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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 5, 1999
ARDEN REALTY, INC.
<TABLE>
<CAPTION>
Maryland 1-12193 95-4578533
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<S> <C> <C>
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
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11601 Wilshire Boulevard, Fourth Floor, Los Angeles, California 90025
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(Address of principal executive offices) (Zip Code)
(310) 966-2600
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On April 5, 1999 we closed a $115 million loan with Massachusetts Mutual Life
Insurance Company (The "MassMutual Loan"). The MassMutual Loan is secured by 12
properties, has a ten year term and bears interest at a fixed rate of 6.94%
(7.049% including the amortization of loan fees) and requires monthly payments
of principal and interest amortized over a 25 year period. Proceeds from this
loan were used to repay a portion of our lines of credit and certain other
variable-rate indebtedness.
ITEM 7. EXHIBITS.
EXHIBIT INDEX
10.1 Promissory Note, dated as of March 30, 1999, between Massachusetts
Mutual Life Insurance Company and Arden Realty Finance V, L.L.C.
10.2 Deed of Trust and Security Agreement, dated as of March 30, 1999, with
Arden Realty Finance V, L.L.C. as the Trustor and Massachusetts Mutual
Life Insurance Company as the Beneficiary.
10.3 Assignment of Leases and Rents, dated as of March 30, 1999, between
Massachusetts Mutual Life Insurance Company and Arden Realty Finance V,
L.L.C.
10.4 Subordination of Management Agreement, dated as of March 30, 1999,
between Massachusetts Mutual Life Insurance Company and Arden Realty
Finance V, L.L.C.
10.5 Environmental Indemnification and Hold Harmless Agreement, dated as
of March 30, 1999, between Massachusetts Mutual Life Insurance Company
and Arden Realty Finance V, L.L.C.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 20, 1999.
Arden Realty, Inc.
By: /s/ DIANE M. LAING
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Diane M. Laing
Executive Vice President
Chief Financial Officer
and Secretary
By: /s/ RICHARD S. DAVIS
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Richard S. Davis
Senior Vice President and
Chief Accounting Officer
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EXHIBIT 10.1
Mortgage Loan No. 99701
PROMISSORY NOTE
$115,000,000 March 30, 1999
Los Angeles, California
FOR VALUE RECEIVED, ARDEN REALTY FINANCE V, L.L.C., a Delaware limited liability
company ("BORROWER"), promise(s) to pay to the order of MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY ("LENDER"), at its home office in Springfield,
Massachusetts, or at such other place as Lender may direct, in lawful money of
the United States of America, without grace or offset, the principal sum of ONE
HUNDRED FIFTEEN MILLION AND NO/100 DOLLARS ($115,000,000), with interest thereon
at the rate of six and ninety-four one-hundredths percent (6.94%) per annum (the
"CONTRACT RATE") to be paid as provided herein below.
This Promissory Note is secured by a Deed of Trust and Security
Agreement of even date herewith (collectively, the "MORTGAGE"), covering real
property and other property described in the Mortgage (collectively, the
"MORTGAGED PROPERTY").
1. PAYMENT TERMS
Payments shall be made on this Promissory Note as follows:
A. On the date the loan evidenced hereby (the "LOAN") is made, a
payment of interest only shall be due and payable for the period from such date
to the first day of the next calendar month.
B. Successive monthly installments of principal and interest,
shall be made on the first day of June, 1999 and on the first day of each
calendar month thereafter up to and including the first day of March, 2009 (each
a "PAYMENT DATE").
C. Each monthly installment shall be in the constant amount of
EIGHT HUNDRED FIFTEEN THOUSAND NINE HUNDRED THIRTY-FOUR AND 98/100 DOLLARS
($815,934.98).
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D. A final installment equal to the entire principal balance then
remaining unpaid, with accrued interest thereon, shall be due and payable on
April 1, 2009 (the "MATURITY DATE");
Unless otherwise directed by Lender in writing, all payments
shall be made by direct debit of Borrower's bank and bank account through
automated clearinghouse deductions of immediate federal funds or equivalent to
Lender's bank and bank account. Borrower acknowledges that, since the term of
the loan evidenced hereby is shorter than the amortization period, a substantial
portion of the principal balance will be due on the Maturity Date. Whenever any
payment to be made under this Promissory Note is stated to be due on a date
which is not a Business Day (defined herein below), the due date shall be
extended to the next succeeding Business Day and interest shall continue to
accrue and be payable at the applicable rate during such extension.
2. INTEREST
The monthly payments of combined principal and interest of this
Promissory Note are based upon a twenty-five (25) year amortization period, and
all interest accruing hereunder shall be calculated on the basis of a 360-day
year and the actual number of days elapsed.
3. DEFAULT INTEREST
If the entire unpaid principal balance of this Promissory Note,
together with accrued and unpaid interest thereon, is not paid when due, whether
on the Maturity Date or any earlier date as a result of acceleration of this
Promissory Note after an Event of Default (hereinafter defined), then the amount
unpaid shall bear interest from the Maturity Date or such earlier date, as the
case may be, at the per annum interest rate (the "DEFAULT RATE") equal to the
lesser of
(i) the highest rate permitted by law to be charged
on a promissory note secured by a commercial
mortgage, or
(ii) the sum of three percent (3%) plus the greater
of
(x) the Contract Rate; or
(y) the rate published in The Wall Street
Journal as the average prime rate in its
"Money Rates" section as of the Maturity
Date or such earlier date. If The Wall
Street Journal is not in publication on
the applicable date, or ceases to
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publish such average rates, then any other
publication acceptable to Lender quoting daily
market average prime rates will be used.
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The Default Rate shall continue until the first to occur of the following:
(i) payment in full of any sums due
hereunder and under the Loan Documents
(hereinafter defined); or
(ii) reinstatement of the Loan pursuant to
statutory provisions requiring such
reinstatement, but only after the curing
of all defaults and payments of all sums
due hereunder.
4. LATE CHARGE
If any regular monthly installment of principal or interest due
hereunder, or any monthly deposit for taxes, ground rent, insurance,
replacements and other sums if required under any Loan Document, shall not be
paid as required under this Promissory Note or such Loan Document, as the case
may be, by the eleventh (11th) day of the month in which the same shall be due
or by the eleventh (11th) day after the due date for any payment other than the
regular monthly installment due under this Promissory Note, Borrower shall pay
to Lender a late charge (the "LATE CHARGE") of four cents ($0.04) for each
dollar so overdue in order to compensate Lender for its loss of the timely use
of the money and frustration of Lender in the meeting of its financial
commitments, and to defray part of Lender's incurred cost of collection
occasioned by such late payment. Lender agrees to comply with Section 2954.5 of
the California Civil Code (or any successor provision), as now or hereafter in
effect, with respect to the giving of notice prior to imposing a Late Charge.
Any Late Charge incurred shall be immediately due and payable. Nothing herein
contained shall be deemed to constitute a waiver or modification of the due date
of such installments or deposits or the requirement that Borrower make all
payment of installments and deposits as and when the same are due and payable.
5. APPLICATION OF PAYMENTS
Each payment received by Lender shall be applied in the following
order:
A. First, to the interest due on any advances made by Lender
under any instrument which is a Loan Document;
B. Next, to the principal amount of any advances made by Lender
under any instrument which is a Loan Document;
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C. Next, to Late Charges, attorneys' fees or any other amount due
hereunder or under a Loan Document save for the amounts described in (D) and (E)
immediately below;
D. Next, to accrued interest due hereunder; and
E. Finally, to the principal balance hereof.
Notwithstanding the foregoing, in the event that Borrower does
not pay the outstanding principal balance and accrued interest due under this
Promissory Note, when due, whether on the Maturity Date or on any earlier date
as a result of acceleration of this Promissory Note, the Lender at its option
shall apply any payments it then receives in such order as Lender deems
appropriate in its sole discretion.
6. EVENTS OF DEFAULT AND ACCELERATION
The failure to make any payment required under this Promissory
Note, as and when due, and the failure to comply with any term, covenant or
condition of any Loan Document within the time provided therein, shall be an
event of default ("EVENT OF DEFAULT") hereunder.
Upon the occurrence of an Event of Default subject to the terms
of Section 7, below, the Lender may, at any time thereafter, together or singly,
(i) declare the entire outstanding principal balance
due hereunder, together with all accrued and unpaid
interest thereon, to be immediately due and
payable, thereby accelerating this Promissory Note;
(ii) exercise immediately and without notice, any and
all other rights and remedies available under the
Loan Documents or at law or in equity.
7. NOTICE AND CURE
Prior to accelerating this Promissory Note for an Event of
Default or exercising any rights or remedies as to which acceleration is a
precondition, Lender shall give Borrower notice specifying the Event of Default
and time to cure such Event of Default, as follows, but not otherwise:
A. If the Event of Default is one which can be cured by the mere payment of
money (other than a failure to keep in effect insurance required under any of
the Loan Documents and other than as described in Section 7B(i) below),
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Borrower shall have ten (10) days from the notice of Event of
Default to pay such money and to cure and eliminate the Event of Default;
B. If the Event of Default is
(i) the failure to pay on the Maturity Date the
outstanding principal balance, accrued interest, and
other payments due under this Promissory Note or the
Loan Documents;
(ii) the failure to have or keep in force insurance as
required under any of the Loan Documents;
(iii) the insolvency, or bankruptcy of the Borrower, or
any guarantor hereof;
(iv) a sale, transfer or encumbrance of a direct,
indirect, legal or beneficial interest in the
Borrower (including, without limitation, any direct
or indirect interest in the owner of any legal or
beneficial interest in Borrower) or the property
encumbered by the Loan Documents for which any
required approval of Lender under any Loan Document
was not obtained;
Borrower shall not be entitled to any notice of Event of Default,
or time to cure, and Lender shall not be obligated to give the same.
C. If the Event of Default is one which cannot be cured by the
mere payment of money (other than an Event of Default described in Section 7B
above), Borrower shall have thirty (30) days from the notice of Event of Default
to cure and eliminate the Event of Default.
D. The Lender's agreement to give notice and time to cure are on
the further conditions that:
(i) the failure of Lender to give any notice(s) required
shall not result in the imposition of any
liabilities or penalties upon Lender;
(ii) the agreement to give notice and time to cure is
personal to Borrower, and does not extend to or vest
any such rights in any other person or entity; and
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(iii) nothing contained in this Section 7 shall prevent
the imposition of Late Charges, or the right of the
Lender to exercise immediately and, without notice,
any and all other rights and remedies available
under the Loan Documents or at law or in equity.
8. DEFINITIONS
Any terms used in this Promissory Note requiring a definition
shall have the definition given in this Section, unless elsewhere defined in
this Promissory Note. Any and all instruments securing or executed in connection
with this Promissory Note, including, without limitation, the Mortgage,
guarantees, indemnities, pledges, master leases, security agreements and
assignments of leases and rents are herein collectively referred to as the "LOAN
DOCUMENTS." Any instrument included within the term "Loan Documents" is herein
referred to in the singular as a "Loan Document." Any capitalized terms used in
this Promissory Note and not defined herein (including without limitation the
terms "COLLATERAL", "DEBT SERVICE COVERAGE RATIO", "EQUIPMENT", "INDEBTEDNESS",
"LOAN TO VALUE", "LOSSES", "MORTGAGED PROPERTY", "PROCEEDS", "PREMISES",
"PROPERTY INCOME" and "SINGLE PURPOSE ENTITY") shall have the meaning set forth
for such in the Mortgage. The term "Event of Default" shall have the meaning
given in Section 6 hereof. The term "BUSINESS DAY" as used herein shall mean any
day other than a Saturday, Sunday or other day on which national banks in the
State of California are not open for business.
9. PREPAYMENT
There are no full or partial prepayment privileges of the
principal amount due under this Promissory Note except as follows:
9.1 Prepayment in Full. Borrower shall have the right to make
payment in full, but not in part, of the then outstanding principal balance
hereof, on any payment date on and after (but not prior to) the fifth
anniversary of the due date of the first monthly installment payment required
under Section 1A, provided that Borrower gives Lender thirty (30) days prior
written notice of its intention to make any such prepayment, the date thereof,
and the amount to be prepaid, and that Borrower also pays, as consideration for
the privilege of making such prepayment, a prepayment premium (the "PREPAYMENT
PREMIUM") calculated as follows:
The Prepayment Premium shall be equal to the greater of (x) or (y), where
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(x) is equal to the amount to be prepaid multiplied by one
percent (1%); and
(y) is equal to the product (discounted as hereinafter provided)
obtained by multiplying the amount to be prepaid by the
"Prepayment Premium Rate." The "PREPAYMENT PREMIUM RATE" shall be
the percentage obtained by multiplying the excess, if any, of the
Contract Rate over the market yield of U.S. Treasury issues which
have the closest maturity (month and year) to the Maturity Date,
as quoted in The Wall Street Journal published on the scheduled
prepayment date, by a fraction, the numerator of which is equal
to the number of days remaining from and including the scheduled
prepayment date to and including the Maturity Date, and the
denominator of which is 360. Should more than one U.S. Treasury
issue be quoted as maturing on the date closest to the Maturity
Date, then the issue having the market yield which differs least
from the Contract Rate will be used in the calculations. If The
Wall Street Journal is not in publication on the applicable date,
or ceases to publish such U.S. Treasury issue yield, then any
other publication acceptable to Lender quoting daily market
yields for U.S. Treasury issues will be used. The product
obtained from the foregoing shall then be discounted, on a
semi-annual basis over the remaining term of this Promissory
Note, as of the date of prepayment to its then present value,
using the U.S. Treasury yield, referred to in this subparagraph
(y).
9.2 Prepayment Upon Partial Release of Mortgaged Property.
Borrower shall make prepayment (with Prepayment Premium) in connection with
partial reconveyances of properties encumbered by the Mortgage, in accordance
with Section 6.13 of the Mortgage.
9.3 General Prepayment Provisions.
A. No Prepayment Premium shall be required to be paid on or after
or in connection with payment of fire, casualty, or condemnation proceeds to the
Lender in accordance with the provisions of the Mortgage.
B. There will be due, with any prepayment of principal, all
accrued and unpaid interest thereon, in addition to all other amounts due under
this Promissory Note.
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C. If the maturity of this Promissory Note is accelerated by the
Lender because of the occurrence of an Event of Default, the resulting
acceleration shall be deemed to be an election on the part of Borrower to prepay
the Loan. Accordingly, there shall be added to the amount due after an Event of
Default and resulting acceleration, a Prepayment Premium, calculated as above
and using as the prepayment date the date on which any tender of payment is
made, and the Borrower agrees to pay the same. Any tender of payment made after
acceleration by or on behalf of Borrower (including, without limitation, payment
by any guarantor or purchaser at a foreclosure sale), shall include the
Prepayment Premium computed as provided herein. In the event such Event of
Default, acceleration and tender occur prior to the time Borrower may prepay the
Loan, under Paragraph A above, there shall nevertheless be due and added the
Prepayment Premium calculated in the manner set forth in said Paragraph A as
though such prepayment privilege were in effect.
BORROWER BY ITS SIGNATURE BELOW HEREBY EXPRESSLY (i) WAIVES ANY RIGHTS IT MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THIS PROMISSORY NOTE,
IN WHOLE OR IN PART, WITHOUT PENALTY, UPON ACCELERATION OF THE MATURITY DATE,
AND (ii) AGREES THAT IF, FOR ANY REASON, A PREPAYMENT OF ALL OR ANY PORTION OF
THE PRINCIPAL AMOUNT OF THIS PROMISSORY NOTE IS MADE UPON OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE BY LENDER ON ACCOUNT OF ANY DEFAULT BY
BORROWER INCLUDING, WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR FURTHER
ENCUMBRANCE PROHIBITED OR RESTRICTED BY THE DEED OF TRUST SECURING THIS
PROMISSORY NOTE, THEN BORROWER SHALL BE OBLIGATED TO PAY CONCURRENTLY WITH SUCH
PREPAYMENT, THE PREPAYMENT PREMIUM SPECIFIED IN THE FOREGOING PARAGRAPHS. BY
SIGNING THIS PROVISION IN THE SPACE PROVIDED BELOW, BORROWER HEREBY DECLARES
THAT LENDER'S AGREEMENT TO MAKE THE LOAN EVIDENCED BY THIS PROMISSORY NOTE
CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY BORROWER FOR THIS
WAIVER AND AGREEMENT.
BORROWER'S SIGNATURE:___________________________
D. The Prepayment Premium herein provided for represents the
reasonable estimate of Lender and Borrower of a fair average compensation for
the loss that will be sustained by Lender resulting from the payment of the
outstanding
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principal balance of the loan evidenced hereby prior to the Maturity Date. The
Prepayment Premium shall be paid without prejudice to the right of Lender to
collect any other amounts provided to be paid under this Promissory Note, or
under the other Loan Documents, or pursuant to the provisions of law.
E. No Prepayment Premium shall be required to be paid with
respect to a prepayment made during the last three (3) months of the originally
scheduled term of the Loan.
10.WAIVERS AND EXTENSIONS
Borrower and all endorsers and guarantors and any and all others
who may at any time be or become liable for payment of all or any part of the
Loan severally waive presentment for payment, demand, notice of dishonor or
nonpayment, protest and notice of protest, notice of acceleration and of
intention to accelerate the Maturity Date (except as provided in Section 7,
above) and any and all lack of diligence or delays in collection or enforcement
hereof, and agree that Lender from time to time may extend the time for payment
of any sums due under this Promissory Note and grant releases to all endorsers
and guarantors hereof, and may release all or any portion of the Mortgaged
Property, without in any way affecting the liability of such parties hereunder.
11.LIMITATIONS ON LIABILITY
A. In any action or proceeding brought on this Promissory Note or
on the Mortgage or on any of the Loan Documents in which a money judgment is
sought (subject to paragraphs B, C, and D below), Lender will look solely to the
Mortgaged Property described in the Loan Documents (including, without
limitation, the Collateral) for payment of the Indebtedness and, specifically
and without limitation, Lender agrees to waive any right to seek or obtain a
deficiency judgment against Borrower or to seek or obtain a personal judgment
for the payment of money representing principal or interest of the Loan.
B. The provisions of this Section 11 shall not
(i) except as set forth herein, constitute a waiver,
release or impairment of any obligation evidenced or
secured by this Promissory Note, the Mortgage or any
other Loan Document;
(ii) be deemed to be a waiver of any right which Lender
may have under Sections 506(a), 506(b), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to
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file a claim for the full amount of the Indebtedness
secured by the Mortgage or to require that all
Collateral shall continue to secure all of the
Indebtedness owing to the Lender in accordance with
the Promissory Note, the Mortgage and the other Loan
Documents;
(iii) impair the right of Lender to name Borrower or any
guarantor of this Promissory Note, as a party or
parties defendant in any action or suit for judicial
foreclosure and sale under the Mortgage (but no
personal judgment for a deficiency money judgment
may be entered or enforced against Borrower);
(iv) affect the validity or enforceability of, or limit
recovery under, any indemnity (including, without
limitation, any environmental indemnity set forth in
the Mortgage or other Loan Document, or any separate
environmental indemnity agreement, however
designated), guaranty, lease or similar instrument
made in connection with this Promissory Note, the
Mortgage, or the Loan Documents;
(v) impair the right of Lender to obtain the appointment
of a receiver; or
(vi) impair the enforcement of an assignment of leases or
an assignment of rents contained in the Mortgage or
any separate Assignments of Leases and Rents
executed in connection herewith.
C. Notwithstanding any provisions of this Section 11 to the
contrary, nothing herein shall be deemed to prejudice the right of Lender (which
right is specifically reserved) to pursue or obtain personal recourse liability
against the Borrower, or any other person or entity, to recover Losses incurred
by Lender, arising out of, or resulting from:
(i) fraud or material misrepresentation in connection
with any Loan Document, affidavit, certification,
warranty or representation given by Borrower or any
officer, general partner, principal, member, or
authorized agent
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of Borrower, in connection with the obtaining or
making of the loan evidenced by this Promissory
Note;
(ii) the application or appropriation of any condemnation
or insurance proceeds in a manner contrary to the
terms of the Loan Documents;
(iii) the application or appropriation of any tenant
security deposits, advance or prepaid rents,
cancellation or termination fees funds in required
reserve accounts or escrow accounts or other similar
sums paid to or held by Lender, Borrower, any escrow
holder or depository or any other person in
connection with the operation of the Premises in a
manner contrary to the terms of the Loan Documents;
(iv) the failure to return, or reimburse Lender for, all
Equipment taken from the Mortgaged Property by or on
behalf of Borrower and not replaced with Equipment
of the same utility;
(v) any act of arson or malicious destruction or waste
by Borrower, any principal, affiliate or partner
thereof, or by any guarantor or indemnitor
(including any indemnitor under the environmental
indemnity contained in the Mortgage, or in a
separate environmental indemnity or similar document
executed herewith); or
(vi) the failure to apply Property Income or Proceeds to
payments due under the Loan Documents or to
operating expenses of the Mortgaged Property,
thereby resulting in, or contributing materially to,
an Event of Default; provided, however, that
Borrower shall have no recourse liability for Losses
based on distributions of Property Income or rent
loss insurance Proceeds to Borrower, or any general
partner, principal, stockholder, or member of or
managing agent for Borrower, made in good faith
(after determining the sufficiency of Property
Income and rent loss insurance Proceeds to cover the
payments due under the Loan
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Documents and operating expenses of the Mortgaged
Property) prior to an Event of Default.
D. Notwithstanding the foregoing, the agreement of Lender not to
pursue personal recourse liability against Borrower as set forth in this Section
11 above SHALL AUTOMATICALLY BECOME NULL AND VOID as to Borrower and shall be of
no further force and effect in the event (i) Borrower, any general partner or
member of Borrower, or any guarantor of the Loan, files, or consents to the
filing of, any petition under the U.S. Bankruptcy Code respecting its or their
debts or (ii) any such petition shall have been filed against the Borrower, any
general partner or member of the Borrower, or any guarantor of this Promissory
Note, and the same is not dismissed within ninety (90) days of such filing, or
(iii) Borrower makes a transfer of the Mortgaged Property or any portion thereof
or interest therein or encumbers the Mortgaged Property or any portion thereof
or interest therein in violation of the Loan Documents, or (iv) Borrower fails
to maintain its status as a Single Purpose Entity.
12.USURY
No amounts under this Promissory Note or the Loan Documents shall
be charged, paid or collected from Borrower if the result of such charge payment
or collection would be to cause the Loan to be usurious under applicable law.
If, however, an amount is paid or collected which would otherwise cause the Loan
to be usurious, such excess causing the Loan to be usurious shall be deemed a
payment of principal and shall be applied against and shall reduce the then
outstanding principal balance of the Loan by a corresponding amount, and no
Prepayment Premium shall be charged on any such excess amount applied to
principal.
13.TRANSFERS
Upon the transfer of this Promissory Note, Borrower hereby
waiving notice of any such transfer, Lender may deliver all the Loan Documents,
Proceeds, Property Income or Collateral, or any part hereof, to the transferee
who shall thereupon become vested with all rights herein, or under applicable
law, given to Lender with respect thereto, and Lender shall thereafter forever
be relieved and fully discharged from any liability or responsibility under or
with respect to this Promissory Note, and the Loan Documents, Proceeds, Property
Income and Collateral so transferred; but Lender shall retain all rights hereby
given to it with respect to any obligations of the Borrower and the Loan
Documents, Proceeds, Property Income or Collateral not so transferred. Upon any
such transfer, the term "Lender" as used herein shall mean such transferee.
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14.SEVERABILITY
In the event any one or more of the provisions contained in this
Promissory Note or the Loan Documents shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Promissory Note or
of the Loan Documents, but this Promissory Note and the Loan Documents shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein or therein.
15.WAIVER OF TRIAL BY JURY
BORROWER AND LENDER, BY ACCEPTANCE OF THIS PROMISSORY NOTE,
HEREBY WAIVE TRIAL BY JURY IN ANY COURT ACTION, PROCEEDING OR COUNTERCLAIM
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN EVIDENCED BY THIS PROMISSORY NOTE, ANY APPLICATION FOR THE LOAN EVIDENCED
BY THIS PROMISSORY NOTE, THIS PROMISSORY NOTE, THE MORTGAGE OR THE LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH.
16. JOINT AND SEVERAL LIABILITY.
If there shall be more than one (1) Borrower named in this
Promissory Note, then the obligations and liabilities of such parties as
Borrower shall be joint and several.
17.REMEDIES CUMULATIVE
The rights, powers and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the Loan Documents shall be
cumulative and concurrent, and may be pursued singly, successively or together
against Borrower or the Mortgaged Property, the Collateral or the Property
Income, at the sole discretion of the Lender, and to the fullest extent
permitted by law. Such rights, powers and remedies shall not be exhausted by any
exercise thereof but may be exercised as often as occasion therefor shall occur.
The failure to exercise any such right, power or remedy shall in no event be
construed as a waiver or release of the same. Lender shall not by any act of
omission or commission be deemed to have waived any of its rights, powers or
remedies under this Promissory Note or the Loan Documents unless such waiver be
in writing and signed by Lender, and then `only to the extent specifically set
forth therein. A waiver of a right in one
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event shall not be construed as continuing or as a bar, or as a waiver of such
right on a subsequent event.
18.FEES AND COSTS
Borrower further promises to pay upon demand all reasonable
attorneys' fees and costs (including, without limitation, court costs and
appraisal fees) incurred by Lender in connection with any Event of Default under
this Promissory Note and in any proceeding, including all appeals, brought to
enforce any of the provisions of this Promissory Note or of the Loan Documents.
19.TIME OF THE ESSENCE
Time shall be of the essence in performance of all obligations of
Borrower under this Promissory Note and the Loan Documents including, without
limitation, the time periods provided for the curing of defaults.
20.HEADINGS FOR CONVENIENCE
Headings and captions used in this Promissory Note are inserted
for convenience of reference only and neither constitute a part of this
Promissory Note nor are to be used to construe or interpret any of the
provisions hereof.
