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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ------------ to ------------
Commission file number 000-24905
BEACON CAPITAL PARTNERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
Maryland 04-3403281
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<S> <C>
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
One Federal Street, 26th Floor,
Boston, Massachusetts 02110
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
617-457-0400
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
</TABLE>
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
Number of Common Shares outstanding at the latest practicable date, August
16, 1999: 20,973,932 shares, $.01 par value.
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BEACON CAPITAL PARTNERS, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
--
<S> <C>
Part I -- Financial Information
Item 1. Consolidated Financial Statements......................................................... 1
Consolidated Balance Sheets--June 30, 1999 (Unaudited) and December 31, 1998............ 1
Consolidated Statements of Operations--Three Months Ended June 30, 1999 and 1998, Six
Months Ended June 30, 1999 and the period from January 21, 1998 (Inception) to June
30, 1998 (Unaudited).................................................................. 2
Consolidated Statements of Cash Flows--Six Months Ended June 30, 1999 and the period
from January 21, 1998 (Inception) to June 30, 1998 (Unaudited)........................ 3
Notes to Consolidated Financial Statements.............................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..... 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk................................ 15
Part II Other Information
- --
Item 1. Legal Proceedings......................................................................... 16
Item 2. Changes in Securities and Use of Proceeds................................................. 16
Item 3. Defaults Upon Senior Securities........................................................... 16
Item 4. Submission of Matters to a Vote of Security Holders....................................... 16
Item 5. Other Information......................................................................... 16
Item 6. Exhibits and Reports on Form 8-K.......................................................... 16
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
BEACON CAPITAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
(UNAUDITED) (NOTE 1)
ASSETS
Real Estate:
Land................................................................................ $ 51,094 $ 51,094
Buildings, improvements and equipment............................................... 170,821 165,842
----------- ------------
221,915 216,936
Less accumulated depreciation....................................................... 4,359 2,168
----------- ------------
217,556 214,768
Deferred financing and leasing costs, net of accumulated amortization of $155 and $42,
respectively........................................................................ 3,029 414
Cash and cash equivalents............................................................. 39,876 174,647
Restricted cash....................................................................... 493 697
Accounts receivable, net.............................................................. 1,852 2,464
Accrued rent receivable............................................................... 397 233
Other assets.......................................................................... 5,978 641
Investments in joint ventures and corporations........................................ 94,753 90,136
Other investments..................................................................... 78,667 --
----------- ------------
Total assets.................................................................... $ 442,601 $ 484,000
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable.............................................................. $ 18,877 $ 21,570
Note payable--interim financing..................................................... 70,000 --
Accounts payable, accrued expenses and dividend payable............................. 6,786 18,731
----------- ------------
Total liabilities............................................................... 95,663 40,301
----------- ------------
Commitments and contingencies......................................................... -- --
Minority interest in consolidated partnership......................................... 43,754 54,983
----------- ------------
Stockholders' equity:
Preferred stock; $.01 par value, 200,000,000 shares authorized, none issued or
outstanding....................................................................... -- --
Excess stock; $.01 par value, 250,000,000 shares authorized, none issued or
outstanding....................................................................... -- --
Common stock; $.01 par value, 500,000,000 shares authorized, 20,973,932 shares
issued and outstanding............................................................ 210 210
Additional paid-in capital.......................................................... 389,520 389,520
Cumulative net income............................................................... 14,626 9,054
Cumulative dividends................................................................ (101,172) (10,068)
----------- ------------
Total stockholders' equity...................................................... 303,184 388,716
----------- ------------
Total liabilities and stockholders' equity...................................... $ 442,601 $ 484,000
----------- ------------
----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
1
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BEACON CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 21,
1998
THREE MONTHS SIX MONTHS (INCEPTION)
ENDED JUNE 30, ENDED TO JUNE 30,
1999 1998 JUNE 30, 1999 1998
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<S> <C> <C> <C> <C>
Revenues:
Rental income....................................... $ 4,715 $ 161 $ 9,877 $ 161
Reimbursement of operating expenses and real estate
taxes............................................. 789 43 1,591 43
Equity in earnings of joint venture................. 1,147 953 2,401 953
Interest income..................................... 2,798 5,038 4,784 5,614
Other income........................................ 162 16 403 24
------------- ------------- ------------- -------------
Total revenues.................................. 9,611 6,211 19,056 6,795
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Expenses:
Property operating.................................. 1,388 13 2,747 13
Real estate taxes................................... 1,236 37 2,299 37
General and administrative.......................... 2,341 1,669 4,923 2,637
Interest expense.................................... 25 16 467 16
Depreciation and amortization....................... 1,192 54 2,316 57
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Total expenses.................................. 6,182 1,789 12,752 2,760
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Income before minority interest....................... 3,429 4,422 6,304 4,035
Minority interest in consolidated partnership......... (398) (67) (732) (67)
------------- ------------- ------------- -------------
Net income...................................... $ 3,031 $ 4,355 $ 5,572 $ 3,968
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Income per common share--basic and diluted............ $ 0.14 $ 0.21 $ 0.27 $ 0.19
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common shares outstanding
(in thousands)...................................... 20,974 20,795 20,974 20,395
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES.
2
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BEACON CAPITAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
PERIOD
FROM JANUARY
21,
SIX MONTHS 1998
ENDED (INCEPTION)
JUNE 30, TO
1999 JUNE 30, 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................................... $ 5,572 $ 3,968
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation...................................................................... 2,191 57
Amortization...................................................................... 125 --
Equity in earnings of joint venture............................................... (2,401) (953)
Distribution from joint venture................................................... 2,500 --
Minority interest in consolidated partnership..................................... 732 67
Increase (decrease) in cash arising from changes in operating assets and
liabilities:
Restricted cash................................................................... 204 --
Accounts receivable............................................................... 612 --
Accrued rent receivable........................................................... (164) --
Other assets...................................................................... (1,384) (2,203)
Accounts payable and accrued expenses............................................. (556) 2,548
----------- -------------
Net cash provided by operating activities....................................... 7,431 3,484
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Wyndham preferred stock, net............................................ (102,874) --
Real estate asset acquisitions and improvements..................................... (4,979) (72,107)
Funding of mortgage note receivable................................................. (45,000) --
Other investment.................................................................... (33,667) --
Payment of deferred leasing costs................................................... (756) --
Acquisition deposits and deferred costs............................................. (3,953) (3,430)
Investments in joint ventures and corporations...................................... (4,716) (122,022)
----------- -------------
Net cash used in investing activities........................................... (195,945) (197,559)
----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable--interim financing....................................... 70,000 --
Payment of deferred financing costs................................................. (1,984) --
Repayments on mortgage notes........................................................ (2,693) --
Proceeds from loans payable--affiliate.............................................. -- 3,560
Repayment of loans payable--affiliate............................................... -- (3,560)
Sale of Operating Partnership units................................................. -- 4,228
Sale of common stock................................................................ -- 417,871
Offering costs...................................................................... -- (28,141)
Distribution payment to minority interests.......................................... (1,321) --
Dividend payment to stockholders.................................................... (10,259) --
----------- -------------
Net cash provided by financing activities....................................... 53,743 393,958
----------- -------------
Net (decrease) increase in cash and cash equivalents................................ (134,771) 199,883
Cash and cash equivalents, beginning of period...................................... 174,647 --
----------- -------------
Cash and cash equivalents, end of period............................................ $ 39,876 $ 199,883
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SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Operating Partnership units to acquire property........................... $ -- $ 51,359
Cash paid for interest, net of capitalized interest of $500 and $0, respectively...... 261 16
Distribution of Wyndham preferred stock to minority interests......................... 11,961 --
Dividend of Wyndham preferred stock to stockholders................................... 90,913 --
</TABLE>
SEE ACCOMPANYING NOTES.
3
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BEACON CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements of Beacon Capital Partners, Inc. ("BCP") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in BCP's annual report on Form 10-K for the period
ended December 31, 1998.
2. ORGANIZATION
Beacon Capital Partners, Inc. was incorporated on January 21, 1998 as a
Massachusetts corporation (the "Formation"), and was initially capitalized
through loans from the two founders of BCP, Messrs. Leventhal and Fortin. The
loans were repaid in May 1998. BCP intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as amended. BCP was
established to conduct real estate investment and development activities and
currently operates in one segment.
On March 17, 1998, BCP was reincorporated as a Maryland corporation and on
March 20, 1998 it completed an initial private offering (the "Original
Offering") in accordance with Section 4(2) of the Securities Act. BCP initially
issued 17,360,769 common shares with proceeds, net of expenses, of $323,110. In
April, 1998, 3,613,163 additional shares were issued through the exercise of the
underwriter's over-allotment, with proceeds, net of expenses, of $66,620.
In connection with the reincorporation of BCP in Maryland, BCP established
Beacon Capital Partners, L.P. (the "Operating Partnership"). BCP and the
Operating Partnership are collectively referred to as the "Company". The
Operating Partnership is a Delaware limited partnership. BCP is the sole general
partner of, and, as of June 30, 1999, holds approximately 88% of the economic
interest in the Operating Partnership. BCP holds an approximate 1% general
partnership interest in the Operating Partnership and the balance is held as a
limited partnership interest. The limited partnership interests not held by BCP
are presented as minority interest in the accompanying consolidated financial
statements. The term of the Operating Partnership commenced on March 16, 1998
and shall continue until January 1, 2056 or until such time as a Liquidating
Event, as defined, has occurred.
3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS
The investments in joint ventures and corporations represents the Company's
interest in (i) a joint venture known as Beacon/PW Kendall LLC ("The Athenaeum
Portfolio"), (ii) a joint venture with Mathilda Partners LLC ("Mathilda Research
Centre"), (iii) a joint venture with HA L.L.C. ("Millennium Tower"), and (iv) an
investment in preferred stock of Cypress Communications, Inc. ("Cypress").
