitrator may, at the instance of either of the parties to the dispute and without notice to the other of them, be made an Order of the Superior Court of Alberta.

 

13.13. Governing Law and Attornment.  This Agreement shall be governed by and interpreted in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein and the parties hereby irrevocably attorn to the jurisdiction of the Courts of the Province of Alberta, judicial district of the city of Calgary.  For the purpose of all legal proceedings, this Agreement shall be deemed to have been executed in the Province of Alberta and the courts of the Province of Alberta shall have exclusive jurisdiction to entertain any action arising under this Agreement

 

13.14. Language.  It is the express wish of the parties hereto that this Agreement and all documents contemplated hereby shall be drawn up in English.

 

13.15. Counterparts.  This Agreement may be executed by facsimile and in as many counterparts as are necessary and shall be binding on each party when each party hereto has signed and delivered one such counterpart.  When a counterpart of this Agreement has been executed by each party, all counterparts together shall constitute one agreement.

  

15

  

THE PARTIES, intending to be contractually bound, have entered into this Agreement as of the date set out on the first page.

	
HANS PETER FLUECK

 

By:

/s/ Hans Peter Flueck                                                                

(Authorized Signatory)

 

	  	
 

c/s

	
COASTAL PACIFIC MINING CORP.

 

By:

/s/ Joseph Bucci                                                                

(Authorized Signatory)

	  	
 

c/s

  

16

  

 

SCHEDULE “A”

To an Agreement made as of October 30, 2010 by and between Hans Peter Flueck and Coastal Pacific Mining Corp.

The Optionor is the recorded and beneficial holder of a 100% un-divided interest in certain mining claims situated in the District of Acobambilla, Province of Huancavelica, Department of Huancavelica, in the Republic of Peru; approximately 200 km southeast of Lima.  It is located within the Instituto Geografico Nacional map sheet 26-M CONAYCA.  The Claims are centered on Universal Transverse Mercator coordinate system, Provisional South American Datum 1956, zone 18L, 456480 meters East and 854570 meters North (Santa Rita) and 455500 meters East and 8559740 meters North (Celeste No 3); or geographic coordinate system 75°24’ 15” of west Longitude and 12°43’ 02” of south Latitude (Santa Rita), 75°24’ 45” of west Longitude and 12°41’ 11” of south Latitude (Celeste No 3).

The two (2) subject claims cover an area of 1200 hectares and are named:

	
-  

	
Celeste No 3 (200 Hectares)

	
-  

	
Nueva Santa Rita (1000 Hectares)

together the ("Claims")..

 

The Claims are for metallic minerals giving the titleholder the right to explore and exploit metallic minerals within the bounds of the Claims; subject to the payment of the annual fees established by Peruvian Mining Law.

 

Mining Claims are map-registered using a grid system based on the PSAD56.  The vertices of the two (2) Mineral rights that comprise the Property are registered at the Instituto Geologico, Minero y Metalurgico (“INGEMMET”); and Superintendecncia Nacional de Registros Publicos (“SUNARP”).

  

17

  

 

SCHEDULE “B”

To an Agreement made as of October 30, 2010 by and between Hans Peter Flueck and Coastal Pacific Mining Corp.

Operator

 

1.                      INTERPRETATION

 

1.01                      Terms defined in the Agreement shall, subject to any contrary intention, have the same meanings herein.  In this Schedule the following words, phrases and expressions shall have the following meanings:

 

	
  

	
 (a)  

	
“Agreement” means the Agreement to which this Schedule is attached.

 

	
(b)  

	
“Program” means the work plan and budget of Mining Operations conducted during the Option Period and adopted pursuant to Section 4 of the Agreement.

 

	
(c)  

	
“Costs” means all items of outlay and expense whatsoever, direct or indirect, with respect to Mining Operations, recorded by the Operator after the date hereof in accordance with this Agreement and prior to the formation of the Joint Venture and shall include all obligations and liabilities incurred or to be incurred with respect to the protection of the environment such as future decommissioning, reclamation and long-term care and monitoring, even if not then due and payable so long as the amounts can be estimated with reasonable accuracy, and whether or not a mine reclamation trust fund has been established.

 

2.           OPERATOR

 

2.01                      The Optionor shall act as Operator or shall appoint Rimpago SAC, a company incorporated pursuant to the laws of Peru.