21.NOTICES: HOW GIVEN
Any notice required or permitted under this Promissory Note or
under any Loan Document shall be given in writing and shall be effective for all
purposes if hand delivered to the party designated below, or if sent by (a)
certified or registered United States mail, postage prepaid; or (b) expedited
prepaid delivery service, commercial or United States Postal Service, with proof
of attempted delivery, addressed in either case as follows:
To Borrower:
Arden Realty Finance V, L.L.C.
11601 Wilshire Boulevard, Suite 405
Los Angeles, CA 90025-1740
Attn: Diana M. Laing
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<PAGE> 16
To Lender:
Massachusetts Mutual Life Insurance Company
Real Estate Finance Group
1295 State Street
Springfield, MA 01111
Attention: Senior Managing Director
or to such other address and person as shall be designated from time to time by
Lender or Borrower, as the case may be, in a written notice to the other given
in the manner provided for in this paragraph.
The notice shall be deemed to have been given at the time of
delivery if hand delivered, or in the case of registered or certified mail,
three (3) Business Days after deposit in the United States mail, or if by
expedited prepaid delivery, upon first attempted delivery on a Business Day.
A party receiving a notice which does not comply with the
technical requirements for notice under this paragraph may elect to waive any
deficiencies and treat the notice as having been properly given.
22.NO ORAL CHANGE
This Promissory Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of the Borrower or Lender, but only by an agreement in writing,
intended for that specific purpose and signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
23.APPLICABLE STATE LAW
This Promissory Note shall be governed, construed, applied and
enforced in accordance with the laws of the State of California.
24.SALE OF LOAN
Lender, in the management of its investments or for any other
reason, may, at any time, sell, transfer or assign this Promissory Note, the
Mortgage and the other Loan Documents and the servicing rights with respect
thereto or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in the Note,
Mortgage and other Loan Documents (collectively, a "TRANSFER"). A transfer may
include a sale of the
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<PAGE> 17
whole Loan, or interests in the Loan, or a pooling of the Loan with other loans
in connection with a sale of public or private securities backed by the pool of
loans (each, a "SECONDARY MARKET TRANSACTION"). As part of a Transfer, Lender
may forward to each transferee, assignee, servicer, participant or investor all
documents and information which Lender now has or may hereafter acquire relating
to the Indebtedness, the Loan Documents and the Mortgaged Property. Subject to
the provisions of Section 25, below, Borrower agrees to cooperate with Lender in
connection with a Transfer including, without limitation, the delivery of any
estoppel certificates required under Section 2.18 of the Mortgage and such other
documents as may be reasonably requested by Lender. Borrower acknowledges and
agrees that, in connection with a Secondary Market Transaction, Lender may make
such information regarding Borrower and the Mortgaged Property and any other
matter related to the making of the Loan available to potential purchasers or
investors and, if applicable, rating agencies and their respective advisors,
subject, however, to the confidentiality provisions contained in Section 25
below. Borrower agrees to take such actions as may be reasonably requested by
Lender or any proposed assignee or participant of Lender in order to facilitate
any such assignment, transfer or participation, including without limitation
execution and delivery of one or more substitute promissory notes reallocating
the Indebtedness hereunder (on the same terms and conditions) among Lender and
any such assignees of Lender.
25. CONFIDENTIALITY.
Lender agrees that it will use its best efforts to keep
confidential and not disclose any non-public information received in connection
with the Loan from Borrower or any of its affiliates or principals, except that
Lender may disclose such information (i) with the consent of Borrower, (ii) to
parties who agree to maintain the confidentiality of such information subject to
reasonable terms and conditions, (iii) to Lender's affiliates and legal counsel
for Lender and its affiliates, (iv) to auditors, accounting firms or accountants
of Lender and its affiliates as may be required in connection with any audit or
other review of the books and records of any such entity, (v) to potential
purchasers or investors in a Secondary Market Transaction, provided Lender has
obtained the agreement of such potential purchasers or investors to maintain the
confidentiality of such information subject to reasonable terms and conditions,
rating agencies and their respective advisors, and (vi) to any parties as may be
required by law, government regulation or order (including without limitation,
any regulation or order of an insurance regulatory agency or body), by subpoena
or by any other legal, administrative or legislative process. In the event
Lender secures a confidentiality agreement from third parties as referred to
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<PAGE> 18
above, Lender shall in no event be liable to Borrower, their affiliates or
principals or any other party for any violations of, or defaults by, such third
parties under such agreement.
Borrower:
ARDEN REALTY FINANCE V, L.L.C.
a Delaware limited liability company
By: _______________________________
Diana M. Laing,
Chief Financial Officer
Federal Taxpayer I.D. No.: 95-4733626
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<PAGE> 1
EXHIBIT 10.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Sheppard, Mullin, Richter & Hampton LLP
333 S. Hope Street, 48th Floor
Los Angeles, CA 90071-1448
Attention: Robert E. Williams
DEED OF TRUST AND SECURITY AGREEMENT
Cover Sheet
<TABLE>
<S> <C>
Dated as of March 30, 1999
Trustor: ARDEN REALTY FINANCE V, L.L.C.,
a Delaware limited liability company
(hereinafter sometimes "BORROWER")
Trustor's Arden Realty Finance V, L.L.C.
Notice Address: 11601 Wilshire Boulevard, Suite 405
Los Angeles, CA 90025-1740
Attn: Diana M. Laing
Trustee: CHICAGO TITLE INSURANCE COMPANY
Trustee's
Notice Address: 700 S. Flower Street
Suite 3305
Los Angeles, California 90017
Beneficiary: MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, a Massachusetts corporation
(hereinafter sometimes "LENDER")
Beneficiary's 1295 State Street
Notice Address: Springfield, Massachusetts 01111-0001
Attention: Senior Managing Director
Mortgage Portfolio Department
Real Estate Finance Group
Note Amount: $115,000,000
</TABLE>
NOTICE: DUPLICATE ORIGINALS OF THIS DEED OF TRUST ARE BEING RECORDED IN LOS
ANGELES, SAN DIEGO AND VENTURA COUNTIES, AND SUCH DUPLICATE ORIGINALS TAKEN
TOGETHER CONSTITUTE ONE AND THE SAME DOCUMENT.
Maturity Date: April 1, 2009
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
DEED OF TRUST AND SECURITY AGREEMENT.....................................................1
GRANTING CLAUSES.........................................................................1
ARTICLE I. DEFINITION OF TERMS...........................................................4
ARTICLE II. COVENANTS OF BORROWER.......................................................11
Section 2.1 Payment of the Indebtedness.........................................11
Section 2.2 Title to the Mortgaged Property.....................................11
Section 2.3 Maintenance of the Mortgaged Property...............................12
Section 2.4 Insurance; Restoration..............................................12
Section 2.5 Condemnation........................................................19
Section 2.6 Impositions.........................................................20
Section 2.7 Deposits............................................................21
Section 2.8 Mortgage Taxes......................................................21
Section 2.9 Loan Documents Authorized...........................................22
Section 2.10 Maintenance of Existence...........................................23
Section 2.11 Payment of Liens...................................................23
Section 2.12 Costs of Defending and Upholding the Lien..........................23
Section 2.13 Costs of Enforcement...............................................24
Section 2.14 Interest on Advances and Expenses..................................24
Section 2.15 Indemnification....................................................24
Section 2.16 Financial Statements; Records......................................24
Section 2.17 Prohibition Against Conveyances and Encumbrances...................27
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</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 2.18 Estoppel Certificates..............................................28
Section 2.19 Assignment of Leases and Property Income...........................28
Section 2.20 Environmental Matters; Warranties; Notice; Indemnity...............31
Section 2.21 Environmental Matters; Remedial Work...............................33
Section 2.22 Environmental Matters; Inspection..................................34
Section 2.23 Management.........................................................35
Section 2.24 ERISA..............................................................35
Section 2.25 Litigation.........................................................36
Section 2.26 Notice of Default..................................................36
Section 2.27 Single Purpose Entity..............................................36
Section 2.28 Trade Indebtedness.................................................36
Section 2.29 Conduct of Business................................................36
Section 2.30 Further Assurances; Filing; Re-Filing, etc.........................36
Section 2.31 No Joint Assessment; Separate Lots.................................38
ARTICLE III. SECURITY AGREEMENT.........................................................38
Section 3.1 Warranties, Representations and Covenants of Borrower...............38
Section 3.2 Financing Statements................................................40
Section 3.3 Addresses...........................................................40
ARTICLE IV. DEFAULT AND REMEDIES........................................................41
Section 4.1 Events of Default...................................................41
Section 4.2 Remedies............................................................43
Section 4.3 General Provisions Regarding Remedies...............................45
ARTICLE V. TRUSTEE......................................................................52
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</TABLE>
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<TABLE>
<S> <C>
Section 5.1 Certain Actions of Trustee..........................................51
Section 5.2 Reconveyance........................................................52
Section 5.3 Trustee's Covenants and Compensation................................52
Section 5.4 Substitution of Trustee.............................................52
Section 5.5 Resignation of Trustee..............................................52
Section 5.6 Ratification of Acts of Trustee.....................................52
ARTICLE VI. MISCELLANEOUS...............................................................52
Section 6.1 Notices.............................................................52
Section 6.2 Binding Obligations; Joint and Several..............................53
Section 6.3 Captions............................................................53
Section 6.4 Further Assurances..................................................53
Section 6.5 Severability........................................................53
Section 6.6 Borrower's Obligations Absolute.....................................54
Section 6.7 Amendments..........................................................54
Section 6.8 Other Loan Documents and Schedules..................................54
Section 6.9 Legal Construction..................................................54
Section 6.10 Merger.............................................................55
Section 6.11 Time of the Essence................................................55
Section 6.12 Reconveyance.......................................................55
Section 6.13 Partial Reconveyance...............................................56
Section 6.14 Defeasance.........................................................58
Section 6.15 Substitution of Mortgaged Property.................................60
Section 6.16 Cash Flow Deposit Account..........................................64
Section 6.17 Performance Reserve Account........................................65
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</TABLE>
<PAGE> 5
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "DEED OF TRUST") is made as of
March 30, 1999, by and between ARDEN REALTY FINANCE V, L.L.C., a Delaware
limited liability company having an office at 11601 Wilshire Boulevard, Suite
405, Los Angeles, CA 90025-1740 ("Trustor" and "BORROWER"), in favor of CHICAGO
TITLE INSURANCE COMPANY, a Missouri corporation, having an office at 700 S.
Flower Street, Suite 3305, Los Angeles, California 90017 ("Trustee"), for the
use and benefit of MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts
corporation having an office at 1295 State Street, Springfield, Massachusetts
01111-0001 ("BENEFICIARY" and "LENDER").
GRANTING CLAUSES
For good and valuable consideration and to secure the payment of an indebtedness
in the principal sum of One Hundred Fifteen Million and No/100 Dollars
($115,000,000) lawful money of the United States, to be paid according to that
certain Promissory Note of even date herewith made by Borrower to the order of
Lender in said principal sum and by this reference made a part hereof (said
Promissory Note, as the same may hereafter be amended, modified, consolidated,
replaced with one or more substitute promissory notes, or extended, the "Note"),
together with all other obligations and liabilities due or to become due to
Lender, all amounts, sums and expenses paid hereunder by or payable to Lender
according to the terms hereof, and all other covenants, obligations and
liabilities of Borrower under the Note, this Deed of Trust, the Assignment
(hereinafter defined), one or more agreements granting security interests in
accounts pledged to Lender as collateral security for the Loan, and any other
instrument evidencing, securing or executed in connection with the loan
evidenced by the Note (all of the foregoing instruments, collectively, the "LOAN
DOCUMENTS"), and together with all interest on said indebtedness, obligations,
liabilities, amounts, sums, Advances (as hereinafter defined) and expenses (all
of the foregoing, collectively, the "INDEBTEDNESS"), Borrower has created in
favor of Lender a security interest in and mortgaged, warranted, granted,
bargained, sold, conveyed, assigned, pledged, transferred and set over, and does
by these presents create a security interest in and MORTGAGE, WARRANT, GRANT,
BARGAIN, SELL, CONVEY, ASSIGN, PLEDGE, TRANSFER AND SET OVER unto Trustee, as
trustee for the benefit of Lender, to its successors in the trust created by
this Deed of Trust, and to its or their respective assigns forever, in trust,
with all POWERS OF SALE and RIGHTS OF ENTRY AND POSSESSION and all STATUTORY
RIGHTS AND COVENANTS in the State (hereinafter defined), the following property:
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<PAGE> 6
The parcel or parcels of land described in Schedule A attached hereto and by
this reference made a part hereof (the "LAND");
TOGETHER with the buildings, foundations, structures and improvements (including
fixtures) now or hereafter located on or in the Land (collectively, the
"IMPROVEMENTS");
TOGETHER with all right, title and interest, if any, of Borrower in and to the
streets and roads, opened or proposed, abutting the Land, all strips and gores
within or adjoining the Land, the air space and right to use the air space above
the Land, all rights of ingress and egress to and from the Land, all easements,
rights of way, reversions, remainders, estates, rights, titles, interests,
privileges, servitudes, tenements, hereditaments, and appurtenances now or
hereafter affecting the Land or the Improvements, all royalties and rights and
privileges appertaining to the use and enjoyment of the Land or the
Improvements, including all air, lateral support, streets, alleys, passages,
vaults, drainage, water, oil, gas and mineral rights, development rights, all
options to purchase or lease, and all other interests, estates or claims, in law
or in equity, which Borrower now has or hereafter may acquire in or with respect
to the Land or the Improvements (collectively, the "Appurtenances");
The Land, the Improvements and the Appurtenances are hereinafter sometimes
collectively referred to as the "PREMISES";
TOGETHER with all equipment, fittings, furniture, furnishings, appliances,
apparatus, and machinery in which Borrower now or hereafter has a possessory or
title interest and now or hereafter installed in or located upon the Premises
and Borrower's interest in all building materials, supplies and equipment now or
hereafter delivered to the Premises and intended to be installed therein or
located thereon; all fixtures, other goods and personal property of whatever
kind and nature now contained on or in or hereafter placed on or in the Premises
and used or to be used in connection with the letting or operation thereof, in
which Borrower now has or hereafter may acquire a possessory or title interest
(but specifically excluding inventory) and all renewals or replacements of any
of the foregoing property or articles in substitution thereof (collectively, the
"EQUIPMENT");
TOGETHER with all right, title and interest of Borrower in and under all present
or future accounts, escrows, documents, instruments, chattel paper, and general
intangibles, as the foregoing terms are defined in the Code (hereinafter
defined), and all contract rights, including, without limitation, casualty
insurance policies and liability insurance policies (irrespective of whether
such policies are required to be obtained or maintained in force pursuant to
this Deed of Trust or other Loan Documents), trade names, trademarks,
servicemarks, logos, copyrights, goodwill,
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<PAGE> 7
franchises, books, records, and, to the extent assignable by Borrower, plans,
specifications, permits, licenses, approvals, actions and causes of action which
now or hereafter relate to, are derived from or are used in connection with the
Premises or the use, operation, maintenance, occupancy or enjoyment thereof or
the conduct of any business or activities thereon (collectively, the
"INTANGIBLES");
TOGETHER with all right, title and interest of Borrower in and under all leases,
lettings, tenancies and licenses of the Premises or any part thereof now or
hereafter entered into and all amendments, extensions, renewals and guaranties
thereof, all security therefor, and all moneys payable thereunder (collectively,
the "LEASES");
TOGETHER with all rents, income, accounts, receivables, issues, profits,
security deposits and other benefits to which Borrower may now or hereafter be
entitled from the Premises, the Equipment or the Intangibles or under or in
connection with the Leases (collectively, the "PROPERTY INCOME"); and
TOGETHER with Borrower's rights in all proceeds, judgments, claims,
compensation, awards of damages and settlements pertaining to or resulting from
or in lieu of any condemnation or taking of the Premises by eminent domain or
any casualty loss or damage to any of the Premises, the Equipment, the
Intangibles, the Leases or the Property Income, and including also, without
limitation, Borrower's right to assert, prosecute and settle claims arising out
of or pertaining to such condemnation or taking or such casualty loss under
insurance policies constituting an Intangible and to apply for and receive
payments of proceeds under such insurance policies and in any condemnation or
taking, the right to apply for and receive all refunds with respect to the
payment of property taxes and assessments and all other proceeds from the
conversion, voluntary or involuntary, of the Premises, the Equipment, the
Intangibles, the Leases or the Property Income, or any part thereof, into cash
or liquidated claims. Collectively, all of the foregoing, are herein referred to
as the "PROCEEDS."
The Equipment, the Intangibles, the Leases, the Property Income and the Proceeds
are hereinafter sometimes collectively referred to as the "Collateral." The
Premises and the Collateral are hereinafter sometimes collectively referred to
as the "MORTGAGED PROPERTY."
TO HAVE AND TO HOLD the Mortgaged Property, with all the privileges and
appurtenances to the same belonging, and with the possession and right of
possession thereof, unto Trustee, as trustee for the benefit of Lender as
beneficiary, to its successors in the trust created by this Deed of Trust, and
to its or their successors and assigns forever, in trust, upon the terms and
conditions set forth herein.
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<PAGE> 8
ARTICLE I.
DEFINITION OF TERMS
As used in this Deed of Trust, the terms set forth below shall have the
following meanings:
"ADVANCES" - All sums, amounts or expenses advanced or paid and all
costs incurred by Lender, as provided in this Deed of Trust or in any other Loan
Document, upon failure of Borrower to pay or perform any obligation or covenant
contained herein or in such other Loan Document.
"ALLOCATED LOAN AMOUNT" - The amount stated as such for the portion of
the Mortgaged Property in question on Schedule C attached hereto.
"APPURTENANCES" - See Granting Clauses.
"ASSIGNMENT" - The Assignment of Leases and Rents from Borrower to
Lender of even date herewith.
"BANKRUPTCY PROCEEDING" - Any proceeding, action, petition or filing
under the Federal Bankruptcy Code or any similar state or federal law now or
hereafter in effect relating to bankruptcy, reorganization or insolvency, or the
arrangement or adjustment of debts.
"BENEFICIARY" - Massachusetts Mutual Life Insurance Company, its
successors and assigns (including any other holders from time to time of the
Note), and also herein called "Lender."
"BORROWER" - The party or parties identified and defined as Trustor and
Borrower on the Cover Sheet and in the preamble of this Deed of Trust, any
subsequent owner of the Mortgaged Property, and its or their respective heirs,
executors, legal representatives, successors and assigns.
"BUSINESS DAY" - Any day other than a Saturday, Sunday or other day on
which national banks in the State are not open for business.
"CODE" - The Uniform Commercial Code of the State.
"COLLATERAL" - See Granting Clauses.
"DEBT SERVICE COVERAGE RATIO" or "DSC" - The ratio obtained by dividing
(a) the income derived from the operation of the Mortgaged Property (or relevant
portion thereof), reduced by normal operating and maintenance expenses,
management fees and real estate taxes and insurance premiums with respect to the
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<PAGE> 9
Mortgaged Property (or relevant portion thereof) but without deduction for
capital expenditures, leasing costs, depreciation, and other non-cash items and
prior to any deduction for principal and interest payments due on the Loan (or
the Allocated Loan Amount for the property, as the context requires), all for
the period in question, by (b) the sum of the principal and interest payments
due on the Loan (or the Allocated Loan Amount for the property, as the context
requires) for the period in question.
"DEFAULT RATE" - The per annum interest rate equal to the lesser of (i)
the highest rate permitted by applicable law as of the date hereof or the date
of any Advance hereunder, whichever is higher, to be charged on commercial Deed
of Trust loans, or (ii) the sum of three percent (3%) plus the greater of either
the Contract Rate (as defined in the Note) or the rate published in The Wall
Street Journal as the average prime rate in its "Money Rates" section as of the
date of any Advance hereunder. If The Wall Street Journal is not in publication
on the applicable date, or ceases to publish such average rates, then any other
publication acceptable to Lender quoting daily market average prime rates will
be used.
"DEFEASANCE DEPOSIT" The amount that will be sufficient to purchase U.S.
Obligations (A) having maturity dates on or prior to, but as close as possible
to, successive scheduled Payment Dates (after the Defeasance Release Date) upon
which Payment Dates interest and principal payments would be required under the
Note and (B) in amounts sufficient to pay all scheduled principal and interest
payments on the Note. "
DEFEASANCE RELEASE DATE" - has the meaning provided in Section 6.14(c).
"ENTITY" - a (i) corporation, if Borrower is listed as a corporation in
the preamble to this Deed of Trust, (ii) limited partnership, if Borrower is
listed as a limited partnership in the preamble to this Deed of Trust or (iii)
limited liability company, if Borrower is listed as a limited liability company
in the preamble to this Deed of Trust.
"ENVIRONMENTAL LAW" - Any present or future federal, state or local law,
statute, regulation or ordinance, and any judicial or administrative order or
judgment thereunder, pertaining to health, industrial hygiene or the
environmental or ecological conditions on, under or about the Premises,
including, without limitation, each of the following as to date or hereafter
amended: the Comprehensive Environmental Response, Compensation and Liability
Act; the Resource Conservation and Recovery Act; the Toxic Substances Control
Act; the Federal Water Pollution Control Act (also known as the Clean Water
Act); the Clean Air Act; and the Hazardous Materials Transportation Act; the
Solid Waste Disposal Act; the Safe Drinking Water Act; the Occupational Safety
and Health Act; the Federal Water Pollution Control Act; the
5
<PAGE> 10
Emergency Planning and Community Right-To-Know Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the National Environmental Policy Act; and, the
Rivers and Harbors Appropriation Act.
"EQUIPMENT" - See Granting Clauses.
"ERISA" - The Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" - Any one or more of the events described in Section
4.1.
"FISCAL YEAR" - The 12 month period commencing on January 1 and ending
on December 31 during each year of the term of the Loan, or such other fiscal
year of Borrower as Borrower may select from time to time with the prior consent
of Lender.
"HAZARDOUS SUBSTANCE" - Any material, waste or substances which is:
(i) included within the definitions of "hazardous
substances," "hazardous materials," "toxic substances" or "solid
waste" in or pursuant to any Environmental Law, or subject to
regulation under any Environmental Law;
(ii) listed in the United States Department of
Transportation Optional Hazardous Materials Table, 49 C.F.R. "
172.101, as to date or hereafter amended, or in the United States
Environmental Protection Agency List of Hazardous Substances and
Reportable Quantities, 40 C.F.R. Part 302, as to date or
hereafter amended; or
(iii) explosive, radioactive, asbestos, a
polychlorinated biphenyl, oil or a petroleum product.
"IMPOSITIONS" - All taxes of every kind and nature, sewer rents, charges
for water, for setting or repairing meters and for all other utilities serving
the Premises, and assessments, levies, inspection and license fees and all other
charges imposed upon or assessed against the Mortgaged Property or any portion
thereof (including the Property Income), and any stamp or other taxes which
might be required to be paid, or with respect to any of the Loan Documents, any
of which might, if unpaid, affect the enforceability of any of the remedies
provided in this Deed of Trust or result in a lien on the Mortgaged Property or
any portion thereof, regardless of to whom assessed.
"INDEBTEDNESS" - See Granting Clauses.
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<PAGE> 11
"INDEPENDENT DIRECTOR" - A duly appointed member of the board of
directors or managers of the relevant Entity who shall not have been, at the
time of such appointment, at any time after appointment, or at any time in the
five (5) years preceding such appointment, (i) a direct or indirect legal or
beneficial owner in such Entity or any of its affiliates, (ii) a creditor,
supplier, employee, officer, director, manager or contractor of such Entity or
any of its affiliates, (iii) a person who controls such Entity or any of its
affiliates, or (iv) a member of the immediate family of a person defined in (i),
(ii) or (iii) above; provided that such person shall not be disqualified solely
by being an "independent manager" and "special member" of other Single-Purpose
Entities affiliated with Borrower.
"INTANGIBLES" - See Granting Clauses.
"LAND" - See Granting Clauses.
"LATE CHARGE" - Any charge designated as such and payable by Borrower
for tardy performance by Borrower under the Note, this Deed of Trust or any
other Loan Document.
"LEASES" - See Granting Clauses.
"LENDER" - Massachusetts Mutual Life Insurance Company, the Beneficiary
and Lender identified as such on the Cover Sheet and in the preamble of this
Deed of Trust, and its successors and assigns (including any other holders from
time to time of the Note).
"LOAN DOCUMENTS" - See Granting Clauses.
"LOAN TO VALUE" or "LTV" - The percentage obtained by dividing the
outstanding principal balance of the Loan (or, if the context so requires, the
Allocated Loan Amount for the portion of the Mortgaged Property in question) by
the fair market value of the Mortgaged Property (or, if the context so requires,
the fair market value of the portion of the Mortgaged Property in question), in
each case as of the date of determination and as determined in the manner
specified in the applicable context of the Loan Documents.
"LOSSES" - Claims, suits, liabilities (including without limitation,
strict liabilities), actions, proceedings, obligations, debts, damages, losses,
costs, fines, penalties, charges, fees, expenses, judgments, awards, amounts
paid in settlement, punitive damages, foreseeable and unforeseeable
consequential damages of whatever kind or nature (including but not limited to
attorneys' fees and other costs of defense).
"MORTGAGED PROPERTY" - See Granting Clauses.
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<PAGE> 12
"NOTE" - See Granting Clauses.
"PAYMENT DATE" - The first day of each calendar month during the term of
the Loan.
"PERMITTED ENCUMBRANCES" - The liens and security interest created by
this Deed of Trust and the other Loan Documents and those exceptions to title
set forth in Schedule B to this Deed of Trust.
"PREMISES" - See Granting Clauses.
"PROCEEDS" - See Granting Clauses.
"PROPERTY INCOME" - See Granting Clauses.
"RATING AGENCIES" means Fitch Investors Service, Inc., Moody's Investors
Service, Inc., Duff & Phelps Credit Rating Co., and Standard & Poor's Rating
Services, a division of The McGraw Hill Companies, Inc. or any successor
thereto, and any other nationally recognized statistical rating organization to
the extent that any of the foregoing have been or will be engaged by Lender or
its designees in connection with or in anticipation of a Securitization (each,
individually a "Rating Agency").