4
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BEACON CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS (CONTINUED)
A reconciliation of the underlying net assets to the Company's carrying
value of investments in joint ventures and corporations is as follows:
<TABLE>
<CAPTION>
THE MATHILDA CYPRESS
ATHENAEUM RESEARCH MILLENNIUM COMMUNICATIONS,
PORTFOLIO CENTRE TOWER INC. TOTAL
----------- --------- ----------- ----------------- ---------
<S> <C> <C> <C> <C> <C>
BCP, L.P. equity interest (including accumulated
earnings, net of distributions)............... $ 63,693 $ 17,637 $ 7,546 $ 88,876
Investments in preferred stock.................. -- -- -- $ 5,000 5,000
Other costs..................................... 40 382 390 65 877
----------- --------- ----------- ------ ---------
Carrying value of investments in joint ventures
and corporations.............................. $ 63,733 $ 18,019 $ 7,936 $ 5,065 $ 94,753
----------- --------- ----------- ------ ---------
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</TABLE>
THE ATHENAEUM PORTFOLIO
Beacon/PW Kendall LLC was formed on April 16, 1998 and is jointly owned by
the Company and PW Acquisitions IX, LLC, an affiliate of PaineWebber. Initially
each member made a $5,000 contribution and the Company provided a loan to the
joint venture of approximately $117,000. The joint venture acquired The
Athenaeum Portfolio, an eleven building 970,000 square foot mixed-use portfolio
located in Cambridge, Massachusetts. In August 1998, the Company and PW
Acquisitions IX, LLC each made equity contributions of approximately $58,500,
which were used to repay the Company's loan receivable.
MATHILDA RESEARCH CENTRE
On August 9, 1998, the Company entered into a joint venture agreement with
Mathilda Partners LLC, an affiliate of Menlo Equities, a California based
developer, to develop two four-story Class A office/R&D buildings with surface
parking, known as Mathilda Research Centre. The Company and Mathilda Partners
LLC have agreed to fund 87.5% and 12.5% of the equity required, respectively. On
November 4, 1998, the joint venture acquired a twelve-acre site on Mathilda
Avenue in Sunnyvale, CA, on which it is developing Mathilda Research Centre. The
estimated cost of the 267,000 square foot development is approximately $57,000.
In addition to funding approximately 35% of the development costs (including the
acquisition of the land) from cash contributions, the joint venture intends to
finance the balance with a construction loan from an institutional lender.
MILLENNIUM TOWER
On September 1, 1998 the Company entered into a joint venture agreement with
HA L.L.C., an affiliate of Martin Smith Real Estate Services, a Seattle based
real estate company, to develop a high-rise building in downtown Seattle,
Washington, known as Millennium Tower. The Company and HA L.L.C. have agreed to
fund 66 2/3% and 33 1/3% of the equity required, respectively. Land has been
contributed to the joint venture by HA L.L.C. at an agreed value of $10,500, and
the Company has agreed to fund the first $19,000 of cash requirements for the
venture. The joint venture has obtained a $45,000 construction loan
5
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BEACON CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
3. INVESTMENTS IN JOINT VENTURES AND CORPORATIONS (CONTINUED)
from two institutional lenders to finance the balance of the development costs.
The estimated cost of the project is $71,000, including the value of the land.
CYPRESS COMMUNICATIONS, INC.
On September 30, 1998, the Company invested $5,000 to acquire preferred
stock in Cypress Communications, Inc., representing a 13.5% fully diluted
ownership position in such company. Dividends will be earned on the Company's
investment as and when dividends are declared on the preferred stock or any
other class of stock in Cypress Communications, Inc. The preferred stock will be
treated preferentially upon a liquidation of Cypress, should a liquidation
occur, and is held by both the Operating Partnership and Tenant Communications,
Inc., a Massachusetts corporation ("Tenant Communications"). The voting common
stock of Tenant Communications is controlled by Messrs. Leventhal and Fortin.
The Operating Partnership owns 99% of the economic interests in Tenant
Communications.
4. OTHER INVESTMENTS
215 FREMONT STREET
On June 30, 1999, the Company invested $33,500, exclusive of closing costs,
in 215 Fremont Street, a 299,000 square foot building located in the South
Financial District of San Francisco, California. It is anticipated that this
investment will be transferred to an affiliate of the Company, Beacon Capital
Strategic Partners, L.P., an investment fund expected to close in the third
quarter of 1999.
MORTGAGE NOTE RECEIVABLE--PAH BATTERYMARCH REALTY COMPANY, LLC
At June 30, 1999, the Company had a mortgage note receivable outstanding in
the amount of $45,000 from PAH Batterymarch Realty Company, LLC, an entity
wholly owned by Patriot American Hospitality Partnership, L.P., for the
development of the Wyndham Batterymarch Hotel located in Boston, Massachusetts.
The mortgage note was collateralized by a first mortgage lien on the property
and was guaranteed by Wyndham International, Inc. ("Wyndham") and Patriot
American Hospitality Partnership, L.P. The mortgage note had an interest rate of
Libor plus 250 basis points and was repaid on July 1, 1999.
5. PREFERRED STOCK INVESTMENT IN WYNDHAM INTERNATIONAL, INC.
On June 30, 1999, the Company purchased 1,050,000 shares of Series B
Convertible Preferred Stock ("Series B Preferred") of Wyndham at a net price of
approximately $102,874. Simultaneous with this transaction, the Company
transferred the shares of Series B Preferred to a voting trust (the trustee of
which is a subsidiary of the Operating Partnership) and declared and paid a
dividend of approximately $4.34 per share of common stock of BCP and a
distribution of approximately $4.34 per operating partnership unit of the
Operating Partnership. The aggregate value of the dividend and distribution was
approximately $103,064 and primarily consisted of the Company's interest in
shares of the Series B Preferred. Stockholders not able to receive such
interests received cash of equivalent value.
On July 1, 1999, the Company purchased 450,000 shares of Series B Preferred
at a net price of approximately $44,055.
6
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BEACON CAPITAL PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
5. PREFERRED STOCK INVESTMENT IN WYNDHAM INTERNATIONAL, INC. (CONTINUED)
The aggregate number of shares of Series B Preferred the Company purchased
may be reduced by up to 30% (450,000 shares) following a rights offering to
current Wyndham common shareholders. Depending on the timing and magnitude of
Wyndham's rights offering, the Company may establish a second voting trust to
hold some or all of the 450,000 shares of Series B Preferred.
6. MORTGAGE NOTES PAYABLE
The mortgage notes payable, collateralized by certain properties and
assignments of leases total $18,877 at June 30, 1999. The mortgage notes payable
have fixed interest rates ranging from 7.75% to 9.25% and maturities ranging
from May 2002 to October 2022. The net book value of the mortgaged assets is
$52,264 at June 30, 1999.
Future minimum principal payments due during the next five years and
thereafter are as follows:
<TABLE>
<S> <C>
1999............................................................... $ 175
2000............................................................... 373
2001............................................................... 404
2002............................................................... 1,815
2003............................................................... 414
Thereafter......................................................... 15,696
---------
Total $ 18,877
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---------
</TABLE>
7. NOTE PAYABLE--INTERIM FINANCING
On June 28, 1999, the Company obtained a $100,000 secured interim financing
(the "Interim Financing") from Bankers Trust Company. The Interim Financing
matures in June 2000, but in certain circumstances can be extended for one year.
Outstanding balances under the Interim Financing bear interest at a rate spread
over the base rate or Eurodollar rate, as applicable. The spread is based upon
certain loan to value ratios. At June 30, 1999, the outstanding balance of the
Interim Financing was $70,000 and the interest rate was 7.96%. The Interim
Financing requires monthly payments of interest only and is secured by mortgages
and assignments of rents on certain properties. The net book value of the
collateralized assets is $121,009 at June 30, 1999.
The Company's ability to borrow under the Interim Financing is subject to
the Company's ongoing compliance with a number of financial and other covenants.
8. SUBSEQUENT EVENT
On July 13, 1999, the Company acquired Fort Point Place, a four-building,
335,000 square foot complex located in the South Boston Waterfront District of
Boston, Massachusetts. The aggregate consideration for the properties was
approximately $24,300.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words "believe", "expect", "anticipate", "intend",
"estimate" and other expressions which are predictions of or indicate future
events and trends and which do not relate to historical matters identify
forward-looking statements. Our actual results could differ materially from
those set forth in the forward-looking statements. Certain factors that might
cause such a difference include the following: real estate investment
considerations, such as the effect of economic and other conditions in the
market area on cash flows and values; the ability to obtain third party
shareholder approval for investment transactions; the need to renew leases or
relet space upon the expiration of current leases, and the ability of a property
to generate revenue sufficient to meet debt service payments and other operating
expenses; risks associated with borrowing, such as the possibility that we will
not have sufficient funds available to make principal payments on outstanding
debt and outstanding debt may be refinanced at higher interest rates or
otherwise on terms less favorable to the Company; the impact of pending or
future litigation; variations in quarterly operating results; the risk that we
and our third party property managers, tenants or vendors may experience
unanticipated delays or expenses in achieving Year 2000 compliance; securities
held for investment are subject to fluctuations in valuation based upon the
performance of the underlying business and those risks and uncertainties
contained elsewhere in this report and under the heading "Risk Factors" of our
Registration Statement on Form S-11 as filed with the Securities and Exchange
Commission on June 16, 1998, as subsequently amended.
The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with the accompanying consolidated
financial statements and notes thereto. Our consolidated financial statements
include Beacon Capital Partners, Inc. ("BCP") and Beacon Capital Partners, L.P.
(the "Operating Partnership"), our majority-owned partnership.
RESULTS OF OPERATIONS
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1999 AND THE PERIOD FROM JANUARY 21,
1998 (INCEPTION) TO JUNE 30, 1998 AND THE THREE MONTHS ENDED JUNE 30, 1999 AND
JUNE 30, 1998.