 

2.02                      The party acting as Operator may resign as Operator on at least 90 days' notice to all the parties.

 

2.03                      Upon ceasing to be Operator, the former Operator shall forthwith deliver to the Optionee custody of all books, records, and other property both real and personal which it prepared or maintained in its capacity as Operator.

 

3.           RIGHTS, DUTIES AND STATUS OF OPERATOR

 

 

3.01                      The Operator in its operations hereunder shall be deemed to be an independent contractor.  The Operator shall not act or hold itself out as agent for any of the parties nor make any commitments on behalf of any of the parties unless specifically permitted by this Agreement or directed in writing by a party.

 

3.02                      Subject to any specific provision of this Agreement and subject to it having the right to reject any direction on reasonable grounds by virtue of its status as an independent contractor, the Operator shall perform its duties hereunder in accordance with the directions of the Optionee and in accordance with this Agreement.

 

3.03                      The Operator shall manage and carry out Mining Operations substantially in accordance with Programs adopted by the Optionee and in connection therewith shall, in advance if reasonably possible, notify the

  

18

  

Optionee of any change in Mining Operations which the Operator considers material and if it is not reasonably possible, the Operator shall notify the Optionee so soon thereafter as is reasonably possible.

 

3.04                      The Operator shall have the sole and exclusive right and authority to manage and carry out all Mining Operations in accordance herewith and to incur on behalf of the Optionee the Costs required for that purpose.  In so doing the Operator shall:

 

	
(a)  

	
comply with the provisions of all agreements or instruments of title under which the Property or Assets are held;

 

	
(b)  

	
pay all Costs properly incurred promptly as and when due;

 

	
(c)  

	
maintain books of account in accordance with the normal industry accounting procedure, and the judgment of the Operator as to matters related to the accounting shall govern if the Operator's accounting practices are in accordance with accounting principles generally accepted in the mining industry in Canada; and

 

	
(d)  

	
perform its duties and obligations hereunder in a sound and workmanlike manner, in accordance with sound mining and engineering practices and other practices customary in the Canadian mining industry, and in substantial compliance with all applicable federal, provincial, Territorial and municipal laws, by-laws, ordinances, rules and regulations.  The Operator shall also comply with all rules and regulations of the jurisdiction of Peru.

 

4.           EXPLORATION PROGRAMS

 

 

4.01                      The Operator shall prepare draft Programs for consideration by the Optionee.  Unless otherwise agreed to by the Optionee, each Program shall cover a calendar year.  The draft Program shall contain a statement in reasonable detail of the proposed Mining Operations, estimates of all Costs to be incurred and an estimate of the time when they will be incurred, and shall be delivered to the Optionee by no later than March 1st of each year to which the draft Program relates.  Each draft Program shall be accompanied by such reports and data as are reasonably necessary for the Optionee to evaluate and assess the results from the Program for the then current year and, to the extent not previously delivered, from earlier Programs.

 

4.02                      The Optionee shall review the draft Program prepared and, if it deems fit, adopt the Program with such modifications, if any, as the Optionee deems necessary.  The Operator shall be entitled to an allowance for Cost overruns of 10 percent in addition to any budgeted Costs and any Costs so incurred shall be deemed to be included in the Program, as adopted.

 

4.03                      The Operator shall be entitled to invoice the Optionee:

 

	
  

	
(a)

	
no more frequently than monthly, for the Costs incurred and paid by the Operator in carrying out a Program; or

 

	
  

	
(b)

	
not more than 120 days in advance of requirements, for an advance of the Costs estimated to be incurred and paid by the Operator in carrying out a Program or portion thereof.

 

Each invoice shall be signed by an officer of the Operator.  The Optionee shall pay to the Operator the amount invoiced within 20 days of receipt of the invoice.  If the Optionee protests the correctness of an invoice it shall nevertheless be required to make the payment.

  

19

  

4.04           If the Optionee fails to pay an invoice within the 20-day period referred to in Section 4.03, the Optionee shall be deemed to have elected to terminate the Program then in effect, and accordingly, the Operator shall have no further obligations under this Agreement in respect of that Program.

 

4.05           If the Operator suspends or prematurely terminates a Program, any funds advanced by a Participant in excess of Costs incurred prior to the suspension or premature termination shall be refunded within 30 days of the suspension or premature termination.  Unless approved by the Optionee, the Operator shall be exclusively liable for the payment of all Costs incurred in excess of 110 percent of any budgeted Costs.