"RELEASE" - Release means and includes the following: the release,
deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of a
Hazardous Substance no matter how or by whom or what caused.
"REMEDIATION" - Remediation means and includes the following: any
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 a 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 and to anything referred to in Section
2.20.
"SINGLE-PURPOSE ENTITY" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning the Mortgaged
Property or (y) acting as the managing member of the limited liability company
or the general partner of a limited partnership which owns the Mortgaged
Property, (ii) has not and will not engage in any business unrelated to the (x)
the ownership of the Mortgaged
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Property or (y) acting as a member of a limited liability company or general
partner of a limited partnership which owns the Mortgaged Property, (iii) has
not and will not have any assets other than (x) those related to the Mortgaged
Property or (y) its membership interest in the limited liability company or its
general partnership interest in the limited partnership which owns the Mortgaged
Property, as applicable, (iv) has not and will not engage in, seek or consent to
any dissolution, winding up, liquidation, consolidation or merger, and, except
as otherwise expressly permitted by this Mortgage, has not and will not engage
in, seek or consent to any asset sale, transfer of its partnership or membership
or shareholder interests, or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of formation or
limited liability company agreement (as applicable), (v) if such entity is a
limited partnership, has and will have as a general partner, a general partner
which is and will be a Single-Purpose Entity which is a corporation, (vi) if
such entity is a limited liability company it either (a) has and will have as
its managing member, a corporation which will be a Single Purpose Entity or (b)
has a special independent member (the "SPECIAL MEMBER") who is an individual
recommended by Borrower and approved by Lender, who is a member of and has
voting rights on the board of managers of such limited liability company, and
such limited liability company's organizational and governing documents are
acceptable to Lender (vii) if such entity is a corporation, it is and will be a
Single Purpose Entity which at all relevant times has and will have at least one
Independent Director and whose Board of Directors has not taken and will not
take any action requiring the unanimous vote of 100% of the members of the Board
of Directors unless all of the directors, including without limitation,
Independent Directors, shall have participated in such vote; (viii) has not and
will not fail to correct any known misunderstanding regarding the separate
identity of such entity, (ix) without the unanimous consent of all of the
partners, directors (including without limitation all Independent Directors) or
members (including without limitation the Special Member) or managers (including
the Independent Director), as applicable, has not and will not with respect to
itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest (a) file a bankruptcy, insolvency or
reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally; (b) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for such entity or all or any portion of such entity's properties; or
(c) make any assignment for the benefit of such entity's creditors; (x) has
maintained and will maintain its accounts, books and records separate from any
other person or entity (provided, that such Person may be included in the
consolidated financial statements or tax group of any other Person), (xi) has
maintained and will maintain its books, records, resolutions and agreements as
official records of Borrower, (xii) has not commingled and will not commingle
its funds or assets with those of any other
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entity (other than commingling of rents for not more than two (2) months during
the transition of ownership of the Mortgaged Properties from Arden Realty
Limited Partnership to Borrower), (xiii) has held and will hold its assets in
its own name, (xiv) has conducted and will conduct its business in its name,
(xv) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other person or entity
(provided, that such Person may be included in the consolidated financial
statements or tax group of another Person), (xvi) has paid and will pay its own
liabilities out of its own funds and assets, (xvii) has observed and will
observe all partnership, corporate or limited liability company formalities as
applicable, (xviii) has maintained and will maintain an arms-length relationship
with its affiliates (it being acknowledged that the Management Agreement dated
as of March 31, 1999 between Borrower and Arden Realty Limited Partnership
represents such an arms-length relationship), (xix) (a) if such entity owns the
Mortgaged Property, has and will have no indebtedness other than the
Indebtedness and unsecured trade payables in the ordinary course of business
relating to the ownership and operation of the Mortgaged Property which (1) do
not exceed, at any time, a maximum amount of three percent (3%) of the original
amount of the Loan and (2) are paid within thirty (30) days of the date due, or
(b) if such entity acts as the general partner of a limited partnership or
managing member of a limited liability company which owns the Mortgaged
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner or
managing member which owns the Mortgaged Property which (1) do not exceed, at
any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within thirty (30)
days of the date due, (xx) has not and will not assume or guarantee or become
obligated for the debts of any other entity or hold out its credit as being
available to satisfy the obligations of any other entity except for the
Indebtedness and customary indemnifications of officers, directors,
shareholders, members and managers for liabilities incurred within the scope of
performance of their duties as such, (xxi) has not acquired and will not acquire
obligations or securities of its partners, members or shareholders, (xxii) has
allocated and will allocate fairly and reasonably shared expenses, including,
without limitation, shared office space and uses separate stationery, invoices
and checks, (xxiii) has not and will not pledge its assets for the benefit of
any other person or entity, (xxiv) has held and identified itself and will hold
itself out and identify itself as a separate and distinct entity under its own
name and not as a division or part of any other person or entity, provided that
such Person may conduct its business through a property manager retained
pursuant to a property management agreement, (xxv) has not made and will not
make loans to any person or entity (other than advances of costs to persons
permitted to be indemnified pursuant to clause (xx), above, (xxvi) has not and
will not identify its partners, members or shareholders, or any affiliates of
any of them as a division or part of it, (xxvii) has not entered and will not
enter into or be a party to, any transaction with its
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partners, members, shareholders or its affiliates except in the ordinary course
of its business and on terms which are intrinsically fair and are no less
favorable to it than would be obtained in a comparable arms-length transaction
with an unrelated third party (it being acknowledged that the Management
Agreement dated as of March 31, 1999, between Borrower and Arden Realty Limited
Partnership represents such an arms-length relationship), (xxviii) has paid and
will pay the salaries of its own employees from its own funds, (xxix) has
maintained and will maintain adequate capital in light of its contemplated
business operations and (xxx) if such entity is a limited liability company or
limited partnership, then such entity shall continue (and not dissolve) for so
long as a solvent equity member or general partner, as applicable, exists and
such entity's organizational documents shall contain such provision.
"STATE" - The State or Commonwealth in which the Land is situated.
"TRUSTEE" - The party or parties identified and defined as Trustee on
the Cover Sheet and in the preamble of this Deed of Trust, and its or their
respective successors in the trust created by this Deed of Trust, and its or
their respective assigns.
"TRUSTOR" - The party or parties identified as such on the Cover Sheet
and in the preamble of this Deed of Trust, any subsequent owner of the Mortgaged
Property, and its or their respective heirs, executors, legal representatives,
successors and assigns. The Trustor is also herein called "Borrower."
"U.S. OBLIGATIONS" means obligations or securities not subject to
prepayment, call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America.
ARTICLE II.
COVENANTS OF BORROWER
Borrower covenants, warrants, represents and agrees with and to Trustee and
Lender as follows:
Payment of the Indebtedness. Borrower shall punctually pay the
Indebtedness at the times and in the manner provided in the Note and the other
Loan Documents, all in lawful money of the United States of America.
Section 2.2 Title to the Mortgaged Property.
(a) Borrower has fee simple title (or such lesser estate
therein as may be specified in Schedule A) to the Premises and good
indefeasible title to the
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balance of the Mortgaged Property, free and clear of liens and
encumbrances except Permitted Encumbrances.
(b) Borrower has full power and lawful authority to
encumber the Mortgaged Property in the manner and form herein set
forth.
(c) This Deed of Trust is and will remain a valid and
enforceable lien on and security interest in the Mortgaged Property.
(d) Borrower will preserve such title and will forever
warrant and defend the same and the validity and priority of the lien
hereof to Trustee and Lender against all claims whatsoever.
Section 2.3 Maintenance of the Mortgaged Property. Borrower shall
maintain the Mortgaged Property in good and safe condition, working order and
repair, ordinary wear and tear excepted, and comply in all material respects
with all existing and future federal, state and local laws, ordinances, rules
and regulations and court orders affecting or which may be interpreted as
affecting the Mortgaged Property. Borrower shall permit Lender to enter upon and
inspect the Mortgaged Property upon prior notice at all reasonable hours, but
subject to the rights of tenants. Borrower shall not, without the prior consent
of Lender, (a) change the use of the Premises or cause or permit the use or
occupancy of any part of the Premises to be discontinued if such discontinuance
would violate any zoning or other law, ordinance or regulation; (b) consent to
any zoning reclassification, modification or restriction affecting the Premises;
(c) threaten, commit or permit any waste, structural or material alteration
(other than alterations made in compliance with Section 2.4 or 2.5), demolition
or removal of the Mortgaged Property or any portion thereof (provided that the
Equipment included within the Collateral may be removed if replaced with similar
items of equal or greater value); or (d) take any steps whatsoever to convert
the Mortgaged Property, or any portion thereof, to a condominium or cooperative
form of ownership. No provision of this Section 2.3 shall prohibit Borrower from
undertaking and completing tenant improvement work authorized under Leases
previously approved by Lender or not requiring Lender's prior approval, or
alteration, demolition or removal of Mortgaged Property in connection with
restoration or condemnation in accordance with Sections 2.4 and 2.5.
Section 2.4 Insurance; Restoration.
(a) Borrower shall keep the Improvements and the Equipment
insured against damage by fire and the other hazards (excluding
earthquake and flood) covered by a comprehensive all risk coverage
insurance policy, in an amount equal to one hundred percent (100%) of
the full insurable value thereof
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(which shall mean the full repair and actual replacement value
thereof providing for no deductible in excess of Twenty-Five Thousand
Dollars ($25,000), without reduction for depreciation or
co-insurance) as approved by Lender, and against loss of rents in an
amount not less than twelve (12) months' rental income from all
Leases. Borrower shall also keep the Improvements and the Equipment
insured against flood, earthquake and earth movement, as long as such
insurance is available at commercially reasonable premiums (it being
acknowledged that the premiums beings charged for such insurance as
of the date of this Deed of Trust are commercially reasonable).
Borrower shall also carry such other insurance, and in such amounts,
as Lender may from time to time reasonably require, against insurable
risks which at the time are commonly insured against in the case of
premises similarly situated, due regard being given to the
availability of insurance and to the type of construction, location,
utilities, use and occupancy of the Premises or any replacements or
substitutions therefor. Such additional insurance may include
workers' compensation, boiler and machinery, flood, earthquake,
demolition and contingent liability from the operation of
"non-conforming" improvements on the Premises, and shall be obtained
within twenty (20) days after demand by Lender. Borrower shall not
obtain any umbrella or blanket liability or casualty policy or any
separate or additional insurance which is contributing in the event
of loss. Notwithstanding the foregoing, in the event Borrower obtains
an umbrella or a blanket insurance policy or a separate policy or any
other insurance policy affecting the Mortgaged Property hereunder,
Borrower shall notify Lender of the same and at the request of Lender
shall cause certified copies of each insurance policy to be delivered
as required under Section 2.4(c) below. Any umbrella or blanket
insurance policy shall specifically allocate to the Mortgaged
Property 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 Mortgaged Property in compliance with the
provisions of Section 2.4(c), giving Lender all of the rights set
forth in this Section 2.4. The Proceeds of insurance paid on account
of any damage to or destruction of the Premises or any portion
thereof shall be paid over to Lender to be applied as hereinafter
provided.
(b) Borrower shall also maintain public liability
insurance with respect to the Premises against personal injury, death
and property damage, with limits of liability in amounts satisfactory
to Lender in its sole discretion.
(c) All insurance policies and endorsements required
pursuant to this Deed of Trust shall (i) be endorsed to name Lender
as an insured thereunder, as its interest may appear, with loss
payable to Lender, without contribution, under a long-form,
non-contributory mortgagee clause, or otherwise endorsed as Lender
may reasonably require; (ii) be fully paid for and contain such
provisions and expiration dates and be in such form and issued by
such insurance companies
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licensed to do business in the State as shall be approved by Lender,
and shall have a rating of "A-VIII" or better as established by
Best's Rating Guide (or an equivalent rating with such other
publication of a similar nature as shall be in current use) and a
rating of long-term unsecured debt obligations of at least "AA" by
Standard & Poor's Rating Services, a division of The McGraw Hill
Companies, Inc.; (iii) without limiting the foregoing, provide that
such policy or endorsement may not be canceled or materially changed
except upon thirty (30) days prior written notice of intention of
non-renewal, cancellation or material change to Lender, and that no
act or thing done by Borrower or Lender shall invalidate the policy
as against Lender; (iv) have a minimum term of twelve (12) months and
(v) be in form and content satisfactory to Lender. Lender
acknowledges that the insurance policies and endorsements provided to
Lender on the date hereof comply with the requirements of this
Section. Borrower shall not finance any insurance policies required
hereunder, or any premiums payable in connection therewith. Borrower
shall deliver all original policies including all endorsements and
renewals thereof, or copies thereof certified by the insurance
company or authorized agent as being true copies, to Lender together
with all endorsements required hereunder, on the date of this Deed of
Trust and thereafter at least ten (10) days prior to the expiration
date of such policies. Borrower may request an extension of time not
exceeding one hundred twenty (120) days to deliver the foregoing
policies, endorsements and renewals or certified copies thereof if
Borrower has done all things necessary to obtain the issuance of the
policies, endorsements and renewals including, without limitation,
the payment of all premiums therefore, and Borrower has delivered to
Lender within the above ten (10) day period an insurance binder
satisfactory to Lender issued by the approved insurer showing all
required coverage to be in full force and effect for the succeeding
twelve (12) month period along with evidence satisfactory to Lender
of payment in full of all premiums. If Borrower fails to maintain
insurance in compliance with this Deed of Trust, Lender may (but
shall not be obligated to) obtain such insurance and pay the premium
therefor and Borrower shall reimburse Lender on demand for all such
Advances. Notwithstanding anything to the contrary contained herein
or in any provision of law, the Proceeds of insurance policies coming
into the possession of Lender shall not be deemed trust funds and
Lender shall be entitled to dispose of such Proceeds as hereinafter
provided.
(d) In the event of any damage to or destruction of the
Premises and/or Equipment the repair of which would cost in excess of
$100,000, Borrower shall give prompt written notice to Lender and
shall promptly commence and diligently continue to completion the
repair, restoration and rebuilding of the Premises and/or Equipment
so damaged or destroyed in full compliance with all legal
requirements and with the provisions of Section 2.4(h)(i) below, and
free and
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clear from any and all liens and claims. Such repair, restoration and
rebuilding of the Premises are sometimes hereinafter collectively
referred to as the "WORK." Borrower shall not adjust, compromise or
settle any claim for casualty insurance proceeds without the prior
consent of Lender. Lender shall have the option in its sole
discretion (subject to Section 2.4(g) and (i)) to apply any casualty
insurance Proceeds it may receive pursuant to this Deed of Trust
(less any cost to Lender of recovering and paying out such Proceeds,
including reasonable attorneys' fees) to the payment of the
Indebtedness or to allow all or a portion of such Proceeds to be used
for the Work. If any insurance Proceeds are applied to reduce the
Indebtedness, provided no Event of Default shall have occurred and be
continuing, Lender shall apply the same, without any prepayment fee,
in the following order:
(i) first, to the payment of interest due on
any Advances;
(ii) next, to the principal amount of any
Advances;
(iii) next, to any Late Charges, attorneys'
fees or any other amount due hereunder or under a Loan
Document save for the amounts described in (iv) and (v)
immediately below;
(iv) next, to accrued interest then due under
the Note; and
(v) finally, to the unpaid principal balance of
the Note (in the inverse order of maturity of principal
installments thereof).
If an Event of Default shall have occurred and be
continuing, however, Lender, at its option, may apply any
insurance Proceeds to the foregoing items in such order
and priority as Lender deems appropriate in its sole
discretion.
(e) In the event of the foreclosure of this Deed of Trust
or other transfer of title to or assignment of the Mortgaged Property
in extinguishment of the Indebtedness in whole or in part, all right,
title and interest of Borrower in and to all policies of insurance
required by this Deed of Trust and any insurance Proceeds shall inure
to the benefit of and pass to Lender or any purchaser or transferee
at the foreclosure sale of the Mortgaged Property.
(f) Borrower hereby irrevocably appoints Lender its
attorney-in-fact, coupled with an interest, to apply and make claims
for casualty insurance Proceeds under all insurance policies
constituting Intangibles, to prosecute and settle such claims and to
endorse any checks, drafts or other instruments representing any
casualty insurance Proceeds whether payable by reason of loss
thereunder or otherwise. Additionally, Lender may notify any and all
insurers
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under casualty and liability insurance policies constituting part of
the Intangibles that Lender has a security interest pursuant to the
provisions of this Deed of Trust in and to such insurance policies
and any proceeds thereof, and that any payments under those insurance
policies are to be made directly to Lender. Lender's rights under
this Section 2.4(f) may be exercised by Lender or a court appointed
receiver appointed upon the request of Lender and irrespective of
whether or not a default shall have occurred under this Deed of
Trust.
(g) Notwithstanding the provisions of Section 2.4(d)
above, Lender shall, upon request by Borrower, permit Borrower to use
the Proceeds for the Work (subject to the provisions of, and less
Lender's costs described in, Section 2.4(h) below), so long as:
(i) no Event of Default which permits
acceleration of the Loan shall have occurred and be
continuing;
(ii) the original Borrower named herein
continues to be the owner of the portion of Mortgaged
Property in question;
(iii) the Work can be completed within twelve
(12) months from the date of the damage to or destruction
of the Premises and Lender determines in its reasonable
judgment that the cost of the Work shall not exceed fifty
percent (50%) of the Allocated Loan Amount for the portion
of the Mortgaged Property in question;
(iv) none of the Leases in effect immediately
prior to the damage or destruction shall have been
canceled or terminated nor shall any such Leases contain
any still exercisable right to cancel, as a result of such
damage or destruction;
(v) all sums necessary to effect the Work over
and above any available Proceeds shall be at the sole cost
and expense of the Borrower and, at Lender's request,
Borrower shall deposit such additional amounts, as
estimated by Lender in its sole discretion, with Lender
prior to commencing any Work and at all times thereafter;
(vi) at all times during any such Work Borrower
shall maintain, at its sole cost and expense, workers'
compensation, builders' risk and public liability
insurance in amounts satisfactory to Lender and in
accordance with the provisions of this Section 2.4; and
(vii) any unexpended casualty insurance
Proceeds, at the sole option of the Lender, shall either
be paid over to the Borrower or
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shall be applied to the reduction of the Indebtedness, but
any unexpended amounts of any additional deposit shall be
returned to Borrower upon completion of the Work. If the
Proceeds are used to reduce the Indebtedness, they shall
be applied in the order provided in Section 2.4(d),
without any prepayment fee.
(h) If any insurance Proceeds are used for the Work, then
such Proceeds shall be held by Lender and shall be paid out from time
to time to Borrower as the Work progresses (less any cost to Lender
of recovering and paying out such Proceeds, including reasonable
attorneys' fees and costs allocable to inspecting the Work and the
plans and specifications therefor), subject to each of the following
conditions:
(i) If the Work is structural or if the cost of
the Work is reasonably estimated to exceed One Hundred
Thousand and No/100 Dollars ($100,000.00), the Work shall
be conducted under the supervision of a certified and
registered architect or engineer reasonably satisfactory
to Lender. Before Borrower commences any Work, other than
temporary work to protect property or prevent interference
with business, Lender shall have approved the plans and
specifications for the Work, which approval shall not be
unreasonably withheld or delayed, it being nevertheless
understood that such plans and specifications shall
provide for Work so that, upon completion thereof, the
Premises shall be at least equal in value and general
utility to the Premises immediately prior to the damage or
destruction.
(ii) Each request for payment shall be made on
not less than seven Business Days prior notice to Lender
and shall be accompanied by a certificate of the architect
or engineer in (i) above (or a certificate given by
Borrower if no architect or engineer is so required)
stating (A) that all of the Work completed has been done
in compliance in all material respects with the approved
plans and specifications, if required under (i) above, (B)
that the sum requested is justly required to reimburse the
Borrower for payments by Borrower, or is justly due to the
contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services
or materials for the Work (giving a brief description of
such services and materials), and that when added to all
sums previously paid out by Lender does not exceed the
value of the Work (including "soft costs") done to the
date of such certificate, (C) if the sum requested is to
cover payment relating to repair and restoration of
Equipment required or relating to the Premises, that title
to the items of Equipment covered by the request for
payment
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<PAGE> 22
is vested in Borrower, and (D) that the amount of such
Proceeds plus any additional deposit made by Borrower
remaining in the hands of Lender will be sufficient on
completion of the Work to pay for the same in full (giving
in such reasonable detail as Lender may require an
estimate of the cost of such completion). Additionally,
each request for payment shall contain a statement signed
by Borrower approving both the Work done to date and the
Work covered by the request for payment in question.
(iii) Each request for payment shall be
accompanied by waivers of lien satisfactory to Lender
covering that part of the Work for which payment or
reimbursement is being requested and, if required by
Lender, a search prepared by a title company or licensed
abstractor, or by other evidence satisfactory to Lender
that there has not been filed with respect to the Premises
any mechanics' or other lien or instrument for the
retention of title relating to any part of the Work not
discharged of record. Additionally, as to any Equipment
covered by the request for payment, Lender shall be
furnished with evidence of payment therefor and such
further evidence satisfactory to assure Lender of its
valid first lien on the Equipment.
(iv) Lender shall have the right to inspect the
Work at all reasonable times and may condition any
disbursement of Proceeds upon the satisfactory completion,
as determined in Lender's sole discretion, of any portion
of the Work for which payment or reimbursement is being
requested. Neither the approval by Lender of the plans and
specifications for the Work nor the inspection by Lender
of the Work shall make Lender responsible for the
preparation of such plans and specifications or the
compliance of such plans and specifications, or of the
Work, with any applicable law, regulation, ordinance,
covenant or agreement.
(v) Proceeds shall not be disbursed more
frequently than every thirty (30) days.
(vi) Any request for payment made after the
Work has been completed shall be accompanied by a copy or
copies of any certificate or certificates required by law
to render occupancy and full operation of the Premises
legal.
(vii) Upon completion of the Work and payment
in full therefor, or upon any failure on the part of
Borrower to promptly
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commence the Work or to proceed diligently and
continuously to completion of the Work, Lender may apply
any such Proceeds it then or thereafter holds to the
payment of the Indebtedness; provided, however, that
Lender, at its sole option, shall be entitled to apply at
any time all or any portion of insurance Proceeds it then
holds to the curing of any Event of Default under this
Deed of Trust, the Note or any other Loan Document.
(i) Notwithstanding any other provision of this Section
2.4, if no Event of Default which permits acceleration shall have
occurred and be continuing and in Lender's reasonable judgment the
cost of the Work is less than one percent (1%) of the outstanding
principal balance of the Note as of the date of loss or damage to the
Premises and/or Equipment and the Work can be completed in less than
ninety (90) days, then Lender, upon request by Borrower, shall permit
Borrower to apply for and receive the insurance Proceeds directly
from the insurer (and Lender shall advise the insurer to pay over
such Proceeds directly to Borrower), provided that Borrower shall
apply such insurance Proceeds solely to the prompt and diligent
commencement and completion of such Work.
Section 2.5 Condemnation. Borrower shall notify Lender
immediately of the actual or threatened commencement of any proceedings for the
condemnation or taking of the Premises or any portion thereof and shall deliver
to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in such proceedings and Borrower shall
deliver to Lender all instruments requested by Lender to permit such
participation. Lender is hereby irrevocably appointed as Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain the Proceeds of any such condemnation and to make any
compromise or settlement in connection with such proceedings, subject to the
provisions of this Deed of Trust. Borrower shall not adjust, compromise, settle
or enter into any agreement with respect to such proceedings without the prior
consent of Lender. All Proceeds of any condemnation, or purchase in lieu
thereof, of the Premises or any portion thereof are hereby assigned to and shall
be paid to Lender. Borrower hereby authorizes Lender to collect and receive such
Proceeds, to give proper receipts and acquittances therefor and, in Lender's
sole discretion, to apply such Proceeds (less any cost to Lender of recovering
and paying out such Proceeds, including reasonable attorneys' fees and costs
allocable to inspecting any repair, restoration or rebuilding work and the plans
and specifications therefor) toward the payment of the Indebtedness or to the
repair, restoration or rebuilding of the Premises in the manner and subject to
the conditions set forth in Section 2.4(h). If the Proceeds are used to reduce
the Indebtedness, they shall be applied in the order provided in Section 2.4(d),
without any prepayment fee. Borrower shall promptly execute and deliver all
instruments requested by Lender for the purpose of confirming the assignment of
the condemnation Proceeds to Lender.
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Section 2.6 Impositions.
(a) Except to the extent of amounts deposited with Lender for
the purpose of paying Impositions pursuant to Section 2.7, below,
Borrower shall pay and discharge all Impositions prior to delinquency
and shall furnish to Lender validated receipts or other evidence
satisfactory to Lender showing the payment of such Impositions within
fifteen (15) days after the same would otherwise have become delinquent.
Borrower's obligation to pay Impositions pursuant to this Deed of Trust
shall include, to the extent permitted by applicable law, taxes
resulting from future changes in law which impose upon Trustee or Lender
an obligation to pay any property taxes or other Impositions or which
otherwise adversely affect Trustee's or Lender's interests. Should
Borrower default in the payment of any Impositions, Lender may (but
shall not be obligated to) pay such Impositions or any portion thereof
and Borrower shall reimburse Lender on demand for all such Advances.
(b) Borrower shall not be required to pay, discharge or remove
any Imposition so long as Borrower contests in good faith such
Imposition or the validity, applicability or amount thereof by an
appropriate legal proceeding which operates to prevent the collection of
such amounts and the sale of the Mortgaged Property or any portion
thereof; provided, however, that prior to the date on which such
Imposition would otherwise have become delinquent Borrower shall have
(i) given Lender prior notice of such contest and (ii) deposited with
Lender, and shall deposit such additional amounts as are necessary to
keep on deposit at all times, an amount equal to at least one hundred
ten per cent (110%) of the total of (A) the balance of such Imposition
then remaining unpaid and (B) all interest, penalties, costs and charges
accrued or accumulated thereon. Any such contest shall be prosecuted
with due diligence, and Borrower shall promptly pay the amount of such
Imposition as finally determined, together with all interest and
penalties payable in connection therewith. Lender shall have full power
and authority to apply any amount deposited with Lender under this
Section 2.6(b) to the payment of any unpaid Imposition to prevent the
sale or forfeiture of the Mortgaged Property for non-payment thereof.