Our total revenues increased $12.3 million to $19.1 million for the six
months ended June 30, 1999 as compared to $6.8 million for the period January
21, 1998 (Inception) to June 30, 1998. The increase was due to Technology
Square, The Draper Building and the Dallas Office and Industrial Portfolio
acquisitions rental income and reimbursement of operating expenses and real
estate taxes of $9.7 million and $1.5 million, respectively, The Athenaeum
Portfolio equity earnings of $1.5 million and other income of $.4 million offset
by a decrease in interest income of $.8 million. Revenues for The Athenaeum
Portfolio were $15.2 million and expenses were $10.4 million for the six months
ended June 30, 1999; we recognize 50% of its net earnings. Interest income for
the six months ended June 30, 1999 decreased $.8 million over the same period
ending June 30, 1998, primarily the result of a reduction in investment cash on
hand due to our use of the March, 1998 Offering Proceeds to fund property
acquisitions, offset by the interest earned on the mortgage note receivable in
1999.
Our total expenses increased $10 million to $12.8 million for the six months
ended June 30, 1999 as compared to $2.8 million for the period January 21, 1998
(Inception) to June 30, 1998. The increase was due to Technology Square, The
Draper Building and the Dallas Office and Industrial Portfolio acquisitions
property operating expenses, real estate taxes and interest expense of $2.7
million, $2.3 million and $.4 million, respectively, additional general and
administrative expenses of $2.3 million and depreciation and amortization
expense of $2.3 million.
8
<PAGE>
Our total revenues increased $3.4 million for the three months ended June
30, 1999 as compared to the three months ended June 30, 1998. The increase was
due to Technology Square, The Draper Building and the Dallas Office and
Industrial Portfolio acquisitions rental income and reimbursement of operating
expenses and real estate taxes of $4.6 million and $.7 million, respectively,
The Athenaeum Portfolio equity earnings of $.2 million, and other income of $.1
million offset by a decrease in interest income of $2.2 million. Interest income
for the three months ended June 30, 1999 decreased $2.2 million over the same
period ending June 30, 1998, primarily the result of a reduction in investment
cash on hand due to our use of the March, 1998 Offering Proceeds to fund
property acquisitions, offset by the interest earned on the mortgage note
receivable in 1999.
Our total expenses increased $4.4 million for the three months ended June
30, 1999 as compared to the three months ended June 30, 1998. The increase was
due to Technology Square, The Draper Building and the Dallas Office and
Industrial Portfolio acquisitions property operating expenses and real estate
taxes of $1.4 million and $1.2 million, respectively, additional general and
administrative expenses of $.7 million and depreciation and amortization expense
of $1.1 million.
The minority interest in consolidated partnership represents the portion of
the Operating Partnership that is not owned by the Company.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $39.9 million at June 30, 1999 as compared to
$174.6 million at December 31, 1998. The decrease of $134.7 million was
primarily the result of (i) the purchase of Series B Convertible Preferred Stock
("Series B Preferred") of Wyndham International, Inc. ("Wyndham"), (ii) the
funding of the mortgage note to PAH Batterymarch Realty Company, LLC, (iii) the
investment in 215 Fremont Street, (iv) the payment of the January 1999 dividend
to stockholders and distribution to minority interests, (v) the payment of Fort
Point Place deposit and acquisition costs, (vi) the payment of Technology Square
redevelopment costs and (vii) investments in Mathilda Research Centre and
Millennium Tower, all offset by (i) proceeds received from the Bankers Trust
Company interim financing note payable and (ii) cash flow from operations.
SHORT AND LONG-TERM LIQUIDITY
We have considered our short-term (up to 12 months) liquidity needs and the
adequacy of expected liquidity sources to meet these needs. We believe that our
principal short-term operating liquidity needs are to fund normal recurring
expenses, debt service requirements and the minimum distribution required to
maintain the Company's REIT qualification under the Internal Revenue Code of
1986, as amended. We believe that these needs will be funded from cash flows
provided by operating activities and the dividend to shareholders of those
shares of Series B Preferred of Wyndham subject to the voting trust. See "--
Investing Activities". We believe our short-term investment liquidity needs are
to fund current real estate investments, developments and redevelopments, as
well as securities held for investment. We expect to fund these needs from cash
on hand and through mortgages and other debt instruments.
We expect to meet long-term (greater than 12 months) liquidity requirements
for the costs of additional development, real estate and real estate related
investments, scheduled debt maturities, major renovations, expansions and other
non-recurring capital improvements through secured and unsecured indebtedness,
joint ventures, the issuance of additional Operating Partnership units and
equity securities and from current cash balances.
FINANCING ACTIVITIES
On June 28, 1999, we obtained a $100 million secured interim financing (the
"Interim Financing") from Bankers Trust Company. The Interim Financing matures
in June 2000, but in certain circumstances can be extended for one year.
Outstanding balances under the Interim Financing bear interest at a rate
9
<PAGE>
spread over the base rate or Eurodollar rate, as applicable. The spread is based
upon certain loan to value ratios. At June 30, 1999, the outstanding balance of
the Interim Financing was $70 million and the interest rate was 7.96%. The
Interim Financing requires monthly payments of interest only and is secured by
mortgages and assignments of rents on certain properties.
Our ability to borrow under the Interim Financing is subject to our ongoing
compliance with a number of financial and other covenants.
On June 9, 1999, Millennium Tower, L.L.C., the joint venture formed to
develop Millennium Tower, obtained a three-year $45 million construction loan
from two institutions. The loan may be extended for one year if certain
conditions are met. The loan initially bears interest at a rate of LIBOR plus
250 basis points and may decrease to a rate of LIBOR plus 200 basis points when
the project achieves certain pre-leasing and debt service coverage thresholds.
The loan is secured by a mortgage and an assignment of rents. Each of the
principals in the venture has provided a completion guarantee and a repayment
guarantee (in the aggregate amount of $12 million) equal to their pro-rata
interest in the venture.
INVESTING ACTIVITIES
On August 9, 1998, we entered into a joint venture agreement with Mathilda
Partners LLC, an affiliate of Menlo Equities (a California based developer). The
joint venture is developing Mathilda Research Centre, two four-story Class A
office/R&D buildings with surface parking in Sunnyvale, California. We agreed to
fund up to $19.8 million of the development, of which, as of June 30, 1999, we
had funded approximately $17.6 million using proceeds from the Original
Offering. On June 18, 1999, the joint venture executed a lease with Juniper
Networks, Inc. for one of the two buildings comprising approximately 144,000 of
the development's approximately 267,000 square feet; the tenant also has an
option to lease the other building.
On September 1, 1998 we entered into a joint venture agreement with HA
L.L.C., an affiliate of Martin Smith Real Estate Services (a Seattle based real
estate company). The joint venture is developing Millennium Tower, a 19-story
office and residential tower, in downtown Seattle, Washington. We agreed to fund
$19 million of the development, of which, as of June 30, 1999, we had funded
approximately $7.5 million using proceeds from the Original Offering.
On May 21, 1999 and June 25, 1999 we funded mortgage note advances of $12.3
million and $32.7 million, respectively (net of interest and fees) to PAH
Batterymarch Realty Company, LLC, an entity wholly owned by Patriot American
Hospitality Partnership, L.P. for the development of the Wyndham Batterymarch
Hotel located in Boston, Massachusetts. The mortgage note was collateralized by
a first mortgage lien on the property and was guaranteed by Wyndham and Patriot
American Hospitality Partnership, L.P. We used proceeds from the Original
Offering for the advances. The mortgage note had an interest rate of Libor plus
250 basis points and was repaid on July 1, 1999.
On June 30, 1999, we invested $33.5 million in 215 Fremont Street, a 299,000
square foot building located in the South Financial District of San Francisco,
California. We used proceeds from the Interim Financing for the investment. We
anticipate that this investment will be transferred to one of our affiliates,
Beacon Capital Strategic Partners, L.P.--See Recent Developments.
On June 30, 1999, we purchased 1,050,000 shares of Series B Preferred of
Wyndham at a net price of approximately $102.9 million. Simultaneous with this
transaction, we transferred the shares of Series B Preferred to a voting trust
(the trustee of which is a subsidiary of the Operating Partnership) and declared
and paid a dividend of approximately $4.34 per share of common stock of BCP and
a distribution of approximately $4.34 per operating partnership unit of the
Operating Partnership. The aggregate value of the dividend and distribution was
approximately $103.1 million and primarily consisted of our interest in shares
of the Series B Preferred. Stockholders not able to receive such interests
received cash of equivalent value. We used proceeds from the Original Offering
for the Series B Preferred purchase.
10
<PAGE>
On July 1, 1999, we purchased 450,000 shares of Series B Preferred at a net
price of approximately $44.1 million. We used proceeds from the Original
Offering for the Series B Preferred purchase.
The aggregate number of shares of Series B Preferred we purchased may be
reduced by up to 30% (450,000 shares) following a rights offering to current
Wyndham common shareholders. Depending on the timing and magnitude of Wyndham's
rights offering, we may establish a second voting trust to hold some or all of
the 450,000 shares of Series B Preferred.
On July 13, 1999, we purchased Fort Point Place, a four-building, 335,000
square foot office and warehouse property located in the Boston, Massachusetts
South Boston Waterfront District for aggregate consideration of approximately
$24.3 million. Two buildings consist of approximately 145,000 square feet of
office space. The other two buildings consist of approximately 190,000 square
feet of warehouse space which were delivered to us vacant and will be
redeveloped for residential use. We used proceeds from the Interim Financing for
the acquisition.
CAPITALIZATION
As of June 30, 1999, our total consolidated debt was approximately $88.9
million, and our total consolidated debt plus our proportionate share of total
unconsolidated debt was approximately $123.1 million. Our current consolidated
indebtedness has a weighted average rate of 8% (8.1% on fixed rate debt and
7.96% on variable rate debt), with maturities ranging from 2000 through 2022,
and is secured by some of our properties. Our proportionate share of the current
total unconsolidated mortgage debt on The Athenaeum Portfolio (in which we hold
a 50% interest in the limited liability company that controls the two limited
liability companies that hold title to this portfolio) is approximately $34.2
million with a rate of 8.485%. It has a stated maturity of 2027 and may be
prepaid any time after January 2007. Prior to January, 2007 but after April,
1999, all or a portion of the loan may be defeased. In the event the loan is not
paid in full in 2007, the interest rate changes to the greater of 13.485% or 5%
over the applicable 20-year Treasury Rate. Assuming The Athenaeum Portfolio loan
has a 2007 maturity, our total consolidated and unconsolidated debt has a
weighted average rate of 8.1% as of June 30, 1999.