 

4.06           Unless otherwise directed by the Optionee, the Operator may suspend or terminate prematurely any Program, by delivering notice to that effect to the Optionee, when the Operator, in good faith, considers that conditions are not suitable for the proper continuation or completion of the Program or the results obtained to that time eliminate or substantially impair the technical rationale on which the Program was based.  The Optionee may suspend or terminate prematurely any Program at any time by delivering notice to that effect to the Operator. If any Program is terminated prematurely, the Operator shall, within 30 days of such termination, refund to the Optionee the amount by which the amounts advanced by the Optionee to the Operator on account of projected Costs exceeds the sum of such Costs and the amounts payable to the Operator under Section 5 of this Schedule.

 

4.07            If the Operator fails to submit a draft Program by the date set out in this Agreement, the following shall apply:

 

	
  

	
(a)

	
the Operator shall not be entitled to submit a draft Program for the subject period;

 

	
  

	
(b)

	
the Optionee may submit a draft Program (the “Non-Operator's Program”) for the subject period for consideration by the Operator;

 

	
  

	
(c)

	
if the Operator elects to proceed with the Non-Operator's Program, it shall remain as the operator for the duration of the Non-Operator's Program; and

 

	
  

	
(d)

	
if the Operator elects not to proceed with the Non-Operator’s Program, it shall cease to be the Operator for the duration of the Non-Operator's Program, and the Optionee shall carry out the Non-Operator Program itself.

 

5.           OPERATOR'S FEE

 

5.01                      Except if Subsection 4.07(d) applies, the Optionee shall pay the Operator a fee for its services with respect to Programs as follows, which amount shall be paid promptly upon being invoiced:

 

	
  

	
(a)

	
10% for each individual contract which is not more than $100,000;

 

	
  

	
(b)

	
8% for each individual contract which exceeds $100,000;

 

	
  

	
(c)

	
10% of all other Costs not included in clauses 5.01(a) and 5.01(b).

 

6.           INFORMATION AND DATA

 

6.01                      While Programs are being carried out, the Operator shall use its best efforts to furnish the Optionee with monthly progress reports and with a final report within 90 days following the conclusion of each

  

20

  

Program.  The final report shall show the Mining Operations performed and the results obtained and shall be accompanied by a statement of Costs and copies of pertinent plans, assay maps, diamond drill records and other factual engineering data.

 

6.02                      All information and data concerning or derived from the Mining Operations shall be kept confidential and, except to the extent required by law or by regulation of any securities regulatory authority or stock exchange, shall not be disclosed to any person other than an Affiliate without the prior consent of all the other parties to this Agreement, which consent shall not unreasonably be withheld.

 

6.03                      The text of any news releases or other public statements which a party intends to make with respect to the Property or this Agreement shall, to the extent practicable, be made available to the other parties prior to publication and the other parties shall have the right to make suggestions for changes therein.

 

7.           LIABILITY OF THE OPERATOR

 

7.01                 Subject to Section 7.02, the Optionee shall indemnify and save the Operator harmless from and against any loss, liability, claim, demand, damage, expense, injury or death (including, without limiting the generality of the foregoing, legal fees) resulting from any acts or omissions of the Operator or its officers, employees or agents.

 

7.02                 Notwithstanding Section 7.01, the Operator shall not be indemnified nor held harmless by any of the parties for any loss, liability, claim, damage, expense, injury or death, (including, without limiting the generality of the foregoing, legal fees) resulting from the negligence or willful misconduct of the Operator or its officers, employees or agents.

 

7.03                 An act or omission of the Operator or its officers, employees or agents done or omitted to be done:

 

	
  

	
(a)

	
at the direction of, or with the concurrence of, the Optionee; or

 

	
  

	
(b)

	
unilaterally and in good faith by the Operator to protect life or property

 

shall be deemed not to be negligence or willful misconduct.

 

7.04               The Operator shall not be liable to any other party nor shall any party be liable to the Operator in contract, tort or otherwise for special or consequential damages, including, without limiting the generality of the foregoing, loss of profits or revenues.

 

8.           AMI

 

8.01               The area of interest shall comprise that area which is included within three (3) kilometers of the outermost boundary of the mineral properties which constitute the Property as outlined in Schedule “A” to the Agreement.

 

  

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]