Lender shall have no liability, however, for failure to so apply any
amount deposited unless Borrower requests the application of such amount
to the payment of the particular Imposition for which such amount was
deposited. Any surplus retained by Lender after payment of the
Imposition for which a deposit was made shall be repaid to Borrower
unless an Event of Default shall then exist under the provisions of this
Deed of Trust, in which case said surplus may be retained by Lender to
be applied to the Indebtedness. Notwithstanding any provision of this
Section 2.6(b) to the contrary, Borrower
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shall pay any Imposition which it might otherwise be entitled to contest
if, in the reasonable opinion of Lender, the Mortgaged Property is in
jeopardy or in danger of being forfeited or foreclosed. If Borrower
refuses to pay any such Imposition, Lender may (but shall not be
obligated to) make such payment and Borrower shall reimburse Lender on
demand for all such Advances. Additionally, in such event, if Lender is
prevented by law or judicial or administrative order from paying such
Imposition, then Lender, at its option, may declare the entire
Indebtedness immediately due and payable.
Section 2.7 Deposits. Borrower shall deposit with Lender,
monthly, on the due date of each monthly installment under the Note, 1/12th of
the annual charges (as estimated by Lender) for Impositions, and, if required by
Lender, 1/12th of the annual charges for rent (if Borrower is lessee of an
interest in the Mortgaged Property) and insurance premiums with respect to the
Mortgaged Property. If deposits for insurance premiums are required by Lender at
any time when insurance is furnished pursuant to "blanket" policies, the monthly
deposits shall be equal to one twelfth (1/12th) of the product obtained by
multiplying the annual premium for such blanket policy by a fraction, the
numerator of which is the total square footage of the Improvements on the
Mortgaged Property and the denominator is the total square footage of all
improvements covered by such blanket policy. If required by Lender, Borrower
shall also deposit with Lender, simultaneously with such monthly deposits and/or
the execution of this Deed of Trust, a sum of money which together with such
monthly deposits will be sufficient to make the payment of each such charge at
least thirty (30) days prior to the date any Imposition becomes delinquent.
Should such charges not be ascertainable at the time any deposit is required to
be made, the deposit shall be made on the basis of the charges for the prior
year or payment period, as reasonably estimated by Lender. When the charges are
fixed for the then current year or period, Borrower shall deposit any deficiency
on demand. All funds deposited with Lender shall be held without interest
(unless the payment of interest thereon is required under applicable law), may
be commingled with Lender's other funds, and shall be applied by Lender in
payment of the foregoing charges when and as payable provided that no Event of
Default shall exist. Should an Event of Default exist, the funds so deposited
may be applied in payment of the charges for which such funds shall have been
deposited or to the payment of the Indebtedness or any other charges affecting
the Mortgaged Property, as Lender in its sole discretion may determine, but no
such application shall be deemed to have been made by operation of law or
otherwise until actually made by Lender as herein provided. Borrower shall
furnish Lender with bills and all other documents necessary for the payment of
the foregoing charges at least ten (10) days prior to the date on which each
payment thereof shall first become due.
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Section 2.8 Mortgage Taxes. Borrower shall pay any and all taxes,
charges, filing, registration and recording fees, excises and levies imposed
upon Lender by reason of its ownership of, or measured by amounts payable under,
the Note, this Deed of Trust or any other Loan Document (other than income,
franchise and doing business taxes), and shall pay all stamp taxes and other
taxes required to be paid on the Note or the other Loan Documents. If Borrower
fails to make such payment within five days after notice thereof from Lender,
Lender may (but shall not be obligated to) pay the amount due, and Borrower
shall reimburse Lender on demand for all such Advances. If applicable law
prohibits Borrower from paying such taxes, charges, filing, registration and
recording fees, excises, levies, stamp taxes or other taxes, then Lender may
declare the Indebtedness then unpaid to be immediately due and payable. In such
event, no prepayment fee shall be charged.
Section 2.9 Loan Documents Authorized.
(a) The execution and delivery of this Deed of Trust, the
Note and the other Loan Documents have been duly authorized and there is
no provision in Borrower's organizational documents, as amended,
requiring further consent for such action by any other person or entity.
(b) Borrower is duly organized, validly existing and in
good standing under the laws of the state of its formation.
(c) Borrower has all necessary franchises, licenses,
authorizations, registrations, permits and approvals and full power and
authority to own and operate its properties, including the Mortgaged
Property, and carry on its business as now conducted in each
jurisdiction where Borrower conducts its business.
(d) The execution and delivery of and performance of its
obligations under the Loan Documents (i) will not result in Borrower
being in default under any provision of its organizational documents, as
amended, any court order, or any mortgage, deed of trust or other
agreement to which it is a party and (ii) do not require the consent of
or any filing with any governmental authority, except the recording of
this Mortgage and the Assignment and filing of UCC-1 financing
statements.
(e) All necessary and required actions have been duly
taken by and on behalf of Borrower to make and constitute the Loan
Documents, and the Loan Documents constitute, legal, valid and binding
obligations enforceable in accordance with their respective terms,
subject only to the application of bankruptcy and other laws affecting
the rights of creditors generally.
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(f) The Mortgaged Property is in compliance in all
material respects with all provisions of all zoning, subdivision, land
use, environmental, traffic, fire, building, and occupational safety and
health rules, regulations, codes, acts and statutes to which it is
subject.
Section 2.10 Maintenance of Existence. So long as it owns the
Mortgaged Property, Borrower shall do all things necessary to preserve and keep
in full force and effect its existence, franchises, licenses, authorizations,
registrations, permits and approvals under the laws of the state of its
formation and the State, and shall comply in all material respects with all
regulations, rules, ordinances, statutes, orders and decrees of any governmental
authority or court now or hereafter applicable to Borrower or to the Mortgaged
Property or any portion thereof.
Section 2.11 Payment of Liens. Borrower shall pay when due all
payments and charges due under or in connection with any liens and encumbrances
on and security interests in the Mortgaged Property or any portion thereof, all
rents and charges under any ground leases and other leases forming a part of the
Mortgaged Property, and all claims and demands of mechanics, materialmen,
laborers and others which, if unpaid, might result in or permit the creation of
a lien on the Mortgaged Property or any portion thereof, and shall cause the
prompt (but in no event later than thirty (30) days after imposition), full and
unconditional discharge of all liens imposed on or against the Mortgaged
Property or any portion thereof. Notwithstanding the foregoing, Borrower shall
have the right to contest in good faith the validity of any such payment,
charge, rent, claim or demand, and to withhold payment of that portion of the
same which is so contested, so long as Borrower either (a) posts a bond in
compliance with California statutes such that no lien or charge may attach to
the Mortgaged Property in respect of the unpaid amount, or (b) takes such steps
as are approved by Lender in its sole discretion to insure against any
impairment of the security of the Mortgage by reason of such nonpayment.
Borrower shall do or cause to be done, at the sole cost of Borrower, everything
necessary to fully preserve the initial priority of the lien of this Deed of
Trust. If Borrower fails to make any such payment or if a lien attaches to the
Mortgaged Property or any portion thereof, Lender may (but shall not be
obligated to) make such payment or discharge such lien and Borrower shall
reimburse Lender on demand for all such Advances.
Section 2.12 Costs of Defending and Upholding the Lien.
Lender and, to the extent authorized by Lender, Trustee may, after notice to
Borrower, (a) appear in and defend any action or proceeding, in the name and on
behalf of either Lender or Borrower, in which Trustee or Lender is named or
which Lender in its sole discretion determines may adversely affect the
Mortgaged Property, this Deed of Trust, the lien hereof or any other Loan
Document; and (b) institute any action or proceeding which Lender in its sole
discretion determines should be instituted to protect the interest or
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rights of Lender or Trustee's interest in the Mortgaged Property or under this
Deed of Trust or any other Loan Document, including, without limitation,
foreclosure proceedings. Borrower agrees to bear and shall pay or reimburse
Trustee and Lender on demand for all Advances and expenses (including reasonable
attorneys' fees) relating to or incurred by Lender in connection with any such
action or proceeding.
Section 2.13 Costs of Enforcement. Borrower agrees to bear and
shall pay or reimburse Trustee and Lender on demand for all Advances and
expenses (including reasonable attorneys' and appraisers' fees and the expenses
and reasonable fees of any receiver or similar official) of or incidental to the
collection of the Indebtedness, any foreclosure of this Deed of Trust or any
other Loan Document, any enforcement, compromise or settlement of this Deed of
Trust, any other Loan Document or the Indebtedness, or any defense or assertion
of the rights or claims of Trustee or Lender in respect of any thereof, by
litigation or otherwise.
Section 2.14 Interest on Advances and Expenses. All Advances made
and any reasonable expenses incurred at any time by Trustee or Lender pursuant
to the provisions of this Deed of Trust or the other Loan Documents or under
applicable law shall be secured by this Deed of Trust as part of the
Indebtedness, with equal rank and priority. All such Advances and expenses shall
bear interest at the Default Rate from the date that each such Advance or
expense is made or incurred to the date of repayment and all such Advances and
expenses with interest thereon shall be payable to Lender on demand.
Section 2.15 Indemnification. Borrower shall indemnify and hold
Trustee and Lender and their respective directors, officers, employees and
agents harmless from and against and reimburse them for all Losses which may be
imposed upon, asserted against, or incurred or paid by any of them (a) by reason
of, on account of or in connection with any act or occurrence relating to the
Mortgaged Property or any bodily injury, death, other personal injury or
property damage occurring in, upon or in the vicinity of the Premises from any
cause whatsoever, (b) as a result of the failure of Borrower to perform any of
its obligations under any of the Loan Documents, or (c) on account of any
transaction otherwise arising out of or in any way connected with the Mortgaged
Property, this Deed of Trust or the Indebtedness, except Borrower shall have no
indemnification obligation for losses caused by any indemnified person's gross
negligence or willful misconduct.
Section 2.16 Financial Statements; Records. Borrower shall keep
adequate books and records of account in accordance with generally accepted
accounting principles ("GAAP"), or in accordance with other methods acceptable
to Lender in its sole discretion, consistently applied, and shall furnish to
Lender the
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following, in each case certified as true, correct, complete and accurate and in
form and substance acceptable to Lender and prepared in accordance with
generally accepted accounting principles:
(a) within twenty (20) days after the end of each calendar
quarter (within forty-five (45) days after the end of each fourth
calendar quarter), quarterly financial statements for Borrower and each
of the properties which comprise the Premises ("QUARTERLY FINANCIAL
STATEMENT") for and as of the end of such calendar quarter, including
quarterly operating statements of each of the properties which comprise
the Premises for such quarter, including a balance sheet and a rent roll
for each such property as of the end of such quarter, and an income
statement, a cash flow statement and an accounting of all tenant
improvement expenditures for each such property for such quarter
prepared and certified by Borrower in a form approved by Lender,
detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest)
and major capital improvements for that quarter and containing
appropriate year-to-date information, prepared and certified by Borrower
in form approved by Lender, or, if required by Lender following (x) the
occurrence of an Event of Default which permits acceleration, or a
determination by Lender that in Lender's reasonable opinion an Event of
Default is likely to occur, or (y) activation of the Cash Flow Deposit
Account provision of Section 6.16, audited and certified by an
independent certified public accountant acceptable to Lender;
(b) within 120 days after the end of each Fiscal Year of
Borrower;
(i) a certified rent roll as of the end of such Fiscal
Year for each of the properties which comprise the Premises,
signed and dated by Borrower, detailing, for each of the Leases,
the names of all tenants of each such property, the portion of
each such property occupied by each tenant, the annual rental,
including base rent, additional rent and percentage rent, and
any other charges payable and the term of each of the Leases,
including the expiration date, and any other information as is
reasonably required by Lender;
(ii) annual financial statements for each of the
properties which comprise the Premises for and as of the end of
such Fiscal Year, including a balance sheet for each of such
property as of the end of such Fiscal Year and an income
statement, a cash flow statement and an accounting of all tenant
improvement expenditures for each such property for such Fiscal
Year, detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt
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service and total cash flow, to be prepared and certified by
Borrower in the form approved by Lender, or if required by
Lender, an audited annual operating statement prepared and
certified by an independent certified public accountant
acceptable to Lender;
(iii) an annual operating and capital budget and
management plan presented on a monthly basis consistent with the
annual operating statements described in clause (b)(ii), above
for each of the properties which comprise the Premises, including
cash flow projections for each such property for the upcoming
Fiscal Year, and all proposed capital replacements and
improvements for each such property;
(iv) an annual balance sheet as of the end of such
Fiscal Year, an income statement, a cash flow statement and a
statement of retained earnings for such Fiscal Year for Borrower,
any principal of Borrower with an ownership interest of twenty
percent (20%) or greater in Borrower, and any guarantor or
indemnitor under any Loan Document, each in a form approved by
Lender, prepared and certified by Borrower, such guarantor or
indemnitor, as appropriate, or, if required by Lender, audited
financial statements for such persons, prepared and certified by
an independent certified public accountant acceptable to Lender;
(c) upon request from Lender, the following:
(i) a copy of the most recently filed federal tax
return of Borrower, of any principal of Borrower with an
ownership interest of twenty percent (20%) or greater in
Borrower, and of any guarantor or indemnitor under any Loan
Document;
(ii) an accounting of all security deposits held in
connection with any of the Leases, including the name and
identification number of the accounts in which such security
deposits are held, the name and address of the financial
institutions in which such security deposits are held and the
name of the person to contact at such financial institution,
along with any authority or release for Borrower to obtain.
information regarding such accounts directly from such financial
institutions;
(iii) such other financial or management
information (including monthly or quarterly certified rent rolls
meeting the
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requirements of paragraph 2.16(a) above) as may, from time to
time, be reasonably required by Lender and in form and substance
reasonably satisfactory to Lender; and
(iv) Borrower's books and records regarding the
Premises for examination, review, copying and audit by Lender or
its auditors during normal business hours and convenient
facilities for such examination review, copying and audit of
Borrower's books and records of account.
(d) Borrower's agreements as set forth in this Section
2.16 constitute material inducements to Lender in making the loan
secured by this Deed of Trust. Accordingly, in the event Borrower fails
to furnish any financial report or tax return required by this section
as and when required, time being of the essence, then, in addition to
all other remedies available to Lender under this Deed of Trust,
Borrower agrees to pay Lender within ten (10) days following demand
therefor, a late charge of Five Hundred and No/100 Dollars ($500) for
each day or part thereof that any such financial report or tax return
shall be overdue. In addition, Borrower hereby appoints Lender its
attorney in fact for the purpose of hiring at Borrower's cost an
auditing firm to prepare and deliver to Lender any overdue rent roll,
operating statement, balance sheet income statement or other financial
report required hereunder in the event Borrower fails or refuses to
furnish to Lender those financial reports as and when due. The foregoing
late charges and the costs and expenses of the auditor shall be due and
payable to Lender within ten (10) days following demand and shall
constitute a part of the Indebtedness.
Section 2.17 Prohibition Against Conveyances and Encumbrances.
Except with the prior consent of Lender, Borrower shall not and shall not permit
others to convey, assign, sell, mortgage, encumber, pledge, hypothecate, grant a
security interest in, grant purchase options with respect to, or otherwise
dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) all or any portion
of any legal or beneficial interest (a) in all or any portion of the Mortgaged
Property including the Leases; (b) in the stock of any corporation which is
either Borrower or a beneficial owner of all or any portion of Borrower or of
the Mortgaged Property; (c) in Borrower (or any trust of which Borrower is a
trustee); or (d) if Borrower is a limited or general partnership, limited
liability company, joint venture, trust, nominee trust, tenancy in common or
other unincorporated form of business association or form of ownership, in any
person, firm or entity having a direct or indirect legal or beneficial ownership
interest in Borrower, including any legal or beneficial interest in any general
partner of Borrower, in any general partner of any general partner of Borrower
or in any member
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of a limited liability company. The foregoing shall not prohibit transfers of
limited partnership interests in Borrower's managing member or transfers of the
stock of Arden Realty, Inc. or transfers subject to Sections 6.13 or 6.15 or
Borrower's leases of the Premises. Any such transfer or encumbrance to which
Lender consents must be to a United States citizen or an entity owned or
controlled by United States citizens. All requests for Lender's consent under
this Section 2.17 shall be on a form previously approved by Lender and shall be
accompanied by the payment of Lender's standard processing fee for such
transactions then in effect. Lender's consent to any of the foregoing actions,
if given (in Lender's sole discretion), may be conditioned upon an increase in
the interest rate, a change in maturity date, amortization period or other terms
under the Note, the payment of a transfer fee and/or any other requirements of
Lender. In addition to the standard processing fee and the transfer fee referred
to in this Section 2.17, Borrower agrees to bear and shall pay or reimburse
Lender on demand for all reasonable expenses (including reasonable attorneys'
fees, title search costs, and title insurance endorsement premiums) incurred by
Lender in connection with the review, approval and documentation of any such
transaction.
Section 2.18 Estoppel Certificates. Within ten (10) Business Days
of a request by Lender, Borrower shall furnish to Lender a duly acknowledged
written statement confirming the amount of the outstanding Indebtedness, the
terms of payment and maturity date of the Note, the date to which interest has
been paid, and whether any offsets or defenses exist against the Indebtedness.
If any such offsets or defenses are alleged to exist, the nature thereof shall
be set forth in detail. Borrower shall also deliver to such tenants of the
Premises as Lender may designate by written notice to Borrower, and exercise its
reasonable best efforts to cause such tenants to furnish to Lender, within 30
days of its request therefor, tenant estoppel letters; provided that Lender
shall not request an estoppel certificate from any one tenant more often than
once in a calendar year period.
<PAGE> 33
Section 2.19 Assignment of Leases and Property Income.
(a) Borrower hereby absolutely and unconditionally assigns
and transfers to Lender the Leases and the Property Income. Borrower
shall not otherwise assign, transfer or encumber in any manner the
Leases or the Property Income or any portion thereof. Borrower shall
have a license, revocable by Lender, to collect and use the Property
Income as the same becomes due and payable so long as no Event of
Default which permits acceleration of the Loan has occurred and is
continuing, but may not collect any Property Income more than thirty
(30) days in advance of the date the same becomes due (other than
customary security deposits). The assignment in this Section 2.19 shall
constitute an absolute and present assignment of the Leases and the
Property Income, and
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not an additional assignment for security, and the existence or exercise
of the Borrower's revocable license to collect Property Income shall not
operate to subordinate this assignment to any subsequent assignment. The
exercise by Lender of any of its rights or remedies under this Section
2.19 shall not be deemed or construed to make Lender a
mortgagee-in-possession.
(b) Borrower shall furnish Lender with executed copies of
all Leases, and renewals or material modifications of Leases, as
follows: (i) if the Lease is not or was not subject to Lender's approval
pursuant to Section 2.19(d) (i.e., the Lease complies with the
conditions described in clauses (i), (ii) and (iii) of Section 2.19(d)),
such copies shall be furnished to Lender on or before the date that the
next quarterly rent roll is required to be delivered to Lender pursuant
to Section 2.16(a); and (ii) if the Lease is or was subject to Lender's
approval pursuant to Section 2.19(d), such copies shall be furnished to
Lender within ten (10) days after execution of such Lease, renewal or
material modification. No material changes may be made to the
Lender-approved standard lease form without the prior written consent of
Lender.
(c) Borrower shall perform all obligations as lessor under
all Leases and shall enforce all of the terms, covenants and conditions
contained in upon the part of the lessee thereunder to be performed or
observed, short of termination thereof. Additionally, Borrower shall not
take any action which would cause any Lease to cease to be in full force
and effect. Except with the prior consent of Lender, Borrower shall not
(i) cancel, terminate (with the exception of terminations of Leases the
execution of which did not require Lender's prior written consent
pursuant to Section 2.19(d), below, wherein the tenant is in material
default and such termination is carried out in the manner of a prudent
landlord in the ordinary course of business) or surrender any Lease or
consent to any cancellation, termination, surrender, subletting or
assignment (with the exception of consent to subletting or assignment of
any Lease the execution of which did not require Lender's prior written
consent pursuant to Section 2.19(d) below) thereof; (ii) subordinate any
Lease to any mortgage, deed of trust or other security interest that is
subordinate to this Deed of Trust; (iii) enter into any new Lease
(except as permitted in Section 2.19(d) below); (iv) waive any default
under or breach of any Lease; (v) consent to or accept any prepayment or
discount of rent or advance rent under any Lease; (vi) take any other
action in connection with any Lease which would impair or jeopardize the
validity of such Lease or the Lender's interest therein; or (vii) alter,
modify or change the terms of any guaranty, letter of credit or other
credit support with respect to any of the Leases or cancel or terminate
such guaranty, letter of credit or other credit support without the
prior written consent of Lender.
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(d) Except as hereinafter provided, Lender's prior written
consent shall be required for entering into any new Lease, or agreeing
to extend or modify any existing Lease, and all Leases shall be written
on the standard form of lease approved in writing by Lender without
material modification to such form. Notwithstanding the foregoing,
Lender's prior written consent shall not be required for entering into
new Leases, extensions or modifications of Leases, provided that (i) the
Lease is the result of an arm's-length transaction, and provides for the
payment of market rents, and (ii) neither the Lease nor renewal thereof
nor the activity of the tenant will violate any provision of any other
Lease or restriction or covenant affecting the Premises or this Deed of
Trust or any other Loan Document, including Section 2.20(b) hereof; and
(iii) the Lease meets either of the following criteria:
(A) (1) such Lease is a non-residential
Lease covering five thousand (5,000) square feet of net
rentable area or less, or a residential Lease relating to
a residential multifamily property, or an extension or
modification thereof; and (2) the Lease term is no greater
than five (5) years with no options to extend the term;
and (3) the Lease contains no purchase options, no rights
of first refusal, no rights to lease other space, and no
expansion rights; or
(B) (1) such Lease is a non-residential
Lease covering more than five thousand (5,000) but less
than ten thousand one (10,001) square feet of net rentable
area, or an extension or renewal thereof; and (2) the
Lease utilized is on a standard form previously approved
by Lender, without material modification.
If a prospective Lease or extension or modification of a Lease does not meet the
above detailed conditions and if approval of a Lease, extension or modification
is requested by Borrower, Lender shall review the prospective Lease, extension
or modification as follows: Borrower shall submit to Lender: (1) a copy of the
prospective lease highlighted to show difference from the approved standard
lease form; (2) a lease summary letter in substantially the form approved by
Lender; (3) financial and operational information regarding the prospective
tenant including a description of the tenant's business, industry, operations
and owners and the tenant's last two (2) years' cash flow and income statements
and balance sheet and a credit report for the tenant, to the extent that such
information has been obtained by Borrower. Lender shall have ten (10) Business
Days from the date of its actual receipt of all such information to provide its
approval or rejection of the prospective lease to Borrower. If Lender fails to
respond within said ten (10) Business Day period, Borrower shall again submit
such information together with a cover letter advising Lender that failure to
respond within a five (5)
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Business Day period shall result in such Lease being deemed approved. In the
event that Lender does in fact fail to approve or disapprove the Lease in
writing within five (5) Business Days after receipt of the second request for
approval, such lease will be deemed approved. All of the foregoing submissions
shall be sent to Lender by either certified or registered mail, return receipt
requested, or by recognized, national overnight courier service, with proof of
receipt.
(e) In addition to the foregoing, Borrower shall comply
with all terms and provisions of the Assignment.
Section 2.20 Environmental Matters; Warranties; Notice;
Indemnity.
(a) Borrower represents and warrants to Lender respecting
the Premises and the Equipment as follows:
(i) Borrower has not installed, used, generated,
manufactured, produced, stored, released, discharged or disposed
of in, on, under or about the Premises, or transported to or from
any portion of the Premises, any Hazardous Substance or allowed
any other person or entity to do so, except under conditions
permitted by applicable Environmental Laws;
(ii) there are no Hazardous Substances or
underground storage tanks in, on, or under or about the
Premises, except those that are both (A) in compliance with
Environmental Laws and with permits issued pursuant thereto, and
(B) fully disclosed to Lender in writing pursuant to the written
reports resulting from environmental assessments of the
Mortgaged Property delivered to Lender and described in Schedule
D attached hereto (collectively, the "ENVIRONMENTAL REPORT");
(iii) to the knowledge of Borrower, after due
inquiry, there are no past, present or threatened Releases of
any Hazardous Substance in, on, under or about the Premises
except as defined in the Environmental Report;
(iv) to the knowledge of Borrower, after due
inquiry, there is no threat of any Release of Hazardous
Substances migrating to the Premises except as described in the
Environmental Report;
(v) to the knowledge of Borrower, after due
inquiry, there is no past or present non-compliance with
Environmental Laws, or with
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permits issued pursuant thereto, in connection with the Premises
or the Equipment except as described in the Environmental
Report;
(vi) Borrower does not know of, and has not
received, any written or oral notice or other communication with
respect to the Premises or the Equipment from any person or
entity (including, but not limited to, a governmental entity)
relating to Hazardous Substances or Remediation thereof, of
possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection
with the Premises or Equipment, or any actual or potential
administrative or judicial proceedings in connection with any of
the foregoing; and,
(vii) Borrower has truthfully and fully provided to
Lender, in writing, any and all information relating to
conditions in, on, under and about the Premises that is known by
Borrower and that is contained in Borrower's files and records,
including but not limited to any reports relating to Hazardous
Substances in, on, under or about the Premises and/or to the
environmental condition of the Premises.
(b) Borrower shall not install, use, generate,
manufacture, produce, store, Release, discharge or dispose of on, under
or about the Premises, or transport to or from any portion of the
Premises, any Hazardous Substance or allow any other person or entity to
do so, except under conditions permitted by applicable Environmental
Laws. Additionally, except with the prior written consent of Lender, no
portion of the Premises shall be leased, used or occupied for dry
cleaning operations or the storage of any chemicals used in the dry
cleaning process.