The following table, which includes both consolidated and unconsolidated
debt, summarizes the scheduled amortization of principal and maturities of the
loans outstanding.
<TABLE>
<CAPTION>
SCHEDULED
AMORTIZATION MATURITIES TOTAL
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
July 1, 1999 -- December 31, 1999.................................... $ 305 $ 305
2000................................................................. 650 $ 70,000 70,650
2001................................................................. 714 -- 714
2002................................................................. 727 1,426 2,153
2003................................................................. 782 -- 782
Thereafter........................................................... 5,387 43,155 48,542
------ ------------- -------------
Total............................................................ $ 8,565 $ 114,581 $ 123,146
------ ------------- -------------
------ ------------- -------------
</TABLE>
FUNDS FROM OPERATIONS
We believe that to facilitate a clear understanding of the operating results
of the Company, Funds from Operations ("FFO") should be examined in conjunction
with net income. The definition of FFO was clarified in the National Association
of Real Estate Investment Trusts, Inc. ("NAREIT") White Paper, adopted by the
NAREIT Board of Governors in March 1995, as net income (loss) (computed in
accordance with generally accepted accounting principles), excluding gains
(losses) from debt restructuring and sales of properties, plus real estate
related depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and
joint ventures will be calculated to reflect FFO on the same basis. FFO should
not be considered as a substitute
11
<PAGE>
for net income, as an indication of our performance, as a substitute for cash
flow or as a measure of our liquidity. The following table presents the
calculations of FFO:
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
SIX JANUARY 21, 1998
MONTHS ENDED (INCEPTION)
JUNE 30, 1999 TO JUNE 30, 1998
-------------- -------------------
(UNAUDITED, DOLLARS IN THOUSANDS)
<S> <C> <C>
Income before extraordinary items and before minority interest in
consolidated partnership................................................... $ 6,304 $ 4,035
Add real estate related depreciation and amortization:
Consolidated entities...................................................... 2,203 42
Joint venture entities..................................................... 1,031 436
------- -------
Funds from operations before minority interest............................... 9,538 4,513
Company share of consolidated partnership.................................... 88.40% 98.63%
------- -------
Company funds from operations................................................ $ 8,432 $ 4,451
------- -------
------- -------
Weighted average number of common shares outstanding (in thousands).......... 20,974 20,395
------- -------
------- -------
</TABLE>
12
<PAGE>
PROPERTY INFORMATION
The following chart sets forth the occupancy rate, expressed as a
percentage, the average annual Base Rent (as defined below) and the average Net
Effective Rent (as defined below) per square foot for each of our properties as
of June 30, 1999. Base Rent is gross rent excluding payments by tenants on
account of real estate tax and operating expense escalation charges. Net
Effective Rent is Base Rent adjusted on a straight-line basis for contractual
rent step-ups and free rent periods, plus tenant payments on account of real
estate tax and operating expense escalation charges, less total operating
expenses and real estate taxes.
<TABLE>
<CAPTION>
AVERAGE AVERAGE
TOTAL % BASE NET EFF
PROPERTY AREA LEASED RENT RENT
- ------------------------------------------------------------------------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
SOUTH BOSTON, MA:
Fort Point Place (1)..................................................... 145,222 97% $ 15.37 $ 8.93
---------- --- --------- ---------
Subtotal / Weighted Average South Boston, MA....................... 145,222 97% 15.37 8.93
---------- --- --------- ---------
CAMBRIDGE, MA:
215 First Street (2)..................................................... 306,084 100% 20.14 15.05
One Kendall Square Cinema (2)............................................ 31,641 100% 18.29 13.48
Buildings 100-500 (2).................................................... 222,372 99% 26.27 19.84
Buildings 600/650/700 (2)................................................ 236,661 97% 34.06 25.04
Buildings 1500 & 1700 (2)................................................ 39,707 90% 16.07 11.56
Building 1400 (2)........................................................ 133,211 82% 26.17 17.35
---------- --- --------- ---------
Subtotal / Weighted Average........................................ 969,676 96% 25.49 18.72
---------- --- --------- ---------
545 Technology Square (3)................................................ 156,270 96% 32.33 23.98
549 Technology Square.................................................... 40,377 35% 14.29 14.29
565 Technology Square (3)................................................ 203,600 10% 6.77 4.14
575 Technology Square (3)................................................ 182,250 18% 7.52 4.21
The Draper Building (NNN) (2)............................................ 474,817 100% 6.16 6.16
---------- --- --------- ---------
Subtotal / Weighted Average........................................ 1,057,314 66% 12.09 10.04
---------- --- --------- ---------
Subtotal / Weighted Average Cambridge, MA.......................... 2,026,990 80% 19.78 15.02
---------- --- --------- ---------
SUBURBAN DALLAS, TX:
OFFICE
Bank One LBJ............................................................. 42,000 73% 13.53 7.53
Brandywine Place......................................................... 66,237 87% 12.21 9.17
Crosspoint Atrium........................................................ 220,212 85% 13.39 7.56
Forest Abrams Place...................................................... 68,827 89% 12.92 7.54
6500 Greenville Avenue................................................... 114,600 89% 13.41 7.29
Northcreek Place II...................................................... 163,303 90% 14.83 8.60
One Glen Lakes........................................................... 166,272 91% 16.35 11.44
---------- --- --------- ---------
Subtotal / Weighted Average........................................ 841,451 88% 14.17 8.65
---------- --- --------- ---------
R&D / INDUSTRIAL
Park North Business Center............................................... 36,885 92% 5.82 4.80
Plaza at Walnut Hill..................................................... 88,280 88% 7.46 4.62
Richardson Business Center............................................... 66,300 100% 4.42 4.27
Richardson Commerce Centre............................................... 60,517 79% 7.16 5.57
Sherman Tech............................................................. 16,176 100% 7.17 5.23
T I Business Park........................................................ 96,902 89% 6.26 5.21
Venture Drive Tech Center................................................ 128,322 85% 4.56 3.28
---------- --- --------- ---------
Subtotal / Weighted Average........................................ 493,382 89% 5.87 4.49
---------- --- --------- ---------
Subtotal / Weighted Average Suburban Dallas, TX.................... 1,334,833 88% 11.08 7.10
---------- --- --------- ---------
Total / Weighted Average Properties................................ 3,507,045 84% $ 16.09 $ 11.56
---------- --- --------- ---------
---------- --- --------- ---------
</TABLE>
- --------------------------
(1) Acquisition closed on July 13, 1999.
(2) Currently being offered for sale, see "Recent Developments"
(3) The rentable area of buildings 545, 565 and 575 have been modified to
reflect recent re-measurements according to BOMA standards.
13
<PAGE>
The following table sets forth Lease Expirations (in square feet) for the
portfolio of properties the Company owned or had an interest in as of June 30,
1999.
<TABLE>
<CAPTION>
% OF
SQUARE SQUARE ANNUAL % ANNUAL # OF
FEET(1) FEET(2) RENT(3) RENT(4) TENANTS(5)
---------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
7/1/99-12/31/99...................... 177,026 5.0% $ 2,062 4.0% 58
2000................................. 462,529 13.2% 6,935 13.4% 92
2001................................. 335,689 9.6% 5,010 9.7% 74
2002................................. 389,762 11.1% 7,478 14.5% 74
2003................................. 454,945 13.0% 8,228 16.0% 54
Thereafter........................... 1,119,896 31.9% 21,865 42.4% 55
---------- --------- --------- --------- ---
Total.............................. 2,939,847 83.8% $ 51,578 100.0% 407
---------- --------- --------- --------- ---
---------- --------- --------- --------- ---
</TABLE>
- ------------------------
(1) Total area in square feet covered by such leases.
(2) Percentage of total square feet of company portfolio.
(3) Annualized expiring base rental income represented by such leases in the
year of expiration plus the current tenant payments on account of operating
expenses and real estate tax escalation charges.
(4) Calculated as annual rent divided by the total annual rent.
(5) The number of tenants whose leases will expire.
RECENT DEVELOPMENTS
We are planning to establish a new investment fund and raise a minimum of
$250 million under the name Beacon Capital Strategic Partners, L.P. The
Operating Partnership plans to invest up to 20% of the total committed capital
in the fund, which is expected to close in the third quarter of 1999.
In April of 1999, we announced that we have offered for sale a portfolio of
properties located in Cambridge, Massachusetts. See "Property Information." The
portfolio, known as The Cambridge Technology Portfolio, consists of the entire
Athenaeum Portfolio and The Draper Building. The offering price is approximately
$286 million.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 compliance issue concerns the inability of computer systems to
accurately calculate, store or use a date after 1999. The inability of a
computer to properly process dates after 1999 could result in system failures or
miscalculations. Such failures in our computers could lead to disruptions in our
activities and operations. If we fail, or our significant tenants or vendors
fail, to make necessary modifications and conversions on a timely basis to
remedy these problems, the Year 2000 issue could have a material adverse effect
on the Company and its results of operations or financial position. We believe
that our competitors face similar risks in regard to Year 2000.
We are managing our Year 2000 initiative to minimize any adverse effect on
our business operations. We have established a Year 2000 committee to address
Year 2000 concerns. The Year 2000 committee has implemented a Year 2000
initiative with the following phases: (i) introducing Year 2000 awareness; (ii)
identifying our systems with potential Year 2000 issues; (iii) assessing and
budgeting Year 2000 compliance costs; (iv) remediation; (v) testing; (vi)
contacting material third parties to assess their Year 2000 compliance; and
(vii) developing a contingency plan in case our Year 2000 initiative is not
successful.