(c) Borrower shall keep and maintain the Premises in
compliance in all material respects with, and shall not cause or permit
the Premises to be in material violation of, applicable Environmental
Laws.
(d) Borrower shall promptly provide notice to Lender of:
(i) any proceeding, investigation or inquiry
commenced by any governmental authority with respect to the
presence of any Hazardous Substance on, under or about the
Premises or the migration of any Hazardous Substance to or from
adjoining property;
(ii) all claims made or threatened by any person or
entity against Borrower, any other party occupying the Premises
or any portion
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thereof, or the Premises, relating to any loss or injury
allegedly resulting from any Hazardous Substance; and
(iii) the discovery of any occurrence or condition
on the Premises or on any real property adjoining or in the
vicinity of the Premises, of which Borrower becomes aware, which
might cause the Premises or any portion thereof to be in
violation in any material respect of any Environmental Law or
subject to any restriction on ownership, occupancy,
transferability or use under any Environmental Law (collectively,
an "ENVIRONMENTAL VIOLATION").
(iv) Lender and, to the extent authorized by
Lender, Trustee may join and participate in, as a party if Lender
so determines, any legal or administrative proceeding or action
concerning the Premises or Equipment under any Environmental Law.
Borrower agrees to bear and shall pay or reimburse Lender on
demand for all Advances and expenses (including reasonable
attorneys' fees) relating to or incurred by Lender in connection
with any such action or proceeding.
(e) Borrower shall indemnify and hold Trustee and Lender
and their respective directors, officers, employees and agents harmless
from and against any and all claims, demands, liabilities, losses,
damages, judgments, penalties, costs and expenses (including reasonable
attorneys' fees) directly or indirectly arising out of or attributable
to a breach of any warranty or representation contained in this Section
2.20 or of any other provision thereof including, without limitation,
(i) all actual and consequential damages, (ii) the costs of any required
Remediation, and (iii) the costs of the preparation and implementation
of any plans for Remediation, closure or other required plans. This
indemnity shall survive the satisfaction, release or extinguishment of
the lien of this Deed of Trust including any extinguishment of such lien
by foreclosure or deed in lieu thereof.
Section 2.21 Environmental Matters; Remedial Work.
(a) If any investigation, site monitoring, containment,
cleanup, removal, restoration or other Remediation of any kind or nature
(collectively, the "REMEDIAL WORK") is required under any applicable
Environmental Law because of or in connection with the current or future
presence, suspected presence, release or suspected release of a
Hazardous Substance into the air, soil, ground water, surface water, or
soil vapor on, under or about the Premises or any portion thereof,
Borrower shall promptly commence and diligently prosecute to completion
all such Remedial Work. In all events, such Remedial Work shall be
commenced
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within 45 days after any demand therefor by Lender or such shorter
period as may be required under any applicable Environmental Law.
(b) All Remedial Work shall be performed by contractors,
and under the supervision of a consulting engineer, each approved in
advance by Lender. All costs and expenses of such Remedial Work and
Lender's monitoring or review of such Remedial Work (including
reasonable attorneys' fees) shall be paid by Borrower. If Borrower does
not timely commence and diligently prosecute to completion the Remedial
Work, Lender may (but shall not be obligated to) cause such Remedial
Work to be performed. Borrower agrees to bear and shall pay or reimburse
Lender on demand for all Advances and expenses (including reasonable
attorneys' fees) relating to or incurred by Lender in connection with
monitoring, reviewing, or if Borrower fails to perform, performing any
Remedial Work required hereunder.
(c) Except with Lender's prior consent, Borrower shall not
commence any Remedial Work or enter into any settlement agreement,
consent decree or other compromise relating to any Hazardous Substances
or Environmental Laws which might, in Lender's sole judgment, impair the
value of Lender's security hereunder. Lender's prior consent shall not
be required, however, if the presence or threatened presence of
Hazardous Substances on, under or about the Premises poses an immediate
threat to the health, safety or welfare of any person or is of such a
nature that an immediate remedial response is necessary, and it is not
possible to obtain Lender's prior consent, or if Remedial Work is
required under Environmental Laws. In such event Borrower shall notify
Lender as soon as practicable of any action taken.
Section 2.22 Environmental Matters; Inspection.
(a) Lender shall have the right at all reasonable times
upon reasonable prior notice to enter upon and inspect all or any
portion of the Premises, provided that such inspections shall not
unreasonably interfere with the operations of the tenants of the
Premises. Lender may select a consulting engineer to conduct and prepare
reports of such inspections. The inspection rights granted to Lender in
this Section 2.22 shall be in addition to, and not in limitation of, any
other inspection rights granted to Lender in this Deed of Trust, and
shall expressly include the right to conduct soil borings and other
customary environmental tests, assessments and audits.
(b) Borrower agrees to bear and shall pay or reimburse
Lender on demand for all Advances and expenses (including reasonable
attorneys' fees)
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relating to or incurred by Lender in connection with
the inspections and reports described in this Section 2.22 in the
following situations:
(i) If Lender has reasonable grounds to believe, at
the time any such inspection is ordered, that there exists an
Environmental Violation or that a Hazardous Substance is present
on, under or about the Premises or is migrating to or from
adjoining property, except under conditions permitted by
applicable Environmental Laws and not prohibited by any Loan
Document;
(ii) if any such inspection reveals an
Environmental Violation or that a Hazardous Substance is present
on, under or about the Premises or is migrating to or from
adjoining property, except under conditions permitted by
applicable Environmental Laws and not prohibited by any Loan
Document; or
(iii) if an Event of Default exists at the time any
such inspection is ordered.
Section 2.23 Management. At all times prior to the payment in
full of the Indebtedness, the Mortgaged Property shall be managed by a
management company reasonably satisfactory to Lender, and pursuant to a
management agreement reasonably satisfactory to Lender. Such management
agreement, and any leasing commissions agreement affecting the Mortgaged
Property, shall be subordinate to this Deed of Trust. Any time the management is
not reasonably satisfactory to Lender, Borrower shall have a reasonable
opportunity, not to exceed ninety (90) days, to obtain approved and satisfactory
management prior to Lender accelerating the Loan. Any leasing commissions and
management agreement affecting the security for this Loan must be subordinate to
the lien of the Loan Documents. As of the date hereof, Lender approves Arden
Realty, Inc., a Maryland corporation, or an entity controlled by or under common
control with Arden Realty, Inc., as manager of the Mortgaged Property, reserving
the right, however, to revoke such approval: (i) upon the occurrence of an Event
of Default which permits acceleration, and/or (ii) upon a reasonable
determination by Lender that any material portion of the Mortgaged Property is
not being properly managed.
Section 2.24 ERISA. As of the date hereof and throughout the term
of this Deed of Trust, (i) Borrower is not and will not be an "employee benefit
plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA;
(ii) the assets of Borrower do not and will not constitute "plan assets" of one
or more such plans for purposes of Title I of ERISA; (iii) Borrower is not and
will not be a "governmental plan" within the meaning of Section 3(3) of ERISA;
(iv) transactions by or with
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Borrower are not and will not be subject to state statutes applicable to
Borrower regulating investments of fiduciaries with respect to governmental
plans; and (v) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under this Deed of Trust, the Note, or the other
Loan Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA. Borrower further agrees to
deliver to Lender such certifications or other evidence of compliance with the
provisions of this Section 2.24 as Lender may from time to time request.
Section 2.25 Litigation. Borrower shall give prompt written
notice to Lender of any litigation or governmental proceedings pending or
threatened against Borrower which is reasonably likely to have a Material
Adverse Effect.
Section 2.26 Notice of Default. Borrower shall promptly advise
Lender of any material adverse change in Borrower's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default.
Section 2.27 Single Purpose Entity. Borrower shall at all times
be a Single-Purpose Entity.
Section 2.28 Trade Indebtedness. Borrower will pay its trade
payables within thirty (30) days of the date due, unless Borrower is in good
faith contesting Borrower's obligation to pay such trade payable in a manner
satisfactory to Lender (which may include Lender's requirement that Borrower
post security with respect to the contested trade payable).
Section 2.29 Conduct of Business. Borrower shall cause the
operation of the Mortgaged Property to be conducted at all times in a manner
consistent with the following:
(a) to maintain or cause to be maintained the standard of
operations at the Mortgaged Property at all times at a level necessary
to insure a level of quality for the Mortgaged Property consistent with
similar facilities in the same competitive market;
(b) to operate or cause to be operated the Mortgaged
Property in a prudent manner in compliance in all material respects with
applicable Legal Requirements and the insurance requirements of this
Deed of Trust relating thereto and cause all licenses, permits, and any
other agreements necessary for the continued use and operation of the
Mortgaged Property to remain in effect; and
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(c) to maintain or cause to be maintained sufficient
inventory and equipment of types and quantities at the Mortgaged
Property to enable Borrower or the Manager to operate the Mortgaged
Property.
Section 2.30 Further Assurances; Filing; Re-Filing, etc.
(a) Borrower shall execute, acknowledge and deliver, from
time to time, such further instruments as Lender may reasonably require
to accomplish the purposes of this Deed of Trust.
(b) Borrower, immediately upon the execution and delivery
of this Deed of Trust, and thereafter from time to time at the request
of Lender, shall cause this Deed of Trust, any security agreement,
mortgage, modification or amendment supplemental hereto and each
document, instrument and agreement of further assurance, to be filed,
registered or recorded or refiled, re-registered or re-recorded in such
manner and in such places as may be required by any present or future
law in order to publish notice of and perfect the lien or estate of this
Deed of Trust upon the Mortgaged Property and to accomplish the purposes
of this Deed of Trust.
(c) Borrower shall pay all intangible taxes, recording
taxes, filing, registration and recording fees, all refiling, all
re-registration and re-recording fees, and all expenses incident to the
execution , filing, recording and acknowledgment of this Deed of Trust,
any security agreement, mortgage, modification or amendment supplemental
hereto and any document, instrument and agreement of further assurance,
and all federal, state, county and municipal stamp taxes and other
taxes, duties, imposts, assessments and charges arising out of the
execution, delivery, filing, registration and recording of the Note,
this Deed of Trust or any of the other Loan Documents, any security
agreement or Deed of Trust supplemental hereto or any document
instrument or agreement of further assurance.
(d) In the event of the passage of any state, federal,
municipal or other governmental law, order, rule or regulation,
subsequent to the date hereof, in any manner changing or modifying the
laws now in force governing the taxation of mortgages or security
agreements or debts secured thereby or the manner of collecting such
taxes so as to adversely affect Lender (other than taxes on Lender's
income), this Deed of Trust or the lien hereof, Borrower will pay any
such tax on or before the due date thereof. If Borrower fails to make
such prompt payment or if, in the reasonable opinion of Lender, any such
state, federal, municipal, or other governmental law, order, rule or
regulation prohibits Borrower from making such payment or would penalize
Lender if Borrower makes such
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payment or if, in the opinion of Lender, the making of such payment
might result in the imposition of interest beyond the maximum amount
permitted by any applicable law, then the entire balance of the Loan,
accrued interest thereon and all other obligations in connection with
the Loan shall, at the option of Lender, become due and payable (without
prepayment premium) on the date that is one hundred twenty (120) days
after written notice to Borrower of any of the foregoing.
(e) Borrower hereby indemnifies and holds harmless Lender
from any sales or use tax that may be imposed on Lender by virtue of the
Loan from Lender to Borrower other than taxes imposed on the income,
stock or assets of Lender.
(f) Borrower shall, upon Lender's request therefor given
from time to time after the occurrence and during the continuance of any
Event of Default which permits acceleration of the Loan, pay for (a)
reports of UCC, federal tax lien, state tax lien, judgment and pending
litigation searches with respect to Borrower and (b) searches of title
to the Mortgaged Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations
reasonably designated by Lender.
(g) Borrower shall furnish to Lender all instruments,
documents, boundary surveys, footing or foundation surveys,
certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished pursuant
to the terms of the Loan Documents; and
(h) Borrower shall do and execute all and such further
lawful acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Deed of Trust
and the Loan Documents, as Lender shall reasonably require from time to
time in Lender's discretion.
Section 2.31 No Joint Assessment; Separate Lots. Borrower has not
and shall not suffer, permit or initiate the joint assessment of the Mortgaged
Property (i) with any other real property constituting a separate tax lot, and
(ii) with any portion of the Mortgaged Property which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Mortgaged Property as a single lien. The Mortgaged
Property is comprised of one or more parcels, each of which constitutes a
separate tax lot and none of which constitutes a portion of any other tax lot.
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ARTICLE III.
SECURITY AGREEMENT
Section 3.1 Warranties, Representations and Covenants of
Borrower. Borrower covenants, warrants, represents and agrees with and to
Trustee and Lender as follows:
(a) This Deed of Trust constitutes a security agreement
under the Code and serves as a fixture filing in accordance with the
Code. This Deed of Trust creates a security interest in favor of
Lender as secured party under the Code with respect to all property
(specifically including the Collateral) included in the Mortgaged
Property which is covered by the Code. The mention of any portion of
the Mortgaged Property in a financing statement filed in the records
normally pertaining to personal property shall not derogate from or
impair in any manner the intention of Borrower and Lender hereby
declared that all items of collateral described in this Deed of Trust
are part of the real property encumbered hereby to the fullest extent
permitted by law, regardless of whether any such item is physically
attached to the Improvements or whether serial numbers are used for
the better identification of certain items. Specifically, the mention
in any such financing statement of (i) the rights in or the Proceeds
of any policy of insurance, (ii) any condemnation Proceeds, (iii)
Borrower's interest in any Leases or Property Income, or (iv) any
other item included in the Mortgaged Property, shall not be construed
to alter, impair or impugn any rights of Lender as determined by this
Deed of Trust or the priority of Lender's lien upon and security
interest in the Mortgaged Property. Any such mention shall be for the
protection of Lender in the event that notice of Lender's priority of
interest as to any portion of the Mortgaged Property is required to be
filed in accordance with the Code to be effective against or take
priority over the interest of any particular class of persons,
including the federal government or any subdivision or instrumentality
thereof.
(b) Except for the security interest granted by this Deed of
Trust, Borrower is and, as to portions of the Collateral to be
acquired after the date hereof, will be the sole owner of the
Collateral, free from any lien, security interest, encumbrance or
adverse claim thereon of any kind whatsoever except Permitted
Encumbrances. Borrower shall notify Lender of, and shall defend the
Collateral against, all claims and demands of all persons at any time
claiming the same or any interest therein.
(c) Except as otherwise provided in this Deed of Trust,
Borrower shall not lease, sell, convey or in any manner transfer the
Collateral without the prior consent of Lender.
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(d) The Collateral is not used or bought for personal,
family or household purposes.
(e) The Collateral shall be kept on or at the Premises,
and Borrower shall not remove the Collateral from the Premises without
the prior consent of Lender, except such portions or items of the
Collateral as are consumed or worn out in ordinary usage, all of which
shall be promptly replaced by Borrower with items of equal or greater
value, and Borrower's books and records shall be maintained by Borrower,
or by the manager appointed pursuant to a management agreement permitted
pursuant to Section 2.23, either at Borrower's principal place of
business or at such manager's place of business (so long as such places
of business shall be located in Southern California) or at another
location in Southern California reasonably approved by Lender.
(f) In the event of any change in name, identity or structure of
Borrower, Borrower shall notify Lender thereof and promptly after
request shall execute, file and record such Code forms as are necessary
to maintain the priority of Lender's lien upon and security interest in
the Collateral, and shall pay all expenses and fees in connection with
the filing and recording thereof. If Lender shall require the filing or
recording of additional Code forms or continuation statements, Borrower
shall, promptly after request, execute, file and record such Code forms
or continuation statements as Lender shall deem necessary (subject to
Lender's right to sign such statements on behalf of Borrower as provided
in Subsection 3.01(g)), and shall pay all expenses and fees in
connection with the filing and recording thereof. If Lender shall
initially pay such expenses, Borrower shall promptly reimburse Lender
for the expenses.
(g) Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to execute in the name of
and on behalf of Borrower any and all financing statements and
continuations thereof and to file with the appropriate public office on
its behalf and at its expense any financing or other statements signed
only by Lender, as secured party, in connection with the Collateral
covered by this Deed of Trust.
Section 3.2 Financing Statements. A CARBON, PHOTOGRAPHIC OR OTHER
REPRODUCTION OF THIS DEED OF TRUST OR ANY FINANCING STATEMENT RELATING TO THIS
DEED OF TRUST SHALL BE SUFFICIENT AS A FINANCING STATEMENT.
Section 3.3 Addresses. The mailing address of Borrower and the
address of Lender from which information concerning the security interest
granted hereby may be obtained are set forth on the Cover Sheet of this Deed of
Trust. Borrower
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maintains its sole place of business or its chief executive
office at the address shown on said Cover Sheet, and Borrower shall immediately
notify Lender in writing of any change in said place of business or chief
executive office.
ARTICLE IV.
DEFAULT AND REMEDIES
Section 4.1 Events of Default. Each of the following shall
constitute an Event of Default under this Deed of Trust, the Note and the other
Loan Documents:
(a) failure in the payment of any amount due as and when
due under this Deed of Trust, the Note or any other Loan Document;
(b) failure to pay any Imposition as and when due or to
maintain insurance as required by this Deed of Trust;
(c) default in the due observance or performance of any
term, covenant or condition contained in this Deed of Trust, the Note or
any other Loan Document which permits acceleration of the Loan;
(d) if any representation made herein or in any other Loan
Document shall prove to be untrue in any material respect at the time
made;
(e) violation of any of the covenants set forth in Section
2.17 with respect to conveyances, sales, encumbrances or other
prohibited dispositions of the Mortgaged Property or Borrower or any
portion thereof or any interest therein;
(f) violation of any of the covenants set forth in Section
2.19(a) with respect to the further assignment, transfer or encumbrance
by Borrower of the Leases or the Property Income or any portion thereof,
(g) violation of any of the covenants set forth as items
(i) through (vii) of Section 2.19(c) with respect to certain actions
concerning Leases which shall not be taken by Borrower without the prior
consent of Lender;
(h) if Borrower, any general partner of Borrower or any
managing or principal member of Borrower (if Borrower is a limited
liability company) or any guarantor of the Note consents to the filing
of, or commences or consents to the commencement of, any Bankruptcy
Proceeding with respect to Borrower or such guarantor;
(i) if any Bankruptcy Proceeding shall have been filed
against Borrower, any general partner of Borrower, any managing or
principal member
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of Borrower (if Borrower is a limited liability company) or any guarantor
of the Note and the same is not withdrawn, dismissed, canceled or
terminated within 90 days of such filing;
(j) if Borrower, any general partner of Borrower, any
managing or principal member of Borrower (if Borrower is a limited
liability company) or any guarantor of the Note is adjudicated bankrupt
or insolvent or a petition for reorganization of Borrower or any such
general partner or guarantor is granted;
(k) if a receiver, liquidator or trustee of Borrower, any
general partner of Borrower, any managing or principal member of
Borrower (if Borrower is a limited liability company) or any guarantor
of the Note or of any of the properties of Borrower or any such general
partner or guarantor shall be appointed;
(l) if Borrower, any general partner of Borrower, any
managing or principal member of Borrower (if Borrower is a limited
liability company) or any guarantor of the Note shall make an assignment
for the benefit of its creditors or shall admit in writing the inability
to pay its debts generally as they become due;
(m) except as otherwise permitted herein, if Borrower, any
general partner of Borrower, any managing or principal member of Borrower
(if Borrower is a limited liability company) or any guarantor of the Note
shall die or shall institute or cause to be instituted any proceeding for
the termination or dissolution of Borrower or any such general partner or
guarantor;
(n) if a default or event of default shall occur under any
mortgage, deed of trust, encumbrance, lien or security agreement
encumbering all or any portion of the Mortgaged Property which is
subordinate or superior to the lien of this Deed of Trust or if any
party under any such instrument shall commence a foreclosure or other
collection or enforcement action in connection therewith, provided,
however, that this provision shall not be deemed to be a waiver of the
provisions of Section 2.17 prohibiting further encumbrances or of any
other provision of this Deed of Trust, it being understood that it is an
event of default under this Deed of Trust to permit any further
mortgage, encumbrance, lien or security agreement to encumber all or any
portion of the Mortgaged Property without the prior written consent of
the Lender;
(o) except as permitted in this Deed of Trust, the actual
or threatened alteration, demolition or removal of any of the
Improvements without the prior consent of Lender; or
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(p) damage to any of the Mortgaged Property in any manner
which is not covered by insurance as a result of Borrower's failure to
maintain insurance required in accordance with this Deed of Trust.
Section 4.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default which permits acceleration of the Loan,
Lender may take such actions against Borrower and/or the Mortgaged Property or
any portion thereof as it deems advisable to protect and enforce its rights
against Borrower and in and to the Mortgaged Property, without notice or demand
except as set forth below. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents. Such
actions may include the following:
(a) Subject to any applicable provisions of the Note, Lender
may declare the entire principal balance under the Note then unpaid,
together with all accrued and unpaid interest thereon, and all other
unpaid Indebtedness, to be immediately due and payable.
(b) Lender may enter into or upon the Mortgaged Property,
personally or by its agents, nominees or attorneys, and may dispossess
Borrower and its agents and servants therefrom, and thereupon Lender
at its sole discretion may: (i) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every
portion of the Mortgaged Property and conduct business thereon, in any
case either in the name of Lender or in such other name as Lender
shall deem best; (ii) complete any construction on the Mortgaged
Property in such manner and form as Lender deems advisable; (iii) make
alterations, additions, renewals, replacements and improvements to or
on the Mortgaged Property; (iv) exercise all rights and powers of
Borrower with respect to the Mortgaged Property, whether in the name
of Borrower or otherwise, including the right to make, cancel, enforce
or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Property Income; and (v) apply the receipts of
Property Income to the payment of the Indebtedness (including any
prepayment fee payable under the Note) in such order as Lender shall
determine in its sole discretion, after deducting therefrom all
expenses (including reasonable attorneys' fees) incurred in connection
with the aforesaid operations and all amounts necessary to pay the
Impositions, insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation for
the services of Lender, its agents, nominees and attorneys.
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(c) Subject to any applicable provisions of the Note, with
or without entry, personally or by its agents, nominees or attorneys,
Lender may require Trustee to sell all or any portion of the Mortgaged
Property and all or any portion of Borrower's estate, right, title,
interest, claim and demand therein and right of redemption thereof at
one or more private or public sales in the manner and to the extent
permitted by law, as an entirety or in parcels or portions, and
Trustee shall have any statutory power of sale as may be provided by
law in the State.
(d) Subject to any applicable provisions of the Note, Lender
may institute proceedings for the complete foreclosure of this Deed of
Trust by power of sale or by judicial action, in which case the
Mortgaged Property may be sold for cash or upon credit, as an entirety
or in parcels or portions. Lender shall have the right to foreclose
this Deed of Trust, by exercise of the power of sale or by judicial
action, either (a) in a single foreclosure with respect to all of the
Mortgaged Property, or (b) in separate, serial foreclosures with
respect to one or more properties included within the Mortgaged
Property. If Lender forecloses this Deed of Trust with respect to less
than all of the Mortgaged Property, this Deed of Trust shall not
terminate upon such foreclosure, but shall remain in effect with
respect to the remainder of the Mortgaged Property.
(e) [Deleted]
(f) Lender may institute, or require Trustee to institute,
an action, suit or proceeding at law or in equity for the specific
performance of any covenant, condition or agreement contained herein
or in the Note or any other Loan Document, or in aid of the execution
of any power granted hereunder or for the enforcement of any other
appropriate legal or equitable remedy.
(g) Lender and Trustee shall have the rights and may take
such actions as are set forth, described or referred to in any rider
entitled "Rider - Applicable State Law Provisions" attached hereto and
made a part hereof, or as are permitted by the laws of the State.
(h) Subject to any applicable provisions of the Note, Lender
may recover judgment on the Note, either before, during or after any
proceedings for the foreclosure or enforcement of this Deed of Trust.
(i) Lender may secure the appointment of a receiver,
trustee, liquidator or similar official of the Mortgaged Property or
any portion thereof, and Borrower hereby consents and agrees to such
appointment, without notice to Borrower and without regard to the
adequacy of the security for the Indebtedness and without regard to
the solvency of Borrower or any other person, firm or entity
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liable for the payment of the Indebtedness, and such receiver or other
official shall have all rights and powers permitted by applicable law
and such other rights and powers as the court making such appointment
may confer, but the appointment of such receiver or other official
shall not impair or in any manner prejudice the rights of Lender to
receive the Property Income pursuant to this Deed of Trust or the
Assignment.
(j) Lender may exercise any or all of the remedies available
to a secured party under the Code, but any sale of the Equipment shall
be subject to any applicable provisions of the Note.
(k) Lender may pursue, or require Trustee to pursue, any
other rights and remedies of Lender permitted by law, equity or
contract or as set forth herein or in the other Loan Documents.
(l) Lender may apply any funds then on deposit with Lender
for payment of Impositions, ground rent or insurance premiums in the
manner provided for in Section 2.7.
(m) Lender in its sole discretion may surrender any
insurance policies and collect the unearned premiums and apply such
sums against the Indebtedness.
Section 4.3 General Provisions Regarding Remedies.
(a) Effect of Judgment. No recovery of any judgment by
Lender or Trustee and no levy of an execution under any judgment upon
the Mortgaged Property or upon any other property of Borrower shall
affect in any manner or to any extent the lien of this Deed of Trust
upon the Mortgaged Property or any portion thereof, or any rights,
powers or remedies of Lender or Trustee hereunder. Such lien, rights,
powers and remedies of Lender and Trustee shall continue unimpaired as
before.
(b) Continuing Power of Sale. The power of sale conferred
upon Lender in this Deed of Trust shall not be exhausted by any one or
more sales as to any portion of the Mortgaged Property remaining
unsold, but shall continue unimpaired until all of the Mortgaged
Property is sold or all of the Indebtedness is paid.
(c) Right to Purchase. At any sale of the Mortgaged Property
or any portion thereof pursuant to the provisions of this Deed of
Trust, Lender or Trustee shall have the right to purchase the
Mortgaged Property being sold, and in such
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case shall have the right to credit against the amount of the bid made
therefor (to the extent necessary) all or any portion of the
Indebtedness then due.
(d) Right to Terminate Proceedings. Lender or Trustee may
terminate or rescind any proceeding or other action brought in
connection with its exercise of the remedies provided in Section 4.2
at any time before the conclusion thereof, as determined in Lender's
sole discretion and without prejudice to Lender.
(e) No Waiver or Release. Lender may resort, or require
Trustee to resort, to any remedies and the security given by the Loan
Documents, in whole or in part, and in such portions and in such order
as determined in Lender's sole discretion. No such action shall in any
way be considered a waiver of any rights, benefits or remedies
evidenced or provided by the Loan Documents. The failure of Lender or
Trustee to exercise any right, remedy or option provided in the Loan
Documents shall not be deemed a waiver of such right, remedy or option
or of any covenant or obligation secured by the Loan Documents. No
acceptance by Lender or Trustee of any payment after the occurrence of
an Event of Default and no payment by Lender or Trustee of any Advance
or obligation for which Borrower is liable hereunder shall be deemed
to waive or cure such Event of Default or Borrower's liability to pay
such obligation. No sale of all or any portion of the Mortgaged
Property, no forbearance on the part of Lender or Trustee, and no
extension of time for the payment of the whole or any portion of the
Indebtedness or any other indulgence given by Lender or Trustee to
Borrower or any other person or entity, shall operate to release or in
any manner affect Lender's or Trustee's interest in the Mortgaged
Property or the liability of Borrower to pay the Indebtedness, except
to the extent that such liability shall be reduced by Proceeds of the
sale of all or any portion of the Mortgaged Property received by
Lender. No waiver by Lender or Trustee shall be effective unless it is
in writing and then only to the extent specifically stated.
(f) No Impairment; No Release. The interests and rights of
Lender or Trustee under the Loan Documents shall not be impaired by
any indulgence, including (i) any renewal, extension or modification
which Lender may grant with respect to any of the Indebtedness; (ii)
any surrender, compromise, release, renewal, extension, exchange or
substitution which Lender or Trustee may grant with respect to the
Mortgaged Property or any portion thereof; or (iii) any release or
indulgence granted to any maker, endorser, guarantor or surety of any
of the Indebtedness. If the Mortgaged Property is sold and Lender
enters into any agreement with the then owner of the Mortgaged
Property extending the time of payment of the Indebtedness, or
otherwise modifying the terms hereof or of any other Loan Document,
Borrower shall continue to be liable to pay the
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Indebtedness according to the tenor of any such agreement unless
expressly released and discharged in writing by Lender.
(g) Waivers and Agreements Regarding Remedies. To the
fullest extent that Borrower may legally do so, Borrower:
(i) AGREES THAT BORROWER WILL NOT AT ANY TIME
INSIST UPON, PLEAD, CLAIM OR TAKE THE BENEFIT OR ADVANTAGE
OF ANY LAWS NOW OR HEREAFTER IN FORCE PROVIDING FOR ANY
APPRAISAL OR APPRAISEMENT, VALUATION, STAY, EXTENSION OR
REDEMPTION, AND WAIVES AND RELEASES ALL RIGHTS OF
REDEMPTION, VALUATION, APPRAISAL OR APPRAISEMENT, STAY OF
EXECUTION, EXTENSION AND NOTICE OF ELECTION TO ACCELERATE OR
DECLARE DUE THE WHOLE OF THE INDEBTEDNESS;
(ii) WAIVES ALL RIGHTS TO A MARSHALLING OF THE
ASSETS OF BORROWER, INCLUDING THE MORTGAGED PROPERTY, OR TO
A SALE IN INVERSE ORDER OF ALIENATION IN THE EVENT OF
FORECLOSURE OF THE INTERESTS HEREBY CREATED, AND AGREES NOT
TO ASSERT ANY RIGHT UNDER ANY LAWS PERTAINING TO THE
MARSHALLING OF ASSETS, THE SALE IN INVERSE ORDER OF
ALIENATION, HOMESTEAD EXEMPTION, THE ADMINISTRATION OF
ESTATES OF DECEDENTS, OR ANY OTHER MATTERS WHATSOEVER TO
DEFEAT, REDUCE OR AFFECT THE RIGHT OF LENDER UNDER THE LOAN
DOCUMENTS TO A SALE OF THE MORTGAGED PROPERTY FOR THE
COLLECTION OF THE INDEBTEDNESS WITHOUT ANY PRIOR OR
DIFFERENT RESORT FOR COLLECTION, OR THE RIGHT OF LENDER OR
TRUSTEE TO THE PAYMENT OF THE INDEBTEDNESS OUT OF THE
PROCEEDS OF SALE OF THE MORTGAGED PROPERTY IN PREFERENCE TO
EVERY OTHER CLAIMANT WHATSOEVER;
(iii) WAIVES ANY RIGHT TO BRING OR UTILIZE ANY
DEFENSE, COUNTERCLAIM OR SETOFF, OTHER THAN ONE IN GOOD
FAITH, WHICH DENIES THE EXISTENCE OR SUFFICIENCY OF THE
FACTS UPON WHICH THE FORECLOSURE ACTION IS GROUNDED OR WHICH
IS BASED ON LENDER'S OR TRUSTEE'S WRONGFUL ACTIONS. IF ANY
DEFENSE, COUNTERCLAIM OR SETOFF (OTHER THAN ONE PERMITTED BY
THE PRECEDING SENTENCE) IS RAISED BY BORROWER IN SUCH
FORECLOSURE ACTION, SUCH DEFENSE, COUNTERCLAIM OR SETOFF
SHALL BE DISMISSED. IF SUCH DEFENSE, COUNTERCLAIM OR SETOFF
IS BASED ON A CLAIM WHICH COULD BE TRIED IN AN ACTION FOR
MONEY DAMAGES, THE FOREGOING WAIVER SHALL NOT BAR A SEPARATE
ACTION FOR SUCH DAMAGE (UNLESS SUCH CLAIM IS REQUIRED BY LAW
OR APPLICABLE RULES OF PROCEDURE TO BE PLEADED IN OR
CONSOLIDATED WITH THE ACTION INITIATED BY LENDER OR
TRUSTEE), BUT SUCH SEPARATE ACTION SHALL NOT THEREAFTER BE
CONSOLIDATED WITH LENDER'S OR TRUSTEE'S FORECLOSURE ACTION.
THE
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BRINGING OF SUCH SEPARATE ACTION FOR MONEY DAMAGES SHALL NOT
BE DEEMED TO AFFORD ANY GROUNDS FOR STAYING ANY SUCH
FORECLOSURE ACTION;
(iv) WAIVES AND RELINQUISHES ANY AND ALL RIGHTS
AND REMEDIES WHICH BORROWER MAY HAVE OR BE ABLE TO ASSERT BY
REASON OF THE PROVISIONS OF ANY LAWS PERTAINING TO THE
RIGHTS AND REMEDIES OF SURETIES;
(v) WAIVES THE DEFENSE OF LACHES AND ANY
APPLICABLE STATUTES OF LIMITATION; AND
(vi) WAIVES ANY RIGHT TO HAVE ANY TRIAL, ACTION OR
PROCEEDING TRIED BY A JURY.
(h) Lender's Discretion. Lender may exercise its rights,
options and remedies and except as provided herein may make all
decisions, judgments and determinations under this Deed of Trust and
the other Loan Documents in its sole unfettered discretion.
(i) Recitals of Facts. In the event of a sale or other
disposition of the Mortgaged Property pursuant to Section 4.2 and the
execution of a deed or other conveyance pursuant thereto, the recitals
therein of facts (such as default, the giving of notice of default and
notice of sale, demand that such sale should be made, postponement of
sale, terms of sale, purchase, payment of purchase money and other
facts affecting the regularity or validity of such sale or
disposition) shall be conclusive proof of the truth of such facts. Any
such deed or conveyance shall be conclusive against all persons as to
such facts recited therein.
(j) Lender's Right to Waive, Consent or Release. Lender may
at any time, in writing, (i) waive compliance by Borrower with any
covenant herein made by Borrower to the extent and in the manner
specified in such writing; (ii) consent to Borrower's doing any act
which Borrower is prohibited hereunder from doing, or consent to
Borrower's failing to do any act which Borrower is required hereunder
to do, to the extent and in the manner specified in such writing; or
(iii) release or require Trustee to release any portion of the
Mortgaged Property, or any interest therein, from this Deed of Trust
and the lien of the other Loan Documents. No such act shall in any way
impair the rights of Lender or Trustee hereunder except to the extent
specified by Lender in such writing.
(k) Possession of the Mortgaged Property. Upon the
occurrence and during the continuance of any Event of Default
hereunder which permits acceleration of the Loan and demand by Lender
at its option, Borrower shall
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immediately surrender or cause the surrender of possession of the
Premises to Lender. If Borrower is permitted to remain in possession,
such possession shall be as tenant of Lender and Borrower (i) shall on
demand pay to Lender monthly, in advance, reasonable use and occupancy
charges for the space so occupied, and (ii) in default thereof, may be
dispossessed by the usual summary proceedings. Upon demand, Borrower
shall assemble the Collateral and make it available at any place
Lender may designate to allow Lender to take possession and/or dispose
of the Collateral. The covenants herein contained may be enforced by a
receiver of the Mortgaged Property or any portion thereof. Nothing in
this Section 4.3(k) shall be deemed a waiver of the provisions of this
Deed of Trust prohibiting the sale or other disposition of the
Mortgaged Property without Lender's consent.
(l) Limitations on Liability
(i) Subject to the provisions of this Section, in
any action or proceedings brought on this Deed of Trust, the
Note or on any of the Loan Documents in which a money
judgment is sought, Lender and Trustee will look solely to
the Mortgaged Property and other property described in the
Loan Documents (including the Property Income and any other
rents and profits from such property) which is collateral
for payment of the Indebtedness and, specifically and
without limitation, Lender and Trustee agree to waive any
right to seek or obtain a deficiency judgment against
Borrower or to seek or obtain personal judgment for the
payment of money representing principal or interest of the
Loan.
(ii) The provisions of Section 4.3(l)(i) shall not
(u) except as expressly set forth herein,
constitute a waiver, release or impairment of
any obligation evidenced or secured by this
Deed of Trust, the Note or any other Loan
Document by either Lender or Trustee;
(v) be deemed to be a waiver of any right
which Lender or Trustee may have under
Sections 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file
a claim for the full amount of the
Indebtedness secured by this Deed of Trust or
to require that all Collateral shall continue
to secure all of the Indebtedness owing to
Lender in accordance
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with the Note, this Deed of Trust and the Loan
Documents;
(w) impair the right of the Lender or Trustee
to name the Borrower or guarantor of the Note
as a party or parties defendant in any action
or suit for judicial foreclosure and sale
under this Deed of Trust but no monetary
judgment for a deficiency money judgment may
be entered or enforced against Borrower;
(x) affect the validity or enforceability of,
or limit recovery under, any indemnity
(including the environmental indemnity set
forth in Section 2.20(f) of this Deed of Trust
or any separate environmental indemnity
agreement, however designated), guaranty,
lease or similar instrument made in connection
with this Deed of Trust, the Note or the Loan
Documents;
(y) impair the right of the Lender or Trustee
to obtain the appointment of a receiver; or,
(z) impair Lender's or Trustee's rights and
remedies under Section 2.19 of this Deed of
Trust regarding the assignment of Leases and
Property Income to Lender or under the
Assignment.
(iii) Notwithstanding any provisions of this
Subsection 4.3(1), nothing herein shall be deemed to impair
or prejudice in any way the right of Lender or Trustee
(which right is specifically reserved) to pursue or obtain
personal recourse liability against Borrower to recover
Losses incurred by Lender or Trustee arising out of or
resulting from:
(u) fraud or material misrepresentation in
connection with any Loan Document, affidavit,
certification, warranty or representation
given by Borrower or any officer, general
partner, member or authorized agent of
Borrower in connection with the making of the
loan evidenced by the Note;
(v) the application or appropriation of
insurance or condemnation Proceeds in a manner
contrary to the terms of the Loan Documents;
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(w) the application or appropriation of any tenant
security deposits, advance or prepaid rents,
cancellation or termination fees or other similar
sums paid to or held by Borrower or any other
person in connection with the operation of the
Premises contrary to the terms of the Loan
Documents;
(x) the failure to return, or reimburse Lender
for, all Equipment taken from the Mortgaged
Property by or on behalf of Borrower and not
replaced with Equipment of the same utility;
(y) any act of arson, malicious destruction or
waste by Borrower, any principal, affiliate or
thereof, or by any guarantor or indemnitor
(including any indemnitor under the environmental
indemnity contained in the Deed of Trust, or in a
separate environmental indemnity or similar
document executed herewith);
(z) the failure to apply Property Income or
Proceeds to payments due under the Loan Documents
or to operating expenses of the Mortgaged
Property, thereby resulting in, or contributing
materially to an Event of Default. Provided,
however, that neither Borrower nor any other
person or entity shall have any recourse liability
for Losses based on distributions by Borrower of
Property Income or rent loss insurance Proceeds to
Borrower, or any general partner, principal,
stockholder or member of or managing agent for
Borrower (if Borrower shall be a limited liability
company) made in good faith (after determining the
sufficiency of Property Income and rent loss
insurance Proceeds to cover the payments due under
the Loan Documents and the operating expenses of
the Mortgaged Property) prior to an Event of
Default.
(iv) Notwithstanding the foregoing, the agreement
of Lender and Trustee not to pursue recourse liability against
Borrower as set forth in this Section 4.3(l)(i) above SHALL
AUTOMATICALLY BECOME NULL AND VOID as to Borrower and be of no
further force and effect in the event Borrower, any general
partner or member (if
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Borrower shall be a limited liability company) of
Borrower or any guarantor of the Indebtedness
files or consents to the filing of any petition
under the U.S. Bankruptcy Code respecting its or
their debts, or any such petition shall have been
filed against any of the foregoing which is not
dismissed within 90 days of such filing.
(m) Subrogation. If all or any portion of the
proceeds of the Note or any Advance shall be used directly or
indirectly to pay off, discharge or satisfy, in whole or in part,
any prior lien or encumbrance upon the Mortgaged Property or any
portion thereof, then Lender and Trustee shall be subrogated to,
and shall have the benefit of the priority of, such other lien or
encumbrance and any additional security held by the holder
thereof.
ARTICLE V.
TRUSTEE
Section 5.1 Certain Actions of Trustee. Upon the written request
of Lender, Trustee may at any time (a) reconvey all or any portion of the
Mortgaged Property, (b) consent to the making of any map or plat thereof, (c)
join in granting any easement thereon or in creating any covenants or conditions
restricting the use or occupancy thereof, or (d) join in any extension agreement
or in any agreement subordinating the lien or charge hereof. Any such action may
be taken by Trustee without notice, and shall not affect the personal liability
of any person for the payment of the Indebtedness or the lien of this Deed of
Trust upon the Mortgaged Property for the full amount of the Indebtedness.
Section 5.2 Reconveyance. Upon the written request of Lender
stating that all sums secured hereby have been paid, and upon payment of its
fees, Trustee shall reconvey without warranty the Mortgaged Property then held
by Trustee hereunder.
Section 5.3 Trustee's Covenants and Compensation. Trustee, by its
acceptance hereof, covenants faithfully to perform and fulfill the trust herein
created, being liable, however, only for negligence or willful misconduct.
Trustee hereby waives any statutory fee and shall be entitled to, and hereby
agrees to accept, reasonable compensation in lieu thereof for all services
rendered or expenses incurred in the administration or execution of the trust
hereby created. Borrower hereby agrees to pay such compensation subject to any
applicable legal limitations.
Section 5.4 Substitution of Trustee. Lender at any time in its
sole discretion may select and appoint a successor or substitute Trustee
hereunder by instrument in writing in any manner now or hereafter provided by
law. Such writing, upon recordation in the county where the Land is located,
shall be conclusive proof of
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proper substitution of such successor or substitute
Trustee which shall thereupon and without conveyance from the predecessor
Trustee succeed to all its title, estate rights, powers and duties.
Section 5.5 Resignation of Trustee. Trustee may resign at any
time upon giving thirty (30) days' notice to Borrower and to Lender.
Section 5.6 Ratification of Acts of Trustee. Borrower hereby
ratifies and confirms any and all acts which Trustee named herein or its
successors or assigns in this trust shall do lawfully by virtue hereof.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 Notices.
(a) All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or
sent by (i) certified or registered United States mail, postage prepaid,
or (ii) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, addressed in
either case to any party hereto at its address as stated on the Cover
Sheet of this Deed of Trust, or at such other address and person as
shall be designated from time to time by Lender or Borrower, as the case
may be, in a written notice to the other party in the manner provided
for in this Section 6.1. A notice shall be deemed to have been given: in
the case of hand delivery, at the time of delivery; in the case of
registered or certified mail, three Business Days after deposit in the
United States mail; or in the case of expedited prepaid delivery, upon
the first attempted delivery on a Business Day. A party receiving a
notice which does not comply with the technical requirements for notice
under this Section 6.1 may elect to waive any deficiencies and treat the
notice as having been properly given.
(b) Borrower shall notify Lender promptly of the
occurrence of any of the following: (i) receipt of notice from any
governmental authority materially and adversely affecting the Mortgaged
Property; (ii) receipt of any notice from the holder of any other lien
or security interest in the Mortgaged Property; or (iii) commencement of
any judicial or administrative proceedings by, against or otherwise
affecting Borrower or any guarantor, the Mortgaged Property, or any
entity controlling, controlled by or under common control with Borrower
or any guarantor, or any other action by any creditor thereof as a
result of any default
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under the terms of any loan if such action could reasonably be expected to have
a material adverse effect on Borrower or the Mortgaged Property.
Section 6.2 Binding Obligations; Joint and Several. The
provisions and covenants of this Deed of Trust shall run with the land, shall be
binding upon Borrower, its successors and assigns, and shall inure to the
benefit of Lender and Trustee and their respective successors and assigns. If
there is more than one Borrower, all their obligations and undertakings
hereunder are and shall be joint and several.
Section 6.3 Captions. The captions of the sections and
subsections of this Deed of Trust are for convenience only and are not intended
to be a part of this Deed of Trust and shall not be deemed to modify, explain,
enlarge or restrict any of the provisions hereof.
Section 6.4 Further Assurances. Borrower shall do, execute,
acknowledge and deliver, at its sole cost and expense, such further acts,
instruments or documentation, including additional title insurance policies or
endorsements, as Lender or Trustee may reasonably require from time to time to
better assure, transfer and confirm unto Lender the rights now or hereafter
intended to be granted to Lender and/or Trustee under this Deed of Trust or any
other Loan Document.
Section 6.5 Severability. If any one or more of the provisions
contained in this Deed of Trust shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Deed of Trust, but
this Deed of Trust shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
Section 6.6 Borrower's Obligations Absolute. All sums payable by
Borrower hereunder shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of Borrower hereunder shall in no
way be released, discharged, or otherwise affected (except as expressly provided
herein) by reason of: (a) any damage to or destruction of or any condemnation or
similar taking of the Mortgaged Property or any portion thereof; (b) any
restriction or prevention of or interference with any use of the Mortgaged
Property or any portion thereof; (c) any title defect or encumbrance or any
eviction from the Premises or any portion thereof by title paramount or
otherwise; (d) any Bankruptcy Proceeding relating to Borrower, any general
partner of Borrower, or any guarantor or indemnitor, or any action taken with
respect to this Deed of Trust or any other Loan Document by any trustee or
receiver of Borrower or any such general partner, guarantor or indemnitor, or by
any
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court, in any such proceeding; (e) any claim which Borrower has or might
have against Lender or Trustee; (f) any default or failure on the part of Lender
or Trustee to perform or comply with any of the terms hereof or of any other
agreement with Borrower; or (g) any other occurrence whatsoever, whether similar
or dissimilar to the foregoing, whether or not Borrower shall have notice or
knowledge of any of the foregoing. Except as expressly provided herein, Borrower
waives all rights now or hereafter conferred by statute or otherwise to any
abatement, suspension, deferment, diminution or reduction of any sum secured
hereby and payable by Borrower.
Section 6.7 Amendments. This Deed of Trust cannot be altered,
amended, modified or discharged orally and no executory agreement shall be
effective to modify or discharge it in whole or in part, unless in writing and
signed by the party against which enforcement is sought.
Section 6.8 Other Loan Documents and Schedules. All of the
agreements, conditions, covenants, provisions and stipulations contained in the
Note and the other Loan Documents, and each of them, which are to be kept and
performed by Borrower are hereby made a part of this Deed of Trust to the same
extent and with the same force and effect as if they were fully set forth in
this Deed of Trust, and Borrower shall keep and perform the same, or cause them
to be kept and performed, strictly in accordance with their respective terms.
The Cover Sheet and each schedule and rider attached to this Deed of Trust are
integral parts of this Deed of Trust and are incorporated herein by this
reference. In the event of any conflict between the provisions of any such
schedule or rider and the remainder of this Deed of Trust, the provisions of
such schedule or rider shall prevail.
Section 6.9 Legal Construction.
(a) The enforcement of this Deed of Trust shall be
governed by, and construed and interpreted in accordance with, the laws
of the State.
(b) All terms contained herein shall be construed,
whenever the context of this Deed of Trust so requires, so that the
singular number shall include the plural, and the plural the singular,
and the use of any gender shall include all genders.
(c) The terms "include" and "including" as used in this
Deed of Trust shall be construed as if followed by the phrase "without
limitation."
(d) Any provision of this Deed of Trust permitting the
recovery of attorneys' fees and costs shall be deemed to include such
fees and costs incurred in all appellate proceedings.
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Section 6.10 Merger. So long as any Indebtedness shall remain
unpaid, fee title to and any other estate in the Mortgaged Property shall not
merge, but shall be kept separate and distinct, notwithstanding the union of
such estates in any person or entity.
Section 6.11 Time of the Essence. Time shall be of the essence in
the performance of all obligations of Borrower under this Deed of Trust.
Section 6.12 Reconveyance. If all of the Indebtedness is paid in
full in accordance with the Note and the other Loan Documents, then in that
event only all rights of Lender and Trustee under this Deed of Trust and the
other Loan Documents shall terminate and the Mortgaged Property shall become
wholly clear of the liens, grants, security interests, conveyances and
assignments evidenced hereby and thereby, and Lender shall release or cause to
be released such liens, grants, assignments, conveyances and security interests
in due form at Borrower's cost (to the extent permitted by the law of the
State), and this Deed of Trust shall be void; provided, however, that no
provision of this Deed of Trust or any other Loan Document which, by its own
terms, is intended to survive such payment, performance, and release (nor the
rights of Lender or Trustee under any such provision) shall be affected in any
manner thereby and such provision shall, in fact, survive. Recitals of any
matters or facts in any release instrument executed by Lender or Trustee under
this Section 6.12 shall be conclusive proof of the truthfulness thereof. To the
extent permitted by law, such an instrument may describe the grantee or releasee
as "the person or persons legally entitled thereto" and Lender and Trustee shall
not have any duty to determine the rights of persons claiming to be rightful
grantees or releasees of any of the Mortgaged Property. When this Deed of Trust
has been fully released or discharged by Lender and/or Trustee, the release or
discharge hereof shall operate as a release and discharge of the Assignment and
as a reassignment of all future Leases and Property Income with respect to the
Mortgaged Property to the person or persons legally entitled thereto, unless
such release expressly provides to the contrary.
Section 6.13 Partial Reconveyance. After disbursement of the
principal of the Loan, Borrower shall be entitled to obtain partial reconveyance
of entire properties encumbered by this Deed of Trust (but not portions of such
properties) from the liens of this Deed of Trust on the following terms and
conditions:
(1) A release under this Section 6.13 may not take
place more than three (3) times during the term of the Loan;
(2) The property to be reconveyed shall constitute
an entire real estate development, comprising one of the
properties encumbered by
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this Mortgage and indicated by a separate underlined caption in
the legal description attached as Schedule A;
(3) No more than five (5) properties may be
released under this Section 6.13, and no more than a total of
five (5) properties may be released under this Section 6.13 and
Section 6.15;
(4) After the proposed release, the Debt Service
Coverage Ratio ("DSC") of the Loan, calculated with respect to
all portions of the Mortgaged Property other than the property
to be released and taking into account the prepayment of the
Loan, both for the twelve (12) consecutive calendar months prior
to the release and as projected for the twelve (12) months
following the release, must be at least equal to or greater than
the greater of (a) 1.60:1 or (b) the current DSC of the existing
Mortgaged Property including the property to be released
calculated for the prior twelve (12) consecutive calendar months
prior to release;
(5) After the proposed release, the Loan to Value
("LTV") of the Loan must be less than or equal to the lesser of
a) sixty-five percent (65%) or (b) the current LTV of the
existing Mortgaged Property including the property to be released
calculated immediately prior to the release based upon appraisals
in form and content satisfactory to Lender, prepared by an MAI
appraiser approved by Lender and furnished to Lender at
Borrower's cost;
(6) Borrower shall pay to Lender in reduction of
the principal balance of the Loan, a sum equal to one hundred
twenty five percent (125%) of the original Allocated Loan Amount
(as shown in Schedule C) for the property to be released, plus a
Prepayment Premium calculated with respect to such Allocated Loan
Amount, computed in the manner specified in Section 9.1 of the
Note; if the partial release occurs prior to the time Borrower
may prepay the Loan under Section 9.1 of the Note, there shall
nevertheless be charged a Prepayment Premium relative to the
partial release calculated as though such prepayment privilege
were in effect;
(7) In no event may any partial release result in
the reduction of the principal balance of the Loan below
FIFTY-SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($57,500,000);
(8) Lender may at its sole discretion reject any
property release that, in Lender's sole determination, would
render the remaining
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Mortgaged Property not in compliance with the terms and
provisions of that certain Application for Real Estate Loan
executed by "Arden Realty Ltd. Partnership" and Lender with
respect to the Loan (the "APPLICATION") the Loan Documents, or
would be detrimental to the overall quality and/or value of the
remaining Mortgaged Property;
(9) No Event of Default shall have occurred and be
continuing at the time such request for release is made or at
the time of the release, nor shall any event have occurred and
be continuing at the time of release which, after notice or
passage of time or both, would constitute an Event of Default;
(10) Borrower shall furnish to Lender, at Borrower's
sole cost, an indorsement to the title insurance policy which
insures the continued validity and priority of the Mortgage on
all remaining properties encumbered thereby, notwithstanding
such partial reconveyance.