We have completed phases (i), (ii), (iii) and (iv) of our Year 2000
initiative. We have reviewed our corporate computer operations that consist of
recent releases of network systems, accounting, property
14
<PAGE>
management and desktop applications. All such systems were installed in 1998. We
have contacted the vendors for these systems for assurance that the systems are
Year 2000 compliant. All corporate hardware and software have been upgraded to
meet the vendor's specifications in regards to Year 2000 compliance. All
corporate and property financial records are maintained on our corporate
accounting system which is Year 2000 compliant. Final testing, phase (v), will
be completed by the end of September.
We have not incurred any material costs to address our Year 2000 compliance
issue. We do not currently expect that the costs incurred in connection with the
initiative will have a material adverse impact on our results of operations or
financial position.
We have also been working extensively on phase (vi) of our Year 2000
initiative. Included in the contractual obligations of the third party managers
who operate our properties is an undertaking to work with us on our Year 2000
initiative. Our Year 2000 committee has regular communications with our third
party managers to determine their Year 2000 compliance status. From this ongoing
process, based upon information received to date, we currently believe that our
third party managers have taken appropriate steps in regards to Year 2000
compliance with respect to the building systems and the systems of the
properties' tenants and vendors.
We have the right to approve all lease agreements and have reviewed our
standard lease form to address Year 2000 compliance issues.
The inability of the Company, or our tenants or vendors, to be Year 2000
compliant could lead to declining occupancy rates, higher operating expenses and
other adverse effects which are not quantifiable at this time. The failure of
any of these parties to be Year 2000 compliant could have a material adverse
effect on our results of operations or financial position.
We are currently evaluating the need to have a contingency plan in place in
the event we, or our third party property managers, tenants or vendors, do not
successfully address Year 2000 compliance issues. We expect to complete our Year
2000 initiative by the end of the third quarter of 1999, including the
development of a contingency plan, if needed.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates. Interest rate fluctuations are monitored by
management as an integral part of our overall risk management program, which
recognizes the unpredictability of financial markets and seeks to reduce the
potentially adverse effect on our results of operations. The effect of interest
rate fluctuations historically has been small relative to other factors
affecting operating results, such as rental rates and occupancy.
The following table summarizes our debt obligations outstanding as of June
30, 1999. This information should be read in conjunction with Notes 6 and 7 to
the consolidated financial statements.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
7/1/99-
12/31/99 2000 2001 2002 2003 THEREAFTER TOTAL FAIR VALUE
----------- --------- --------- --------- --------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities
Long-Term Debt:
Fixed Rate..................... $ 175 $ 373 $ 404 $ 1,815 $ 414 $ 15,696 $ 18,877 $ 18,877
Weighted Average Interest
Rate......................... 8.1% 8.1% 8.1% 8.0% 8.0% 8.6% 8.2%
Variable Rate.................. $ -- $ 70,000 $ -- $ -- $ -- $ -- $ 70,000 $ 70,000
Current Variable
Interest Rate................ -- 7.96% -- -- -- -- 7.96%
</TABLE>
15
<PAGE>
BEACON CAPITAL PARTNERS, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its 1999 Annual Meeting of Stockholders on June 22,
1999. At the meeting, the following directors were elected to serve
until the 2002 Annual Meeting:
<TABLE>
<CAPTION>
VOTE FOR VOTE WITHHELD
----------- ---------------
<S> <C> <C> <C>
Alan M. Leventhal............................................................ 14,865,172 35,000
Robert M. Melzer............................................................. 14,865,172 35,000
</TABLE>
Additionally, the stockholders ratified the appointment of Ernst &
Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 1999.
VOTE FOR AGAINST ABSTAIN
----------- ----------- -----------
14,859,811 30,000 10,361
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<S> <C> <C>
(a) 3.1 Articles of Incorporation.(1)
3.2 Certificate of Correction to Articles of Incorporation.(1)
3.3 Amended and Restated By-laws.(1)
3.4 Agreement of Limited Partnership of Beacon Capital Partners, L.P.(2)
3.5 First Amendment to Agreement of Limited Partnership.(2)
10.1 Employment and Non-Competition Agreement for Alan M. Leventhal.(1)
10.2 Employment and Non-Competition Agreement for Lionel P. Fortin.(1)
10.3 Beacon Capital Partners 1998 Stock Option and Incentive Plan.(1)
10.4 Form of Indemnification Agreement between the Registrant and its directors and
executive officers.(1)
10.5 Purchase and Sale Contract between Eastern Properties Master LLC and the
Registrant.(1)
10.6 Contract of Sale for Bank One Building.(2)
10.7 Contract of Sale for 6500 Greenville Building.(2)
10.8 Contract of Sale for North Creek II Building.(2)
10.9 Contract of Sale for One Glen Lakes Building.(2)
10.10 Contract of Sale for Crosspoint Atrium Building.(2)
10.11 Contract of Sale for Brandywine Place Building.(2)
10.12 Contract of Sale for Forest Abrams Building.(2)
10.13 Contract of Sale for Sherman Tech Building.(2)
10.14 Contract of Sale for Venture Tech Building.(2)
10.15 Contract of Sale for Plaza at Walnut Building.(2)
10.16 Contract of Sale for Richardson BC Building.(2)
10.17 Contract of Sale for Park North SC Building.(2)
10.18 Contract of Sale for TI Business Center.(2)
10.19 Contract of Sale for Richardson CC Building.(2)
10.20 Contribution Agreement by and between Luddite Associates and Beacon Capital
Partners, L.P.(3)
10.21 Credit Agreement with Bankers Trust Company.
27. Financial Data Schedule.
</TABLE>
<TABLE>
<S> <C> <C>
(b) None.
</TABLE>
- --------------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-11 (SEC File No. 333-56937) filed with the Commission on June 16,
1998.
(2) Previously filed as an exhibit to Pre-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
with the Commission on August 21, 1998.
(3) Previously filed as an exhibit to Post-Effective Amendment No. 3 to the
Company's Registration Statement on Form S-11 (SEC File No. 333-56937) filed
with the Commission on March 29, 1999.
16
<PAGE>
SIGNATURES
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 thereunto duly authorized.
<TABLE>
<S> <C>
BEACON CAPITAL PARTNERS, INC.
/s/ RANDY J. PARKER
------------------------------------------
Randy J. Parker
Chief Financial Officer (Authorized
Officer and
August 16, 1999 Principal Accounting Officer)
</TABLE>
<PAGE>
CREDIT AGREEMENT, dated as of June 28, 1999 (this
"AGREEMENT"), among TECHNOLOGY SQUARE LLC, a Delaware limited liability company
("TSQUARE"), DALLAS OFFICE PORTFOLIO, L.P., a Delaware limited partnership
("DALLAS"; Dallas and TSquare are each a "BORROWER", and jointly and severally
are the "BORROWER"), BEACON CAPITAL PARTNERS, L.P., a Delaware limited
partnership ("GUARANTOR"), BEACON CAPITAL PARTNERS, INC., a Maryland corporation
("BEACON"), and BANKERS TRUST COMPANY, a New York banking corporation, as Agent
and a lender; and each other lender from time to time party hereto (each, a
"LENDER" and, collectively, the "LENDERS").
All capitalized terms used herein shall have the respective
meanings set forth in SECTION 1.1 hereof.
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan from the Lenders;
and
WHEREAS, the Lenders are willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents;
NOW, THEREFORE, in consideration of the making of the Loan by
the Lenders and the covenants, agreements, representations and warranties set
forth in this Agreement, the parties hereto hereby covenant, agree, represent
and warrant as follows:
ARTICLE I
DEFINITIONS, PRINCIPLES OF CONSTRUCTION
Section 1.1 DEFINITIONS. For all purposes of this Agreement,
except as otherwise expressly provided herein:
"ACCEPTABLE PROPERTY MANAGER" shall mean (i) Beacon Management
and/or Spaulding and Slye Services Limited Partnership for the Mortgaged
Properties located in Cambridge, Massachusetts, and Beacon Management and/or
Transwestern Property Company Southwest, L.P., d/b/a Transwestern Commercial
Services for the Mortgaged Properties located in or about Dallas, Texas; or (ii)
another Person approved by Agent (such approval not to be unreasonably withheld
or delayed).
"ADJUSTED LIBOR" shall mean, with respect to each Interest
Accrual Period, a rate of interest per annum obtained by dividing (i) Base LIBOR
for such Interest Accrual Period by (ii) a percentage equal to 100% minus the
applicable Reserve Percentage then in effect.
"ADMINISTRATIVE FEE" shall have the meaning set forth in
SECTION 2.10.
<PAGE>
"ADVANCE" shall have the meaning specified in SECTION 2.1.1.
"AFFILIATE" shall mean a Person or Persons directly or
indirectly, through one or more intermediaries, Controlling, Controlled by or
under common Control with the Person or Persons in question.
"AFFILIATE CONTRACTS" means any contract or agreement between
Borrower and an Affiliate of Borrower.
"AGENT" shall mean Bankers Trust Company, in its capacity as
Agent for the Lenders, and any successor Agent appointed hereunder.
"ALLOCATED LOAN AMOUNT" shall mean the principal amount of the
Loan Amount allocated to each Mortgaged Property as set forth on SCHEDULE
1.1(a); PROVIDED, HOWEVER, that the Allocated Loan Amount for a Mortgaged
Property shall (without duplication) (I) be proportionately reduced in
connection with each Prepayment (other than any Prepayment in connection with
the release of any Mortgaged Property), in the same percentage that the amount
of such Prepayment bears to the Loan Amount, (II) on the Outside Advance Date,
be proportionately reduced in the same percentage that any unadvanced portion of
the Loan Amount bears to the Loan Amount, (III) be adjusted upon Agent's receipt
of the Second Appraisals for all remaining Mortgaged Properties such that the
aggregate principal amount of the Loan then outstanding shall be allocated to
each remaining Mortgaged Property in the same ratio that the Second Appraisal
for such Mortgaged Property bears to the aggregate of all Second Appraisals for
all remaining Mortgaged Properties, (IV) be adjusted upon Agent's receipt of the
Interim Appraisal such that the aggregate principal amount of the Loan then
outstanding shall be allocated to each remaining Mortgaged Property in the same
ratio that the most current Appraisal for such Mortgaged Property (I.E., Initial
Appraisal or Interim Appraisal) bears to the aggregate of all such most recent
Appraisals and (V) be adjusted upon a Prepayment in connection with the release
of any Mortgaged Property such that the aggregate principal amount of the Loan
then outstanding (after giving effect to the Prepayment in connection with the
release of such Mortgaged Property) shall be allocated to each remaining
Mortgaged Property in the same ratio that such Mortgaged Property=s prior
Allocated Loan Amount bears to the total of the prior Allocated Loan Amounts of
such remaining Mortgaged Properties.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
"ALTERATION" shall mean any demolition, alteration,
installation, improvement or decoration of or to a Mortgaged Property or any
part thereof or the Improvements thereon.