(11) Borrower must pay all of Lender's reasonable costs
associated with the partial release (including without
limitation legal fees, appraisal fees, costs of market studies,
title insurance premiums, engineering fees, recording fees and
taxes) plus a fee of one percent (1%) of the original Allocated
Loan Amount for the property to be released as shown on Schedule
C attached hereto;
(12) The original Borrower named in the Loan Documents
continues to be the owner of the remaining Mortgaged Property;
and
(13) All documents relating to the release shall be in
form and substance reasonably satisfactory to Lender.
Borrower shall have the right to obtain partial reconveyance of
that portion of the Mortgaged Property described in Schedule A under the caption
"2730 Wilshire Boulevard," which portion is described as Lot 2 in Tentative
Tract Map No. 24932, prepared by Psomas and Associates and dated April 16, 1997,
with revisions September 15, 1997, October 2, 1997, June 30, 1998 and August 5,
1998, as that description may be altered subject to the reasonable approval of
Lender (the "Free Release Parcel"), upon satisfaction of the following
conditions:
(1) No Event of Default shall have occurred and be
continuing at the time of request for such reconveyance or at
the time of the release, nor shall any event have occurred and
be continuing at the time of release which, after notice or
passage of time or both, would constitute an Event of Default;
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(2) Borrower shall furnish to Lender evidence that the
Free Release Parcel and the remaining portions of the "2730
Wilshire Boulevard" property (the "Retained Office Parcel") are
in compliance with all subdivision laws and ordinances,
including without limitation the California Subdivision Map Act;
(3) Borrower shall furnish to Lender, at Borrower's sole
cost, an indorsement to the title insurance policy which insures
the continued validity and priority of the Mortgage on all
remaining properties encumbered thereby, notwithstanding such
partial reconveyance;
(4) Borrower shall establish to Lender's reasonable
satisfaction that the Retained Office Parcel shall have access
to public streets, and that such access, all easements, rights
of way, rights of ingress and egress, parking rights and
arrangements for maintenance and operation of (and, if
applicable, sharing of costs of maintenance and operation of)
the Free Release Parcel and the Retained Office Parcel are in
place and are reasonably satisfactory to Lender; and
(5) Borrower must pay all of Lender's reasonable costs
associated with the partial reconveyance (including, without
limitation, legal fees, title insurance premiums, engineering
fees, recording fees and taxes).
Section 6.14 Defeasance.
(a) Borrower shall not be permitted at any time to defease
all or any part of the Loan except as expressly provided in this Section
6.14.
(b) Provided that no Event of Default has occurred and is
continuing, at any time after the second anniversary of the due date for
the first installment payment required under Section 1A of the Note,
Borrower may voluntarily defease all of the Loan.
(c) Borrower may defease the Loan on a Payment Date if
Borrower: (i) has provided not less than thirty (30) days prior written
notice to Lender specifying a Payment Date (the "DEFEASANCE RELEASE
DATE") on which the payments provided in clauses (ii) and (iii) below
are to be made and the deposit provided in clause (iv) below is to be
made, (ii) pays all interest accrued and unpaid on the outstanding
principal amount of the Loan to and including the
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Defeasance Release Date, (iii) pays all other sums then due and payable
under the Loan Documents, (iv) deposits with the Lender an amount equal
to the Defeasance Deposit, (v) delivers to the Lender (A) a security
agreement, in form and substance satisfactory to Lender, creating a
first priority perfected lien on the deposits required pursuant to this
Section and the U.S. Obligations purchased on behalf of Borrower in
accordance with this Section (THE "DEFEASANCE SECURITY AGREEMENT"), (B)
a reconveyance of the Mortgaged Property from the lien of the Mortgage
in a form appropriate for each jurisdiction in which the Mortgaged
Property is located, to be executed by Lender, (C) an officer's
certificate of Borrower certifying that the requirements set forth in
this Section have been satisfied that no Event of Default exists, (D) an
opinion of Borrower's counsel in form and substance (and from counsel)
reasonably satisfactory to the Lender stating, among other things, (x)
that, without qualification, the U.S. Obligations have been duly and
validly assigned and delivered to Lender and Lender has a perfected
security interest free of adverse claim in and lien on the deposits
required pursuant to this Section and a perfected security interest in
and lien on the U.S. Obligations purchased pursuant hereto and the
proceeds thereof, and (y) that the defeasance will not adversely affect
the status of any real estate mortgage investment conduit as defined in
Section 860D of the Internal Revenue Code ("REMIC") or financial asset
securitization trust as defined under Section 860L (a) of the Internal
Revenue Code ("FASIT") formed in connection with a rated or unrated
public offering or private placement of participations in mortgage
pass-through securities or other securities evidencing a beneficial
interest in assets including the Loan (a "SECURITIZATION") and (E) such
other certificates, documents or instruments as the Lender may
reasonably request including, without limitation, (x) written
confirmation from the relevant Rating Agencies that such defeasance will
not cause any Rating Agency to withdraw, qualify or downgrade the
then-applicable rating on any security issued in connection with any
Securitization and (y) a certificate from an independent certified
public accountant that is a member in good standing of the AICPA, is
subject to peer review, and is otherwise reasonably acceptable to
Lender, certifying that the amounts of the U.S. Obligations comply with
all of the requirements of this Mortgage, and (vi) assigns to such other
entity or entities established or designated by Lender (THE "SUCCESSOR
OBLIGOR") all of Borrower's rights, interests and obligations under the
Note, the other Loan Documents and the Defeasance Security Agreement
together with the pledged U.S. Obligations. The Successor Obligor shall
assume, in a writing or writings satisfactory to Lender in Lender's
discretion, all of Borrower's obligations under the Note, the other Loan
Documents and the Defeasance Defeasance Security Agreement and, upon
such assignment Borrower shall, except as set forth herein, be relieved
of its obligations hereunder
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(d) The U.S. Obligations shall mature on or be redeemable, or
provide for payment thereon, on or prior to the Business Day immediately
preceding the date on which payments under the Note are due and payable
and the proceeds thereof shall be payable directly to the Lender. In
connection with the foregoing, Borrower appoints the Lender as
Borrower's agent for the purpose of applying the amounts delivered
pursuant to clause (c)(iv) above to purchase U.S. Obligations.
(e) If any notice of defeasance is given, Borrower shall be
required to defease the Loan on the specified Payment Date (unless such
notice is revoked in writing by Borrower prior to the date specified
therein in which event Borrower shall immediately reimburse Lender for
any costs incurred by Lender in connection with Borrower's giving of
such notice and revocation).
(f) Upon defeasance of the Loan in accordance with the
requirements of this Section, the Mortgaged Property shall be reconveyed
from the lien of the Mortgage.
(g) Nothing in this Section shall release Borrower from any
liability or obligation relating to any environmental matters arising
under Sections 2.20 through 2.22 hereof.
Section 6.15 Substitution of Mortgaged Property
After disbursement of the principal of the Loan, Borrower shall
be entitled to substitute a property (defined as releasing a property that then
constitutes Mortgaged Property (the "RELEASED PROPERTY") and substituting
another property owned in fee by Borrower (the "SUBSTITUTE PROPERTY") in its
place on the following terms and conditions:
(1) A substitution may not take place more than two
(2) times during the term of the Loan;
(2) No more than three (3) properties may be
released under this Section 6.15 and no more than a total of five
(5) properties may be released under Section 6.13 and this
Section 6.15;
(3) After the proposed substitution, the Debt
Service Coverage Ratio ("DSC") of the Loan, calculated so as to
include the Substitute Property (in place of the Released
Property) and the remaining Mortgaged Property, both for the
twelve (12) months prior to the substitution and as projected for
the twelve (12) months following the substitution, must be at
least equal to or greater than the greater of
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(a) 1.60:1 or (b) the current DSC of the existing Mortgaged
Property including the Released Property (and not including the
Substitute Property) calculated for the prior twelve (12) months
period prior to the substitution;
(4) After the proposed substitution, the Loan to Value
("LTV") of the Loan must be less than or equal to the lesser of
(a) sixty-five percent (65%) or (b) the current LTV of the
existing Mortgaged Property including the property to be
released calculated immediately prior to the substitution based
upon appraisals in form and substance satisfactory to Lender,
prepared by an MAI appraiser approved by Lender and furnished to
Lender at Borrower's cost;
(5) The net operating income and/or rental rates of the
Substitute Property must not show a downward trend for any of
the three (3) years prior to the substitution;
(6) The appraised value (based upon appraisals furnished
to Lender in form and substance satisfactory to Lender and
prepared by an MAI appraiser approved by Lender at Borrower's
cost), the net operating income and current DSC of the
Substitute Property must be at least one hundred twenty-five
percent (125%) of the appraised value, net operating income and
the DSC of the Released Property. (For purposes hereof, the DSC
shall be calculated for the Released Property and the Substitute
Property on the basis of the Allocated Loan Amounts of each);
(7) Lender may at its sole discretion reject any
property substitution that, in Lender's sole determination,
would not be in compliance with the conditions for approval and
acceptance of collateral reflected in the Application and the
terms and provisions of the Loan Documents, would be detrimental
to the overall quality and/or value of the Mortgaged Property,
or would not be in compliance with Lender's then existing
underwriting standards and criteria. The Substitute Property
must be located in California and must be one hundred percent
(100%) multi-tenant office with no "flex space" or "R & D"
buildings;
(8) Borrower must pay all of Lender's costs associated
with the substitution plus a fee of one percent (1%) of the
original Allocated Loan Amount for the Released Property, as
shown on Schedule C hereto;
(9) No Event of Default shall exist at the time such
request for substitution is made or on the date of the
completion of the substitution, nor shall any event have
occurred and be continuing at the time of release
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which, after notice or passage of time or both, would constitute
an Event of Default;
(10) After the proposed substitution, no more than
twelve percent (12%) of the total square foot area of the
buildings comprising the Mortgaged Property may be occupied by
tenants occupying an entire, or substantially entire, building;
(11) After giving effect to the substitution and
release, the original Borrower named in the Loan Documents
continues to be the owner of the Mortgaged Property;
(12) In order to substitute one property for another as
security for the Loan, Borrower and Lender must go through many
of the same steps required to close the Loan initially. Solely
for purposes of illustration and without limitation,
environmental assessments must be performed and analyzed; leases
must be obtained and reviewed and tenant estoppel letters
obtained; the status of title to the property must be evaluated
and title insurance obtained, including but not limited to any
title policy endorsement required by Lender insuring that the
release will not impair Lender's coverage under its then
existing title policy as to the land remaining under the
Mortgage; plans and specifications must be obtained and
reviewed; satisfactory evidence of compliance obtained, etc. All
documents relating to the substitution shall be in form and
substance reasonably satisfactory to Lender. Any property to be
substituted must comply with all of the terms and conditions
reflected in the Application for the appraisal, inspection,
engineering review, evaluation and approval by Lender of the
original collateral for the Loan. In connection with that
process of appraisal, inspection, engineering review, evaluation
and approval, Lender may engage one or more consultants.
Borrower shall reimburse Lender, within ten (10) days after
written notice making demand therefor, for the fees and expenses
charged by such consultants. Borrower shall also pay, within ten
(10) days after written notice making demand therefor, all other
costs charged or incurred by Lender in connection with or
arising from any request for property substitution, whether or
not such substitution is actually approved or completed,
including without limitation, legal fees, appraisal fees, costs
of market studies, title insurance premiums, engineering fees,
recording fees and taxes.
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Section 6.16 Cash Flow Deposit Account
(a) If, at any time during the term of the Loan (1) for
two consecutive quarters, the Debt Service Coverage Ratio
("DSC") for the Mortgaged Property is less than 1.30:1, or (2)
Borrower fails to deliver the Quarterly Financial Statement
required to be furnished pursuant to Section 2.16 as and when
due, or (3) an Event of Default occurs which permits Lender to
accelerate the Note, then, upon written notice by Lender to
Borrower, Borrower will be obligated to notify all tenants under
leases for any portion of the Mortgaged Property that all rents
and other income assigned to Lender under the Mortgage (and the
Assignments of Leases and Rents) shall be paid as directed by
Lender into an interest-bearing deposit account in the name of
Borrower (the "CASH FLOW DEPOSIT ACCOUNT") from which
withdrawals may not be made without the written authorization of
Lender, maintained at a bank or other financial institution
approved by Lender. If Borrower receives any such rents or other
income at any time during which such amounts are required
pursuant to this Section 6.16(a) to be paid into the Cash Flow
Deposit Account, Borrower shall promptly and in any event within
ten (10) days deposit such amounts into the Cash Flow Deposit
Account. The Cash Flow Deposit Account and all funds from time
to time therein shall be subject to a first priority pledge and
security interest in favor of Lender, as collateral security for
the Indebtedness and the other obligations under the Note and
the other Loan Documents, pursuant to documents approved by
Lender. Borrower shall take such actions and execute such
documents as may be reasonably required by Lender in order to
create, evidence and perfect such pledge and security interest.
Disbursements or withdrawals from the Cash Flow Deposit Account
shall, subject to Section 6.16(b), be made only upon written
request therefor by Borrower and written consent thereto by
Lender. Lender shall consent to payment of normal and customary
operating expenses of the Mortgaged Property including, without
limitation, utility costs, cleaning costs, management fees for
the Mortgaged Property (but only to the extent not exceeding
four percent (4%) of gross rents), leasing commissions and
expenses, real estate taxes, capital expenditures, tenant
improvement costs, all pursuant to a budget and capital
expenditures program submitted to and approved by Lender (which
approval shall not be unreasonably withheld or delayed), and
payments due on the Loan. So long as the Cash Flow Deposit
Account remains active, Borrower shall pay to Lender as a
servicing fee (the "Servicing Fee") on the first day of each
month a sum equal to Six Thousand and No/100 Dollars ($6,000),
and shall pay to the depository of the Cash Flow Deposit Account
(or reimburse Lender within ten (10) days after written demand
therefor, to the extent the same are paid by Lender) any fees or
other amounts charged by such depository.
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(b) Monthly payments required on the Loan and under the
Loan Documents, including principal and interest payments, the
Servicing Fee and payments for real estate taxes and
assessments, insurance and other escrows will be deducted
automatically from the Cash Flow Deposit Account on the first
day of each month. Provided that no Event of Default has
occurred and is continuing and no event which, with notice or
the passage of time or both, would constitute an Event of
Default has occurred and is continuing, Lender will also
authorize disbursements from the Cash Flow Deposit Account
within seven (7) business days of a written request therefor,
for items contained in the approved budget and capital
expenditures program accompanied by supporting documentation
reasonably satisfactory to Lender for the items thus requested.
Interest on funds in the Cash Flow Deposit Account will accrue
to the benefit of Borrower and will be retained in the Cash Flow
Deposit Account. Upon the occurrence of an Event of Default,
Lender, at is option, may apply the funds then on deposit in the
Cash Flow Deposit Account to pay expenses of the Mortgaged
Property or against the then balance of the Indebtedness.
(c) Provided that no Event of Default has occurred which
permits acceleration of the Loan for four (4) consecutive
calendar quarters after activation of the Cash Flow Deposit
Account, and the DSC at the end of each of those quarters, as
shown on financial statements for each of those quarters
prepared in accordance with generally accepted accounting
principles, certified to Lender by the managing partner or
member of Borrower or chief financial officer of Borrower and
delivered to Lender along with a current rent roll for the
Mortgaged Property certified to Lender by the same person,
equals or exceeds 1.40:1, then the requirement for payment of
revenues to the Cash Flow Deposit Account will be suspended and
all funds then on deposit in the Cash Flow Deposit Account shall
be paid to Borrower. The requirement for the Cash Flow Deposit
Account may be reinstated on any later date during the term of
the Loan in accordance with the provisions of Section 6.16(a).
Section 6.17 Performance Reserve Account. Upon execution of
this Promissory Note, Borrower shall deposit Three Million and No/100 Dollars
($3,000,000) into an interest-bearing deposit account (the "PERFORMANCE RESERVE
ACCOUNT") from which withdrawals may not be made without the written
authorization of Lender, maintained at a bank or other financial instruction
approved by Lender. The Performance Reserve Account and all funds from time to
time therein shall be subject to a first priority pledge and security interest
in favor of Lender, as collateral security for the Indebtedness and the other
obligations under the Note and the other Loan Documents pursuant to documents
approved by Lender. Borrower shall take such actions and execute such documents
as may be reasonably required by Lender in order to create, evidence and perfect
such pledge and security interest.
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Interest on the funds in the Performance Reserve Account shall accrue to the
benefit of Borrower and shall, so long as no Event of Default has occurred and
is continuing which permits acceleration of the Loan to Borrower, upon request
by Borrower, not more than once per calendar quarter. Upon the occurrence of an
Event of Default which permits acceleration of the Loan, the funds in the
Performance Reserve Account may be withdrawn by Lender from the Performance
Reserve Account on Lender's sole demand, irrespective of any conflicting notice
or demand by or on behalf of Borrower, and may be applied in whole or in part by
Lender, in its sole discretion to the cure of such Event of Default, or to the
payment of the Indebtedness, or may continue to be held by Lender as additional
collateral, or any combination of the foregoing.
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IN WITNESS WHEREOF, this Deed of Trust has been duly executed and delivered as
of the day and year first above written.
BORROWER
ARDEN REALTY FINANCE V, L.L.C.
a Delaware limited liability company
By: _____________________________
Diana M. Laing
Chief Financial Officer
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ACKNOWLEDGMENT
[California]
STATE OF CALIFORNIA )
) SS.
COUNTY OF ______________________________ )
On __________________ before me, (here insert name and title of the officer),
personally appeared ________________________________
______________________________________________ personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
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SCHEDULE A
DESCRIPTION OF LAND
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SCHEDULE B
PERMITTED ENCUMBRANCES
70
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SCHEDULE C
ALLOCATED LOAN AMOUNTS
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SCHEDULE D
ENVIRONMENTAL REPORT
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RIDER
APPLICABLE LAW PROVISIONS
Pursuant to the provisions of Section 6.8 of this Deed of Trust, this
Rider and the following terms and provisions are hereby attached to,
incorporated into and made a part of this Deed of Trust.
1. Trustor requests that a copy of any notice of default and of any
notice of sale hereunder shall be mailed to Trustor at its address set forth
above.
2. (a) If the maturity of the Note is accelerated by Beneficiary
because of the occurrence of an Event of Default, as provided therein, such
default and the resulting acceleration shall be deemed to be an election on the
part of Trustor to prepay the Note. Accordingly, there shall be added to the
amount due after default and acceleration the Prepayment Premium (as defined in
the Note), calculated as set forth in the Note and using as the prepayment date
the date on which any tender of payment is made, and Trustor agrees to pay the
same. Any tender of payment thereafter made by or on behalf of Trustor
(including, without limitation, payment by any guarantor or purchaser at a
foreclosure sale) shall include the Prepayment Premium computed as provided in
the Note. In the event such default, acceleration and tender occur prior to the
time Trustor may prepay the Note, there shall nevertheless be due and added the
Prepayment Premium calculated in the manner set forth in the Note as though such
prepayment privilege were in effect.
(b) The Prepayment Premium shall be paid without prejudice to the
right of Beneficiary to collect any other amounts provided to be paid under the
Note or the other Loan Documents.
(c) TRUSTOR HEREBY EXPRESSLY (A) WAIVES ANY RIGHTS TRUSTOR MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THE NOTE, IN WHOLE OR
IN PART, WITHOUT PENALTY, UPON ACCELERATION OF THE MATURITY DATE, AND (B) EXCEPT
AS OTHERWISE PROVIDED IN THIS DEED OF TRUST OR THE OTHER LOAN DOCUMENTS, AGREES
THAT IF, FOR ANY REASON, A PREPAYMENT OF ALL OR ANY PORTION OF THE PRINCIPAL
AMOUNT OF THE NOTE IS MADE, WHETHER VOLUNTARILY OR UPON OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE OF THE NOTE BY BENEFICIARY ON ACCOUNT OF ANY
DEFAULT BY TRUSTOR, INCLUDING, WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR
FURTHER ENCUMBRANCE PROHIBITED OR RESTRICTED BY THIS DEED OF TRUST, THEN TRUSTOR
SHALL BE OBLIGATED TO PAY
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CONCURRENTLY WITH SUCH PREPAYMENT THE PREPAYMENT PREMIUM SPECIFIED IN THE NOTE.
BY INITIALING THIS PROVISION IN THE SPACE PROVIDED BELOW, TRUSTOR HEREBY
DECLARES THAT BENEFICIARY'S AGREEMENT TO MAKE THE LOAN SECURED BY THIS DEED OF
TRUST AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN THE NOTE CONSTITUTES
ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY TRUSTOR, FOR THIS WAIVER AND
AGREEMENT.
Trustor's Initials:___________
(d) The Note further provides that, upon default in the payment
of any installment of principal and interest as and when due thereunder, or upon
default in the performance of or compliance with any of the other covenants or
conditions of any of the Loan Documents, both continuing beyond any time
provided in the Note for the curing of such defaults, then, or at any time
thereafter, Beneficiary may, at its option and without notice, declare the
entire debt then remaining unpaid (including accrued interest and Late Charges
thereunder and any Advances made by Beneficiary under any Loan Documents) to be
immediately due and payable, plus the amount of the Prepayment Premium described
in the Note, and Beneficiary may include the amount of such Prepayment Premium
in any Beneficiary's statement, in any demand for (or answer to any request for
the amount of) full payment and in any bid at a judicial foreclosure or
trustee's sale under this Deed of Trust. Additionally, upon the occurrence of
any default(s), continuing beyond any time provided in the Note for the curing
of such default(s), Beneficiary shall have and may exercise immediately and
without notice any and all rights and remedies available at law or in equity and
also all rights and remedies provided for in any of the Loan Documents.
3. To the extent permitted by law, during any sale conducted by Trustee
pursuant to the power of sale contained in this Deed of Trust, Beneficiary may,
at Beneficiary's option, direct the Trustee to sell the Mortgaged Property
either as a whole or in separate parcels and in such order as Beneficiary may
determine.
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EXHIBIT 10.3
LOAN NO. 99701
ASSIGNMENT OF LEASES AND RENTS
ASSIGNMENT MADE THIS 30th day of March, 1999.
ARDEN REALTY FINANCE V, L.L.C., a Delaware limited liability company
("BORROWER"), of the City of Los Angeles, County of Los Angeles, and State of
California in consideration of ONE HUNDRED FIFTEEN MILLION DOLLARS and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, does hereby absolutely, presently and irrevocably assign,
transfer and set over unto MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
("LENDER"), a corporation organized under the laws of the Commonwealth of
Massachusetts, with its principal place of business in the City of Springfield,
County of Hampden, and Commonwealth of Massachusetts, the following:
A. All of the right, title and interest of Borrower in and to those
certain leases affecting all or a portion of the real property more
particularly described on EXHIBIT A hereto (the "PREMISES") which leases
are listed on EXHIBIT B hereto, and all other and future lease(s) of the
Premises, and all modifications, renewals, and extensions of the leases
listed on EXHIBIT B and of other and future lease(s), and guarantees, if
any, of the lessee's obligations under said leases listed on EXHIBIT B
and under other and future lease(s). Each of said leases and other and
future lease(s) and all modifications, renewals and extensions and
guarantees, if any, relating thereto are hereinafter collectively
referred to as the "Leases" and
B. All rents, issues, income, proceeds and profits arising from the
Lease(s) and from the use and occupancy of the Premises, including,
without limitation, all fixed and additional rents, cancellation
payments, and all sums due and payments made under any guarantee of any
of the Leases or any obligations thereunder (collectively "Rents").
C. All rights, powers, privileges, options and other benefits of
Borrower under the Leases, including without limitation the immediate
and continuing right to make claim for, receive, collect and receipt for
all Rents, including the right to make such claim in a proceeding under
the Bankruptcy Code (hereinbelow defined), and the right to apply the
same to the payment of the Debt (hereinbelow defined).
THIS ASSIGNMENT is an absolute, present and irrevocable assignment and
is given in connection with a loan transaction in which Borrower has undertaken
obligations for the following:
A. The payment of all sums and indebtedness now or hereafter due under
that certain Promissory Note and any amendments, extensions or renewals
thereof, (the Promissory Note together with all amendments, extensions
or renewals thereof is hereinafter referred to as the "NOTE") in the
original principal sum of ONE HUNDRED FIFTEEN MILLION DOLLARS
($115,000,000) made by Borrower to the order of Lender, and dated March
30, 1999, which Note is secured by that certain Deed of Trust and
Security
-1-
<PAGE> 2
Agreement executed as of even date herewith by Borrower as trustor,
naming Lender as beneficiary and Chicago Title Insurance Company as
trustee, originally encumbering twelve separate real property
developments (such Deed of Trust and Security Agreement, together with
all amendments, extensions or renewals thereof is hereinafter called the
"MORTGAGE") and intended to be duly recorded.
B. The performance and discharge of each and every obligation, covenant
and agreement of Borrower under this Assignment, the Note, the Mortgage
and any other instruments securing the Note (collectively the "LOAN
DOCUMENTS").
C. The payment of all sums now and hereafter becoming due and payable
under the Loan Documents (hereinafter the "DEBT").
THIS ASSIGNMENT is made on the following covenants, terms and
conditions:
SECTION 1. BORROWER'S COVENANTS AND WARRANTIES
Borrower hereby covenants and warrants to Lender as follows:
(a) Borrower has not executed any prior assignment of any of the Leases
or Rents which will remain effective after the recording of this
Assignment, nor has it performed any act or executed any other
instrument which might prevent Borrower from fulfilling any of the terms
and conditions of this Assignment or which might prevent Lender from
operating under any of the terms and conditions of this Assignment or
which would limit Lender in such operation;
(b) Borrower has not executed or granted any modification whatsoever of
any of the Leases, except as delivered to Lender; the Leases are in full
force and effect; and, except as disclosed to the Lender on a rent roll
delivered to Lender concurrently herewith, there are no material
defaults now existing under any of the Leases, or any conditions which,
after notice, passage of time, or both would constitute material
defaults;
(c) Borrower will observe and perform all the obligations imposed upon
the lessor under each of the Leases;
(d) Borrower will not collect any of the rents, issues, income, proceeds
and profits arising or accruing under the Leases or from the Premises
more than 1 month in advance of the time when the same shall become due
under the Leases (except customary security deposits) nor execute any
other assignment of the Leases or assignment of rents, issues, income,
proceeds or profits with respect to the Premises; and
(e) Except as permitted pursuant to the Mortgage, Borrower will not
alter or modify the terms of the Leases, give any consent or exercise
any option required or permitted by such terms, accept a surrender
thereof, or consent to any assignment of or subletting under any of the
Leases, whether or not in accordance with their terms.
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<PAGE> 3
SECTION 2. ABSOLUTE ASSIGNMENT OF LEASE(S)
Borrower and Lender intend that this Assignment constitute a present,
irrevocable and absolute assignment of the Leases and Rents, and not an
assignment for additional security only. Subject to the terms of this Section
2, Lender grants to Borrower a revocable license ("LICENSE") to collect and
receive the Rents. Borrower hereby agrees that Lender may authorize direct the
lessees named in the Leases, and any other occupants of the Premises, and all
Lease guarantors, to pay over to Lender or such other party as Lender may
direct, all Rents, upon receipt from Lender of written notice to the effect
that an Event of Default (defined below) exists, and to continue to do so until
the lessees are otherwise notified by Lender.
SECTION 3. REVOCATION OF LICENSE
Upon or at any time after the occurrence of an Event of Default as
defined in the Note or Mortgage which permits acceleration of the Loan
(collectively, an "EVENT OF Default"), the License granted to Borrower in
Section 2 of this Assignment shall automatically be revoked without the need of
any action by Lender, and Lender shall immediately be entitled to receipt and
possession of all Rents, whether or not Lender enters upon or takes control of
the Premises.
Upon demand by Lender after the occurrence of an Event of Default,
Borrower shall immediately deliver to Lender all Rents in the possession of
Borrower or its agents, and shall cooperate in instructing Borrower's agents
and the lessees under the Leases and all others in possession of the Premises
or any portion thereof to pay directly to Lender all Rents.
Upon revocation of the License, Lender may, at its option, without
waiving such Event Default and without notice or regard to the adequacy of the
security for the Debt, either in person or by agent, nominee or attorney, or by
a receiver appointed by a court, with or without bringing any action or
proceeding, dispossess Borrower and its agents and servants from the Premises,
without liability for trespass, damages or otherwise, and exclude Borrower and
its agents from the Premises.
Upon revocation of the License, Lender may also take possession of the
Premises, and books, records and accounts relating thereto and have, hold,
manage, lease and operate the Premises on such terms and for such period of
time as Lender may deem proper. In addition, and with or without taking
possession of the Premises, Lender, in its own name, may demand, sue or
otherwise collect and receive all Rents, including those past due and unpaid
and may apply any Rents collected in such order of priority as Lender in its
sole discretion deems appropriate, to the payment of:
(a) all expenses of managing the Premises, including, without
limitation, the salaries, fees and wages of a managing agent and such
other persons or entities as Lender may deem necessary or desirable, and
all expenses of operating and maintaining the Premises, including,
without limitation, all taxes, claims, assessments, ground rents, water
rents, sewer rents and any other liens or charges, and premiums for all
insurance which Lender may deem necessary or desirable, and the cost of
all alterations, renovations, repairs or replacements, and all expenses
incident to taking and retaining possession of the Premises;
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<PAGE> 4
(b) the Debt; and
(c) all reasonable costs and attorneys' fees incurred in connection with
the enforcement of this Assignment and any of the Loan Documents.
SECTION 4. NO LIABILITY OF LENDER
This Assignment shall not be construed to bind Lender to the performance
of any of the covenants, conditions, or provisions contained in any Lease, or
otherwise impose any obligation upon Lender. Lender shall not be liable for any
loss sustained by Borrower resulting from Lender's failure to let the Premises
after an Event of Default, or from any other act or omission of Lender either
in collecting the Rents, or if Lender shall have taken possession of the
Premises, in managing the Premises after an Event of Default, unless such loss
is caused by the gross negligence or willful misconduct of Lender.
SECTION 5. NO MORTGAGEE IN POSSESSION
In the absence of taking of actual possession of the Premises by Lender,
in its own right and person, Lender (i) shall not be deemed a mortgagee in
possession, (ii) shall not be responsible for the payment of any taxes or
assessments with respect to the Premises, (iii) shall not be liable to perform
any obligation of the lessor under any of the Leases or under applicable law,
(iv) shall not be liable to any person for any dangerous or defective condition
in the Premises nor for any negligence in the management, upkeep, repair, or
control of the said Premises resulting in loss or injury or death to any
person, and (v) shall not be liable in any manner for the remediation of any
environmental impairment.
SECTION 6. BANKRUPTCY
After the occurrence of an Event of Default which permits acceleration
of the Loan, Lender shall have the right to proceed in its own name or in the
name of Borrower in respect of any claim, suit, action or proceeding, relating
to any of the Leases in a proceeding under the bankruptcy laws of the United
States ("Bankruptcy Code") including, without limitation, the right to file and
prosecute, all to the exclusion of Borrower, any proofs of claim, complaints,
motions, applications, notices and other documents.
If there shall be filed by or against Borrower a petition under the Bankruptcy
Code, and Borrower, as lessor under the Leases, shall determine to reject any
Leases pursuant to Section 365(a) of the Bankruptcy Code, the Borrower shall
give Lender not less than ten (10) days' prior notice of the date on which
Borrower shall apply to the bankruptcy court for authority to reject the
Leases. Lender shall have the right, but not the obligation, to serve upon
Borrower within such ten-day period a notice stating that (i) Lender demands
that Borrower assume and assign the Lease to Lender pursuant to Section 365 of
the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate
assurance of future performance under the Leases. If Lender serves upon
Borrower the notice described in the preceding sentence, Borrower shall not
seek to reject the Leases and shall comply with the demand provided for in
clause (i) of the preceding sentence within thirty (30) days after the notice
shall have been given, subject to the performance by Lender of the covenant
provided for in clause (ii) of the preceding sentence.
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<PAGE> 5
SECTION 7. INDEMNITY OF LENDER
Borrower hereby indemnifies Lender for, and holds Lender harmless from,
any and all liability, loss or damage which may be incurred under said Leases,
or under or by reason of this Assignment, and from any and all claims and
demands whatsoever which may be asserted against Lender by reason of any alleged
obligations or undertakings under any of the Leases, except any claims arising
out of Lender's gross negligence or will misconduct.
Should Lender incur any such liability under the Leases or under or by
reason of this Assignment or in defense of any such claims or demands, the
amount thereof, including costs, expenses and reasonable attorneys' fees, shall
be secured by the Mortgage and Borrower shall reimburse Lender therefor,
immediately upon demand and upon the failure of Borrower so to Lender, at its
option, may declare all sums secured by the Mortgage immediately due and
payable.
SECTION 8. NO WAIVER OF RIGHTS BY LENDER
Nothing contained in this Assignment and no act done or omitted by
Lender pursuant to powers and rights granted it hereunder shall be deemed to be
a waiver by Lender of any of its rights and remedies under the Note, Mortgage or
any other instrument securing the Note. This Assignment is made and accepted
without prejudice to any of such rights and remedies possessed by Lender to
collect the Debt and to enforce the Loan Documents, and said rights and remedies
may be exercised by Lender either prior to, simultaneously with, or subsequent
to any action taken by it hereunder.
SECTION 9. RELEASES OF PARTIES AND SECURITY
Lender may take or release other security for the payment of the Debt,
may release any party primarily or secondarily liable therefor, and may apply
any other security held by it to the satisfaction of any portion of the Debt
without prejudice to any of its rights under this Assignment.
SECTION 10. FUTURE ASSURANCES
Borrower agrees that it will, from time to time, upon demand therefor by
Lender, deliver to Lender an executed counterpart of each of the Leases.
Further, Borrower agrees that it will execute, acknowledge and record such
additional assurances and assignments as Lender may request covering any and all
of the Leases. Such assignments shall be on forms approved by the Lender, and
Borrower agrees to pay all costs incurred in connection with the examination of
the Leases and the preparation, execution and recording of such assignments or
any other related documents, including, without limitation, fees of Lender's
local counsel.
SECTION 11. AMENDMENTS
This Assignment may not be altered or amended except in a writing,
intended for that specific purpose, signed by both Borrower and Lender.
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<PAGE> 6
SECTION 12. HEADINGS AND CAPTIONS
The headings and captions of various sections of this Assignment are for
convenience only and are not to be construed as defining or limiting, in any
way, the scope or intent of the provisions hereof.
SECTION 13. NOTICES
The parties agree that all notices, demands or documents which are
required or permitted to be given or served hereunder shall be in writing and
shall be deemed given when sent by registered or certified mail or, wherever
permitted by law, by overnight or express delivery service, or by hand delivery
addressed to the Borrower or Lender, as the case may be, at the address
furnished below, and that such address may be changed from time to time by
either party by serving a notice on the other as provided herein:
<TABLE>
<CAPTION>
Address of Borrower Address of Lender
<S> <C>
Arden Realty Finance V, L.L.C. Massachusetts Mutual Life
11601 Wilshire Boulevard, Suite 405 Insurance Company
Los Angeles, CA 90025-1740 1295 State Street
Springfield, MA 01111
Attn: Diana M. Laing
Executive Vice President and Attn: Senior Managing Director
Chief Financial Officer Real Estate Finance Group
</TABLE>
SECTION 14. GOVERNING LAW
This instrument shall be governed by the laws of the jurisdiction in
which the Premises are located and, upon the occurrence of an Event of Default,
Lender shall have, in addition to the rights and remedies expressly set forth
herein, all rights and remedies available to Lender as the holder of an
assignment of leases, rents, issues and profits in that jurisdiction.
SECTION 15. DISCHARGE
Until the payment in full of the Debt, this Assignment shall continue in
full force and effect, whether or not recorded. Borrower hereby authorizes
Lender to furnish to any person written notice, that this Assignment of Leases
and Rents remains in effect and agrees that such person may rely upon and shall
be bound by such statement. Upon payment in full of the Debt and the delivery
and recording of a satisfaction or discharge of the Mortgage duly executed,
this Assignment shall be void and of no effect.
SECTION 16. SEVERABILITY
If any one or more of the provisions contained in this Assignment shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Assignment but this Assignment
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<PAGE> 7
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
IN WITNESS WHEREOF, the Borrower has duly executed this Assignment as of
the date first written above.
ARDEN REALTY FINANCE V, L.L.C.,
a Delaware limited liability company
By: ______________________________
Diana M. Laing,
Chief Financial Officer
-7-
<PAGE> 8
ACKNOWLEDGMENT
[California]
STATE OF CALIFORNIA )
) SS.
COUNTY OF ______________________________ )
On __________________ before me, (here insert name and title of the
officer), personally appeared ________________________________
______________________________________________ personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
-8-
<PAGE> 9
EXHIBIT A
PREMISES
-9-
<PAGE> 10
EXHIBIT B
LEASES
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<PAGE> 1
EXHIBIT 10.4
SUBORDINATION OF MANAGEMENT AGREEMENT
This Agreement is made and entered into as of the 30th day of
March, 1999, by ARDEN REALTY FINANCE V, L.L.C., a Delaware limited liability
company ("Owner"), and ARDEN REALTY LIMITED PARTNERSHIP a Maryland limited
partnership ("Manager"), in favor of MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, a Massachusetts corporation ("Lender"), with reference to the
Management Agreement and Properties as hereinafter defined.
Manager manages each of those certain real properties located in
the State of California, more particularly described on Exhibit "A" hereto
(collectively, referred to as the "Properties"), pursuant to that certain
Property Management Agreement (the "Management Agreement") dated March 31, 1999,
executed by Owner and Manager, a copy of which Management Agreement is attached
hereto as Exhibit "B".
In order to induce Lender to close a permanent loan with respect
to the Properties, Manager desires to subordinate all of Manager's rights and
interests under the Management Agreement to the rights and interests of Lender
under the documents evidencing and securing the said loan ("Loan Documents") and
to make the agreements for the benefit of Lender hereinafter set forth; and
Owner desires to consent to the agreements of Manager set forth in this
Agreement and to enter into certain agreements, hereinafter set forth, for the
benefit of Lender.
NOW THEREFORE for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The Owner and Manager agree not to materially alter or amend
the terms of the Management Agreement or otherwise delegate or assign to others
the management of the Properties without the prior written consent of Lender.
2. Manager hereby acknowledges and agrees that its rights
(including without limitation rights to payment) and interests, if any, in the
Properties pursuant to the Management Agreement, or otherwise, are and shall be
in all respects inferior, subject, and subordinate to the rights and interest of
Lender pursuant to the Loan Documents. If Manager receives any management fees
after its receipt of written notice from Lender that an Event of Default, as
defined in the Loan Documents, has occurred, and after any applicable notice and
cure periods, such sums shall be paid by Manager to Lender upon demand.
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<PAGE> 2
3. Should an Event of Default occur under any of the Loan
Documents and should Lender elect to exercise its rights and remedies under the
Loan Documents, the Management Agreement and Manager's rights, interests, and
entitlement thereunder, at the option of Lender, may be terminated by Lender
effective upon Lender's providing Manager with written notice of its election to
so terminate the Management Agreement.
4. In the event of termination of the Management Agreement
pursuant to paragraph 3 above, Manager agrees to deliver, or make available to
Lender during normal business hours, all leases, books, records, accounts,
deposits, brochures and all other information and property in Manager's
possession regarding the management and operation of the Properties.
5. Exercise of the rights of Lender hereunder shall be without
any liability of Lender to Manager for past due management fees, expenses,
termination fees or otherwise for any sums owed by Owner to Manager pursuant to
the Management Agreement, provided that should Lender elect to continue to
employ Manager for the operation of the Properties, Lender shall pay Manager for
all fees and expenses accruing from and after the date Lender enters into
possession of the Properties.
6. All notices to Manager or Lender required or permitted
hereunder shall be given in writing by registered or certified mail, return
receipt requested, or by overnight courier providing a receipt, at the following
addresses,
Manager: Arden Realty Limited Partnership
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, California 90025
Lender:Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Senior Managing Director,
Real Estate Finance Group
or to such other address as may hereafter be specified by notice given as above
provided.
7. Owner consents to the agreements of Manager herein contained.
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<PAGE> 3
8. This Agreement shall be binding upon the successors and
assigns of the parties hereto and shall inure to the benefit of the successors
and assigns of Lender.
9. This Agreement may not be amended and no provision of this
Agreement may be waived except by an agreement in writing signed by the party
against which the amendment or waiver is asserted and approved in writing by
Lender.
10. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
11. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, and all of which together shall
constitute one and the same Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
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<PAGE> 4
IN WITNESS WHEREOF, Manager and Owner have executed this
Agreement as of the date first above written.
OWNER:
ARDEN REALTY FINANCE V, L.L.C.,
a Delaware limited liability company,
By: _____________________________
Diana M. Laing,
Chief Financial Officer
MANAGER:
ARDEN REALTY LIMITED PARTNERSHIP
a Maryland limited partnership
By: Arden Realty, Inc.,
a Delaware corporation,
General Partner
By: _____________________________
Diana M. Laing,
Chief Financial Officer
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<PAGE> 5
ACKNOWLEDGMENT
[California]
STATE OF CALIFORNIA )
) SS.
COUNTY OF ______________________________ )
On __________________ before me, (here insert name and title of the officer),
personally appeared ________________________________
______________________________________________ personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
STATE OF CALIFORNIA )
) SS.
COUNTY OF ______________________________ )
On __________________ before me, (here insert name and title of the officer),
personally appeared ________________________________
______________________________________________ personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________ (Seal)
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<PAGE> 6
EXHIBIT "A"
LEGAL DESCRIPTION
-6-
<PAGE> 7
EXHIBIT "B"
MANAGEMENT AGREEMENT
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<PAGE> 1
EXHIBIT 10.5
ENVIRONMENTAL INDEMNIFICATION
AND HOLD HARMLESS AGREEMENT
THIS ENVIRONMENTAL INDEMNIFICATION AND HOLD HARMLESS AGREEMENT (this
"AGREEMENT") is made as of this 30th day of March, 1999, by ARDEN REALTY FINANCE
V, L.L.C., a Delaware limited liability company ("BORROWER") (Borrower being
sometimes hereinafter referred to as "Indemnitor") to and for the benefit of
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation
("LENDER").
W I T N E S S E T H:
WHEREAS, Borrower is the owner of certain real properties situated in
the State of California, as more particularly described on Exhibit "A" attached
hereto and made a part hereof (such real properties, together with any
additional real property hereafter encumbered by the lien of the Mortgage (as
defined below), and all improvements now or hereafter located thereon and all
rights and interests of Borrower therein, are hereinafter referred to as the
"LAND");
WHEREAS, Lender is about to make a loan to Borrower in the original
principal amount of ONE HUNDRED FIFTEEN MILLION AND NO/100 DOLLARS
($115,000,000.00) (the "LOAN") to be evidenced by a Promissory Note of even date
herewith (as the same may be amended, modified, supplemented or extended from
time to time, the "NOTE"); and
WHEREAS, the Note will be secured, inter alia, by a Deed of Trust and
Security Agreement of even date herewith, executed by Borrower as trustor,
naming Lender as beneficiary and Chicago Title Insurance Company as trustee,
originally encumbering twelve separate real property developments (as such Deed
of Trust and Security Agreement may be amended, modified, supplemented or
extended from time to time, the "MORTGAGE"); and
WHEREAS as a condition to making the Loan, Lender requires that
Indemnitor provide certain indemnities; and
WHEREAS, to induce Lender to make the Loan, Indemnitor has agreed to
provide such indemnities.
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Indemnitor hereby
covenants and agrees as follows:
1. Indemnity. Indemnitor, its successors, heirs, next of kin, personal
representatives, and assigns (collectively referred to in this Paragraph 1 as
"INDEMNITOR") jointly and severally
1
<PAGE> 2
agree to defend, indemnify and hold harmless Lender, its directors, officers,
employees, agents, contractors, sub-contractors, licensees, invitees, successors
and assigns (collectively referred to in this Paragraph 1 as "LENDER"), from and
against any and all of the following (collectively, "CLAIMS"): all claims,
demands, judgments, settlements, damages, actions, causes of action, injuries,
administrative orders, consent agreements and orders, liabilities, penalties,
costs, including but not limited to any cleanup costs, remediation costs,
response costs and all reasonable expenses of any kind whatsoever (including
claims arising out of loss of life, injury to persons, property or business or
damage to natural resources in connection with the activities of Indemnitor,
their predecessors in interest, third parties who have trespassed on the Land or
parties in a contractual relationship with Indemnitor, or any of them, or
anybody else whether or not occasioned wholly or in part by any condition,
accident or event caused by any act or omission of Lender unless the same
constitute gross negligence or willful misconduct) which:
A. arise out of the actual, alleged or threatened migration,
spilling, leaching, pouring, emptying, injection, discharge,
dispersal, release, storage, treatment, generation, disposal or
escape of Hazardous Substances as defined in the Mortgage and
Hazardous Materials as defined in Exhibit B hereto, and
including any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste including materials to be recycled,
reconditioned or reclaimed; or
B. Actually or allegedly arise out of the use, specification or
inclusion of any product, material or process containing
chemicals, the failure to detect the existence or proportion of
chemicals, the failure to detect the existence or proportion of
chemicals in the soil, air, surface water or ground water, or
the performance or failure to perform the abatement of any
pollution source or the replacement or removal of any soil,
water, surface water or ground water containing chemicals; or
C. Arise out of the breach of any covenant, warranty or
representation contained in Exhibit "B" hereto of Indemnitor,
which covenants, warranties and representations are incorporated
herein; or
D. Arise out of breach of Section 2.20, 2.21 or 2.22 of the
Mortgage.
2. Payments; Hold Harmless; Defense. Indemnitor and its heirs, next of
kin, personal representatives, successors and assigns, shall bear, pay and
discharge when and as the same becomes due and payable, any and all Claims
against Lender described in Paragraph 1 of this Agreement, shall hold Lender
harmless for such Claims, and shall assume the burden and expense of defending
all such Claims with any and all persons, political subdivisions or government
agencies.
2
<PAGE> 3
3. Incorporation of Covenants, Warranties, Representations and
Agreements. The covenants, warranties, representations and agreements of
Indemnitor set forth on Exhibit "B" hereto are hereby incorporated and made a
part hereof, with the same force and effect as if set forth fully in this
Agreement.
4. Survival. Indemnitor's indemnifications and representations made
herein shall survive any termination or expiration of the documents evidencing
or securing the Loan and/or the repayment of the indebtedness evidenced by the
Note included but not limited to any foreclosure on the Mortgage or any
deed-in-lieu of foreclosure; it being understood and agreed that the indemnity
given herein is independent of the secured indebtedness and the documents
securing the Loan. Notwithstanding the aforesaid, Indemnitor's indemnification
and representations shall not extend to Hazardous Materials (as defined on
Exhibit "B") which first become present on the Land or any improvements thereon
after Lender's succession to title by virtue of a foreclosure or deed-in-lieu of
foreclosure, or any claims arising out of any gross negligence or willful
misconduct by any indemnified party.
5. Notices. All notices given pursuant to this Agreement shall be given
in writing and shall be effective for all purposes if delivered or sent by (a)
certified or registered United States mail, postage prepaid, or (b) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, addressed, in the case of Lender or Borrower,
at its address as set forth in the Mortgage or at such other address as shall be
designated from time to time by Borrower or Lender, as the case may be, in a
written notice to the other party, in the manner provided for in this Section 6.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
7. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, and all of which together shall
constitute one and the same Agreement.
[Signatures Appear on Next Page]
3
<PAGE> 4
WITNESS the due execution of this Agreement by Borrower acting through
its duly authorized representatives, as of the day and year first above written.
BORROWER and INDEMNITOR:
ARDEN REALTY FINANCE V, L.L.C.,
a Delaware limited liability company
By: ___________________________________
Diana M. Laing, Chief Financial Officer
4
<PAGE> 5
EXHIBIT A
LEGAL DESCRIPTION
5
<PAGE> 6
EXHIBIT "B"
Borrower's Hazardous Substances Covenants,
Warranties and Representations
1. Indemnitor, for itself and its respective heirs, next of kin, personal
representatives, successors and assigns, after reasonable inquiry,
covenant, warrant and represent that, except as disclosed in the
Environmental Report (as defined in the Mortgage):
A. No pollutants or other toxic or hazardous substances, as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S. C. Section 9601 et seq., or
any other federal or state law, including any solid, liquid,
gaseous or thermal irritant or contaminant, such as smoke,
vapor, soot, fumes, acids, alkalis, chemicals or waste
(including materials to be recycled, reconditioned or
reclaimed), Hazardous Substances as defined in the Mortgage, and
other regulated substances, (collectively, "Hazardous
Materials") have been, or shall be, discharged, dispersed,
released, stored, treated, generated, disposed of or allowed to
escape or migrate, or shall threaten to be injected, emptied,
poured, leached or spilled (collectively referred to as the
"release") on or from the Land except in compliance in all
material respects with applicable laws.
B. No asbestos or asbestos-containing materials have been or will be
(during the term of the Loan) installed, used, incorporated into,
place on or disposed of on the Land except in compliance in all
material respects with applicable laws.
C. No polychlorinated biphenyls ("PCBs") are or will be (during the
term of the Loan) located on or in the Land, in the form of
electrical transformers, fluorescent light fixtures with
ballasts, cooling oils or any other device except in compliance
in all material respects with applicable laws.
D. No underground storage tanks are or will be (during the term of
the Loan) located on the Land or to the knowledge of Indemnitor
were located on the Land and subsequently removed or filled,
except those tanks which have been identified (by size, location,
age, substance contained therein, and whether in existence,
removed or filled) and disclosed to Lender.
E. To the knowledge of Indemnitor, no investigation, administrative
order, consent order and agreement, litigation, settlement, lien
or encumbrance (collectively referred to as the "action") with
respect to Hazardous Materials is proposed, threatened,
anticipated or in existence with respect to the Land.
F. The Land and Borrower's operations at the Land are in compliance
in all material respects with all applicable federal, state and
local statutes, laws and regulations. No notice has been served
on Indemnitor, or any subsidiary of Indemnitor, from any entity,
government body or individual claiming any violation of any law,
regulation, ordinance or code, or requiring compliance with any
law, regulation, ordinance or code, or demanding payment or
contribution for environmental damage or injury to natural
resources. Copies of any such notices received after settlement
shall be forwarded to Lender within three (3) business days of
their receipt.
G. Indemnitor has no knowledge of the release or threat of release
of any Hazardous Material from any land adjoining or in the
immediate vicinity of the Land.
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H. No portion of the Land is a wetland or other water of the United
States subject to jurisdiction under Section 404 of the Clean
Water Act (33 U.S.C. Section 1344) or any comparable California
statute or local ordinance or regulation defining or protecting
wetlands or other special aquatic areas.
I. To the best of Indemnitor's knowledge, there are no
concentrations of radon or other radioactive gases or materials
in any buildings or structures on the Land that exceed background
ambient air levels.
J. To the best of Indemnitor's knowledge, there have been no
complaints of illness or sickness alleged to result from
conditions inside any buildings or structures on the Land.
2. Failure to comply with any provision in Section 1 of this Exhibit "B",
including failure to fully and accurately complete any schedule or
attachment described in Section 1 of this Exhibit "B", shall be deemed
to be an occurrence of default under the Environmental Indemnity and
Hold Harmless Agreement to which this Exhibit "B" is attached.
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