"APPLICABLE INTEREST RATE" shall have the meaning set forth in
SECTION 2.2.2.
"APPRAISAL" means an as-is appraisal of a Mortgaged Property
prepared by a
<PAGE>
member of the American Institute of Real Estate Appraisers selected by Agent,
which appraisal shall meet the minimum appraisal standards for national banks
promulgated by the Comptroller of the Currency pursuant to Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended
(FIRREA), and shall include the Initial Appraisals, the Second Appraisals and
the Interim Appraisal.
"APPROVAL", "APPROVED", "APPROVAL" or "APPROVED" means, as the
context so determines, an approval in writing given to the party seeking
approval.
"APPROVED BANKS" shall mean banks or other financial
institutions which have (i) (a) a minimum net worth of $500,000,000 or (b) total
assets of $5,000,000,000 and (ii) a minimum long-term senior unsecured debt
rating from the Rating Agencies at least equivalent to the Required Rating.
"ASSIGNMENT" shall have the meaning set forth in SECTION
5.1(v).
"ASSIGNMENT OF AGREEMENTS" shall mean that certain first
priority Assignment of Agreements, Licenses, Permits and Contracts dated as of
the date hereof, from Borrower, as assignor, to Agent for the benefit of the
Lenders, as assignee, assigning to Agent for the benefit of the Lenders as
security for the Loan, to the extent assignable under law, all of Borrower's
interest in and to all licenses, permits and contracts necessary or desirable
for the use and operation of any one or more of the Mortgaged Properties, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time pursuant to the provisions thereof or of the other Loan Documents.
"ASSIGNMENT OF LEASES" shall mean the Assignment of Leases,
Rents and Revenues, dated as of the date hereof, from Borrower, as assignor, to
Agent for the benefit of Lenders, as assignee, together with any amendments
thereto pursuant to the provisions thereof, assigning all of the Leases and
Rents with respect to each Mortgaged Property.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code entitled "Bankruptcy" as the same may be amended, modified, succeeded or
replaced, from time to time.
"BASE LIBOR" shall mean the rate per annum calculated as set
forth below:
(i) On each Interest Determination Date, Base LIBOR for the
next Interest Accrual Period will be the rate for deposits in United
States dollars for a period equal to the next Interest Accrual Period
which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date.
(ii) With respect to an Interest Determination Date on which
no such rate appears on Telerate Page 3750 as described above, Base
LIBOR for the next Interest Accrual Period will be determined on the
basis of the rates at which deposits in United
<PAGE>
States dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on such Interest Determination Date to prime
banks in the London interbank market for a period equal to the next
Interest Accrual Period (each, a "REFERENCE BANK RATE"). Agent shall
request the principal London office of each of the Reference Banks to
provide a quotation of its Reference Bank Rate. If at least two such
quotations are provided, Base LIBOR for such Interest Accrual Period
will be the arithmetic average of such quotations. If fewer than two
quotations are provided, Base LIBOR for such Interest Accrual Period
will be the arithmetic average of the rates quoted by major banks in
New York City, selected by Agent, at approximately 11:00 a.m., New York
City time, on such Interest Determination Date for loans in United
States dollars to leading European banks for a period equal to the next
Interest Accrual Period.
(iii) If on any Interest Determination Date Agent is required
but unable to determine Base LIBOR in the manner provided in paragraphs
(i) and (ii) above, the applicable Loan will automatically, on the last
day of the then existing Interest Accrual Period therefor, accrue
interest as a Base Rate Loan (or, if the Loan is then accruing interest
as a Base Rate Loan, will continue as a Base Rate Loan) and the
obligation of the Lenders to accrue interest as a Eurodollar Rate Loan
shall be suspended until the Agent shall notify Borrower that the
circumstances causing such suspension no longer exist.
All percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards, if necessary, to the nearest multiple
of 1/100 of 1% and all U.S. dollar amounts used in or resulting from such
calculations will be rounded to the nearest cent (with one-half cent or more
being rounded upwards).
"BASE RATE" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all times be
equal to the rate of interest announced publicly by Bankers Trust Company in New
York, New York, from time to time, as its base rate. The Base Rate is a
reference rate and does not necessarily represent the lowest interest rate
actually charged to any customer.
"BASE RATE LOAN" means any portion of the Loan which bears
interest as provided in SECTION 2.2.2(a)(i).
"BASE RATE PERIOD" means the periods during the term of this
Agreement in which the Loan bears interest as a Base Rate Loan. The duration of
each such Base Rate Period shall continue until Borrower elects to convert all
or part of the applicable Base Rate Loan to a Eurodollar Rate Loan in accordance
with the provisions of this Agreement.
"BASE RATE SPREAD A" shall mean 0.375%.
"BASE RATE SPREAD B" shall mean 0.75%.
"BASIC CARRYING COSTS" shall mean the sum of the following
costs associated with
<PAGE>
the Mortgaged Properties: (i) Taxes and Other Charges and (ii) Insurance
Premiums.
"BEACON" shall have the meaning specified in the Preamble
hereto and shall include its successors and assigns, by merger, consolidation or
otherwise.
"BEACON MANAGEMENT" shall mean Beacon Capital Partners
Management, LLC, a Delaware limited liability company.
"BENEFICIAL" when used in the context of beneficial ownership
has the analogous meaning to that specified in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended.
"BORROWER" shall mean TSquare and Dallas, jointly and
severally, together with their respective successors and assigns as permitted
hereunder.
"BORROWER PARTY" shall mean Borrower, Guarantor and Beacon,
together with their respective successors and assigns as permitted hereunder.
"BREAKAGE COSTS" means, with respect to the prepayment of any
principal amount of a Eurodollar Rate Loan, an amount equal to the aggregate of
(i) all "breakage" costs actually incurred by the Lenders as a result of the
liquidation or reemployment of deposits or other funds obtained by the Lenders
to maintain such Eurodollar Rate Loan; PLUS (ii) any and all other actual
losses, costs, fees and expenses (including, without limitation, any early
termination or upfront payments, brokerage commissions and other transaction
costs) of a Lender actually incurred or sustained, directly or indirectly, as a
result of such prepayment of the Eurodollar Rate Loan.
"BUSINESS DAY" means any day other than (i) a Saturday and a
Sunday and (ii) a day on which federally insured depository institutions in the
State of New York or the state in which the offices of Agent are located are
authorized or obligated by law, governmental decree or executive order to be
closed. When used with respect to an Interest Determination Date, "BUSINESS DAY"
shall mean a day on which banks are open for dealing in foreign currency and
exchange in London and New York City.
"CAPITAL EXPENDITURES" means the costs incurred by Borrower
with respect to capital replacements and repairs made to the Mortgaged
Properties (including, without limitation, repairs to, and replacements of, the
structural components, roofs, building systems, parking garages and parking
lots), in each case to the extent required to be capitalized in accordance with
GAAP.
"CASH" shall mean coin or currency of the United States of
America or immediately available federal funds, including such funds delivered
by wire transfer.
"CASH AND CASH EQUIVALENTS" shall mean (i) Cash, (ii) U.S.
Government Securities, (iii) interest bearing or discounted obligations of
federal agencies and government
<PAGE>
sponsored entities or pools of such instruments offered by Approved Banks and
dealers, including, without limitation, Federal Home Loan Mortgage Corporation
participation sale certificates, Government National Mortgage Association
modified pass-through certificates, Federal National Mortgage Association bonds
and Notes, Federal Farm Credit System securities (PROVIDED all of the
obligations described in this clause (iii) shall be rated "AAA" by the Rating
Agencies or backed by the full faith and credit of the United States government
for full and timely payment), (iv) time deposits, domestic and Eurodollar
certificates of deposit, bankers acceptances or commercial paper rated at least
A-1+ (or its equivalent) by the Rating Agencies, and/or guaranteed by an entity
having a long-term rating at least equal to the Required Rating, (v) floating
rate notes, other money market instruments and letters of credit each issued by
Approved Banks (PROVIDED that if the scheduled maturity of any such notes,
instrument or letter of credit is more than six (6) months after the date of
purchase of such obligation, the notes, instrument or letter of credit must be
issued by a bank having a long-term senior unsecured debt rating from the Rating
Agencies at least equal to the Required Rating), (vi) obligations issued by
state and local governments or their agencies, carrying a rating at least equal
to the Required Rating and/or guaranteed by an irrevocable letter of credit of
an Approved Bank (PROVIDED that if the scheduled maturity of any such obligation
is more than six (6) months after the date of purchase and such obligation is
guaranteed by a letter of credit, the letter of credit guaranteeing such
obligation must be issued by an Approved Bank having a long-term senior
unsecured debt rating from the Rating Agencies at least equal to the Required
Rating), (vii) repurchase agreements with major banks and primary government
securities dealers fully secured by U.S. government or agency collateral with a
value equal to or exceeding the principal amount on a daily basis and held in
safekeeping (PROVIDED that at the time of purchase the counterparty to such
repurchase agreement must have a long-term senior unsecured debt rating at least
equal to the Required Rating), (viii) investments in money market funds and
money market mutual funds substantially all of the assets of which are comprised
of investments described in clauses (i) through (viii) above, and (ix) the
aggregate amount of Advances available under this Agreement which have not yet
been made as of the date of determination. Except as otherwise provided in this
definition, Cash and Cash Equivalents shall not include any investments commonly
known as "derivatives", any investments requiring a payment above par for an
obligation, and under no circumstances shall Cash and Cash Equivalents include
interest-only strips.
"CASUALTY" means a fire, explosion, flood, collapse or other
casualty affecting any Mortgaged Property.
"CLOSING DATE" shall mean the date of this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"CONDEMNATION" shall mean a taking or voluntary conveyance
during the term hereof of all or any part of any Mortgaged Property or any
interest therein or right accruing
<PAGE>
thereto or use thereof, as the result of, or in settlement of, any condemnation
or other eminent domain proceeding by any Governmental Authority, whether or not
the same shall have actually been commenced.
"CONSENT OF MANAGER" shall mean, collectively, each Manager0s
Consent and Subordination of Management Agreement dated the date hereof and each
Submanager's Consent and Subordination of Management Agreement dated as of the
date hereof.
"CONSUMER PRICE INDEX" shall mean the Consumer Price Index for
All Urban Consumers published by the United States Department of Labor, U.S.
City Average (all items) (base year 1982-84 = 100), or any successor index
thereto as such successor index may be appropriately adjusted to establish
substantial equivalence with the Consumer Price Index. If the Consumer Price
Index is converted to a different standard reference base or otherwise revised,
then whenever the determination of a CPI Increase figure is called for herein,
the Consumer Price Index shall be converted in accordance with the conversion
factors published by the United States Department of Labor, Bureau of Labor
Statistics, or, if said Bureau shall not publish the same, as the same may be
published by Prentice-Hall, Inc. or any other nationally recognized publisher of
similar statistical information selected by Agent (in its reasonable
discretion). If the Consumer Price Index ceases to be published and there is no
successor thereto, such other index as Agent shall reasonably select shall be
substituted for the Consumer Price Index.
"CONTROL" shall mean, with respect to a Person that is a
corporation, the right to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the shares of the controlled
corporation and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled Person. "CONTROLLING"
and "CONTROLLED" shall have meanings correlative thereto.
"COUNTERPARTY" shall mean a counterparty approved by Agent.
"CPI INCREASE" shall mean, when used to qualify a fixed dollar
amount set forth herein at the date in question, such fixed dollar amount, as
increased by the percentage by which the Consumer Price Index at the time of
such measurement shall have increased over such Consumer Price Index for
January, 1999.
"DEBT" shall mean the outstanding principal amount set forth
in, and evidenced by, the Notes, together with all interest accrued and unpaid
thereon and all other sums due to the Lenders and the Agent in respect of the
Loan, including any Breakage Costs and any sums due or any obligation of any
kind owing under the Notes, this Agreement, the Mortgages or in any other Loan
Document (including, without limitation, any then unpaid (at the time of
determination) reimbursement or indemnity obligation).
"DEBT SECURITIES" shall mean debt obligations, other than U.S.
Government
<PAGE>
Securities, of any Person, whether evidenced by bonds, notes, debentures,
certificates, book entry deposits, certificates of deposit, commercial paper,
bankers acceptances, reinvestment letters, funding agreements or other
instruments, which are rated not less than the then Required Rating; or any
combination of the foregoing. Any Debt Securities delivered to Lenders or Agent
for the benefit of the Lenders as collateral for an obligation shall mature not
less than one (1) Business Day prior to the due date of such obligation.
"DEBT SERVICE" shall mean, with respect to any specified date
or a particular period of time, the amount of scheduled principal, if any, and
interest payments under the Notes due as of such date or payable during such
period (including the last day thereof), as applicable.
"DEFAULT" shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"DEFAULT RATE" shall mean a rate per annum equal at all times
to the lesser of (a) the maximum non-usurious rate permitted by law and (b) 200
basis points in excess of the Applicable Interest Rate.
"ELIGIBLE ASSIGNEE" means (i) (a) a commercial bank or
financial institution organized under the laws of the United States or any state
thereof; (b) a savings and loan association or savings bank organized under the
laws of the United States or any state thereof; (c) a commercial bank organized
under the laws of any other country or a political subdivision thereof;
PROVIDED, HOWEVER, that (x) such bank is acting through a branch or agency
located in the United States or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (d) any other entity
which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its principal
businesses including, but not limited to, insurance companies, mutual funds and
lease financing companies, in each case (under CLAUSES (a) through (d) above)
that is reasonably acceptable to the Agent; and (ii) any Lender and any
Affiliate of any Lender; PROVIDED FURTHER, however, that each Eligible Assignee
shall have total assets of at least $1,000,000,000.
"ELIGIBLE COLLATERAL" shall mean U.S. Government Securities,
Debt Securities or Cash and Cash Equivalents, or any combination thereof.
"ENGINEERING REPORT" means the structural engineering report
or reports with respect to each Mortgaged Property prepared by an Independent
Engineer and delivered to Agent in connection with this Agreement, and any
amendments or supplements thereto delivered to Agent.
"ENVIRONMENTAL CLAIM" means any written notice, claim,
proceeding, investigation, demand or other communication by any Person or
Governmental Authority
<PAGE>
alleging or asserting liability with respect to Borrower or any Mortgaged
Property arising out of, based on or resulting from (i) the presence, use or
Release of any Hazardous Substance, (ii) any fact, circumstance, condition or
occurrence forming the basis of any violation, or alleged violation, of any
Environmental Law, or (iii) any alleged injury or threat of injury to any
Mortgaged Property, health or safety or to the environment caused by Hazardous
Substances.
"ENVIRONMENTAL INDEMNITY" shall mean the Environmental
Indemnity Agreement, dated as of the date hereof, executed by Borrower and
Guarantor in connection with the Loan for the benefit of Agent on behalf of the
Lenders.
"ENVIRONMENTAL LAWS" means any and all present and future
federal, state or local laws, statutes, ordinances or regulations, any judicial
or administrative orders, decrees or judgments thereunder, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the pollution, protection or cleanup of
the environment, the impact of Hazardous Substances on any Mortgaged Property,
health or safety, or the use or Release of Hazardous Substances.
"ENVIRONMENTAL REPORTS" means the environmental site
assessment with respect to each Mortgaged Property prepared by an environmental
auditor reasonably acceptable to Agent and delivered to Agent, and any
amendments or supplements thereto delivered to Agent, and shall also include any
other environmental reports delivered to Agent in connection with this Agreement
and the Environmental Indemnity.
"EQUIPMENT" shall have the meaning set forth in the Mortgage.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated thereunder.
"ERISA GROUP" means any Borrower Party and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with such Borrower Party, are
treated as a single employer under Section 414 of the Code or are considered to
be one employer under Section 4001 of ERISA.
"EURODOLLAR RATE LOAN" means any portion of the Loan which
bears interest as provided in SECTION 2.2.2(a)(ii).
"EURODOLLAR RATE PERIOD" means the periods during the term of
this Agreement in which the Loan bears interest as a Eurodollar Rate Loan.
"EURODOLLAR SPREAD A" shall mean two and three-eighths percent
(2.375%).
"EURODOLLAR SPREAD B" shall mean two and three-quarters
percent (2.75%).
<PAGE>
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION
9.1(a).
"EXPANSION" shall mean any expansion of any Mortgaged Property
or any portion thereof or the Improvements thereon.
"EXTENSION NOTICE" shall have the meaning set forth in SECTION
2.9.
"FEDERAL FUNDS RATE" means, for any period, the rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)"), for each day during such period opposite the caption
"Federal Funds (Effective)". If on any relevant day such rate is not yet
published in H.15(519), the rate for such day will be the rate set forth in the
daily statistical release designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor, the "COMPOSITE
3:30 P.M. QUOTATION") for such day under the caption "Federal Funds Effective
Rate". If on any relevant day the appropriate rate for such day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic average of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three (3) leading brokers of Federal funds
transactions in New York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System.
"FINAL FACILITY FEE DATE" shall have the meaning specified in
SECTION 2.11.
"FISCAL YEAR" shall mean the twelve-month period commencing on
January 1 and ending on December 31 of each year.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the relevant date in question, consistently
applied.
"GOVERNMENTAL APPROVALS" means all approvals, consents,
waivers, orders, acknowledgments, authorizations, permits and licenses required
under applicable Laws and Regulations to be obtained from any Governmental
Authority, including, without limitation, for the construction of the
Improvements and the use, occupancy and operation thereof following completion
of construction.
"GOVERNMENTAL AUTHORITY" means any national or federal
government, any state, regional, local or other political subdivision thereof
with jurisdiction and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government or quasi-governmental issues (including, without limitation, any
court).
<PAGE>
"GROSS ASSET VALUE" means, for any Borrower Party, the value
of all of such Borrower Party's assets, determined on a cost basis (without
giving effect to depreciation), except that the value of the Mortgaged
Properties shall be as set forth in the Initial Appraisals or, if obtained, the
Interim Appraisal or the Second Appraisals. Gross Asset Value for Guarantor
shall be determined on a consolidated basis except that only Guarantor=s
pro-rata share of any assets held in joint ventures with third parties shall be
included.
"GUARANTOR" shall have the meaning specified in the Preamble,
and shall include its successors and assigns, by merger, consolidation or
otherwise.
"GUARANTY" shall have the meaning set forth in SECTION 12.1.
"GUARANTY OBLIGATIONS" shall mean any obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) guaranteeing any Indebtedness, leases, dividends or other
obligations of any other Person in any manner, whether direct or indirect, and
including any obligation, whether or not contingent, (i) to purchase any such
Indebtedness or other obligation or any property constituting security therefor,
(ii) to advance or provide funds or other support for the payment or purchase of
such Indebtedness or obligation or to maintain working capital, solvency or
other balance sheet condition of such other Person (including, without
limitation, keep well agreements, maintenance agreements, comfort letters or
similar agreement or arrangement), (iii) to lease or purchase any property,
securities or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation, or (iv) otherwise assure or hold harmless the owner
of such Indebtedness or obligation against loss in respect thereof.
"HAZARDOUS SUBSTANCE" means, collectively, (i) any petroleum
or petroleum products or waste oils, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBS"),
and lead-based paint, (ii) any chemicals or other materials or substances which
are now or hereafter become defined as or included in the definitions of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar import under any
Environmental Law, and (iii) any other chemical or any other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"IMPROVEMENTS" shall have the meaning set forth in the
Mortgage.
"INCREASED COSTS" shall have the meaning set forth in SECTION
2.2.2(b).
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, the following, whether direct or contingent:
(a) all indebtedness for borrowed money;
<PAGE>
(b) the deferred purchase price of assets or services which in
accordance with GAAP would be shown to be a liability (or on the
liability side of a balance sheet);
(c) all Guaranty Obligations in respect of Indebtedness of
another Person;
(d) the maximum amount of all letters of credit issued or
acceptance facilities established for the account of such Person and,
without duplication, all drafts drawn thereunder (other than letters of
credit supporting other indebtedness of such Person and except to the
extent that a letter of credit is offset by Cash or Cash Equivalents
held in escrow or deposited to secure such letter of credit and draws
thereunder);
(e) all capitalized lease obligations;
(f) all indebtedness of another Person secured by any lien on
any property of Borrower or Guarantor, whether or not such indebtedness
has been assumed;
(g) all obligations under take-or-pay or similar arrangements
or under interest rate, currency, or commodities agreements;
(h) indebtedness created or arising under any conditional sale
or title retention agreement (other than conditional sale and title
retention agreements entered into in the ordinary course of business
for assets incidental to the management and operation of the Mortgaged
Properties); and
(i) obligations of such Person with respect to withdrawal
liability to or on behalf of any "multi employer plan" as defined in
Section 4001(a) of ERISA;
PROVIDED, HOWEVER, that Indebtedness shall not include (v) current accounts
payable (other than for borrowed money or purchase money obligations) incurred
in the ordinary course of business; PROVIDED that all such liabilities, accounts
and claims shall be paid when due (or in conformity with customary trade terms
or customary dispute resolution procedures), (w) accrued expenses (other than
for borrowed money or purchase money obligations) incurred in the ordinary
course of business, (x) indemnification and similar contingent obligations which
are not assurances of payment of the items described in subclauses (a) through
(i) of this definition, (y) customary recourse carve-outs, and (z) indebtedness
in respect of which Cash or Cash Equivalents have been deposited with a lender
or its agent as collateral to defease such indebtedness.
"INDEPENDENT ARCHITECT" shall mean any reputable architecture
or construction management firm that is licensed or registered in the
jurisdiction where a Mortgaged Property is located, if required by the laws of
such jurisdiction, and not affiliated with any Borrower Party.
"INDEPENDENT ENGINEER" shall mean any reputable engineer that
is licensed or registered in the jurisdiction where a Mortgaged Property is
located, if required by the laws of
<PAGE>
such jurisdiction, and not affiliated with any Borrower Party.
"INITIAL ADVANCE" shall mean the initial Advance by the
Lenders pursuant to this Agreement.
"INITIAL APPRAISALS" shall have the meaning specified in
SECTION 3.1(l).
"INITIAL MATURITY DATE" means June 28, 2000.
"INSURANCE PREMIUMS" shall have the meaning set forth in
SECTION 8.1.1(d).
"INSURANCE REQUIREMENTS" shall mean all terms of any insurance
policy required hereunder covering or applicable to any Mortgaged Property or
any part thereof, all requirements of the issuer of any such policy, and all
orders, rules, regulations and other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) applicable to or
affecting a Mortgaged Property or any part thereof or any use of any Mortgaged
Property or any part thereof.
"INTEREST ACCRUAL PERIOD" means, with respect to each
Eurodollar Rate Loan, the period commencing on the date of such Loan and ending
on the last day of the period selected by Borrower pursuant to the provisions of
this Agreement and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Accrual Period and ending on the last
day of the period selected by Borrower pursuant to the provisions of this
Agreement. The duration of each such Interest Accrual Period shall be one, two
or three months, in each case as Borrower may, upon notice received by the Agent
not later than 4:00 P.M. (New York City time) on the Notice Date applicable to
such Interest Accrual Period, select; PROVIDED, HOWEVER, that:
(i) Borrower may not select any Interest Accrual Period which
ends after the Maturity Date;
(ii) whenever the last day of any Interest Accrual Period
would otherwise occur on a day other than a Business Day, the last day
of such Interest Accrual Period shall be extended to occur on the next
succeeding Business Day, PROVIDED that if such extension would cause
the last day of such Interest Accrual Period to occur in the next
following calendar month, the last day of such Interest Accrual Period
shall occur on the next preceding Business Day;
(iii) any Interest Accrual Period that begins on the last
Business Day of a calendar month (or a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Accrual Period) shall end on the last Business Day of a
calendar month;
<PAGE>
(iv) if Borrower shall fail to give notice on the Notice Date
with respect to any existing Eurodollar Rate Loan, Borrower shall be
deemed to have elected to continue the affected Eurodollar Rate Loan
for an Interest Accrual Period of one month; and
(v) no more than five (5) Eurodollar Rate Loans shall be
outstanding at any one time; PROVIDED, HOWEVER, that if any portion of
the Loan is a Base Rate Loan, then during such period as any portion of
the Loan is a Base Rate Loan, no more than four (4) Eurodollar Rate
Loans shall be outstanding at any one time.
"INTEREST DETERMINATION DATE" shall mean, in connection with
the calculation of interest accrued for any Interest Accrual Period, the second
Business Day preceding the first day of such Interest Accrual Period.
"INTEREST EXPENSE" shall mean for any period the aggregate
amount of interest payable or accruing on the Notes during such period.
"INTEREST GUARANTY" shall have the meaning specified in
SECTION 12.1(a).
"INTERIM APPRAISAL" shall have the meaning specified in
SECTION 5.1(d)(ii).
"KNOWLEDGE" or words of similar import shall mean the actual
and constructive knowledge of a Person or, if such Person is not an individual,
of such Person0s representatives, agents, employees, officers or directors (with
respect to directors, the actual knowledge only and not constructive knowledge)
who would be likely to have material information as to the relevant subject
matter.
"LAWS AND REGULATIONS" or "LAW OR REGULATION" means all laws,
statutes, treaties, codes, permits, decrees, ordinances, orders, rules,
regulations, determinations, or requirements of any governmental authority,
arbiter or court, including, without limitation, any environmental laws, any
building, use, zoning and land use laws or regulations (including set back
requirements), and any applicable covenants and restrictions pursuant thereto
relating in any way to a Mortgaged Property or a Borrower Party.
"LEASE" shall mean any lease, sublease, sub-sublease, license,
letting, concession, occupancy agreement or other agreement (whether written or
oral and whether now or hereafter in effect), existing as of the date hereof
(and to which Borrower is a party or successor party) or hereafter entered into
by Borrower, pursuant to which any Person is granted a possessory interest in,
or right to use or occupy, all or any portion of any space in any Mortgaged
Property, and every modification, amendment or other agreement relating to such
lease, sublease, sub-sublease or other agreement entered into in accordance with
the terms of the Loan Documents, and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean:
<PAGE>
(i) all governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities (including, without limitation, Environmental
Laws) affecting any Borrower Party or any Mortgaged Property or any
part thereof or the construction, ownership, use, alteration or
operation thereof, or any part thereof (whether now or hereafter
enacted and in force),
(ii) all permits, licenses and authorizations and regulations
relating thereto, and
(iii) all covenants, conditions and restrictions contained in
any instruments at any time in force (whether or not involving
Governmental Authorities) affecting any Mortgaged Property or any part
thereof which, in the case of this clause (iii), require repairs,
modifications or alterations in or to a Mortgaged Property or any part
thereof, or in any material way limit or restrict the existing use and
enjoyment thereof.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENDER EXPENSES" shall mean all reasonable out-of-pocket
expenses and costs incurred by Agent (or any of its Affiliates) with respect to
the making of the Loan (as well as such reasonable costs and expenses as Agent
(or any of its Affiliates) customarily includes in reimbursables, such as the
duplication and binding of presentation books), including for preparation of
audits, agreed-upon-procedures, reasonable travel expenses, preparation of
environmental, seismic and engineering reports, credit reports, appraisals,
preparation, negotiation, execution and delivery of this Agreement and the other
Loan Documents and the consummation of the transactions contemplated hereby and
thereby (including reasonable attorneys* fees and disbursements in connection
therewith and in connection with the Agent's due diligence), mortgage recording
taxes and other document filing fees and any other reasonable out-of-pocket
expenses relating to credit and collateral evaluations; PROVIDED, HOWEVER, that
costs and expenses of Affiliates of Agent shall constitute ALender Expenses@
only to the extent incurred in connection with the origination of the Loan
hereunder and from and after and during the continuance of a Default or an Event
of Default hereunder.
"LICENSES" shall have the meaning set forth in SECTION 4.1(v).
"LIEN" shall mean any mortgage, deed of trust, lien (statutory
or other), pledge, hypothecation, assignment, preference, priority, security
interest, or any other encumbrance or charge on or affecting a Mortgaged
Property or any portion thereof or Borrower (including, without limitation, any
conditional sale or other title retention agreement, any sale-leaseback, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
Uniform Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanics', materialmen's
<PAGE>
and other similar liens and encumbrances).
"LOAN" shall mean each Advance and all Advances in the
aggregate made pursuant to this Agreement and the other Loan Documents and
evidenced by the Notes and secured by the Mortgage and the other Loan Documents.
"LOAN AMOUNT" shall mean One Hundred Million and 00/100
Dollars ($100,000,000.00).
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Notes, the Mortgage, the Assignment of Agreements, the Assignment of Leases, the
Environmental Indemnity, the Consent of Manager and any other document executed
in connection with the Loan, as well as all other documents executed and/or
delivered in connection with the Loan or hereafter delivered by or on behalf of
any Borrower Party pursuant to the requirements hereof or of any other Loan
Document.
"LOAN PERCENTAGE" means (i) prior to any assignment by the
initial Lender of the Loan in accordance herewith, for the Lender named herein,
one hundred percent (100%), and (ii) subsequent to any such assignment, for each
Lender, the percentage obtained as the quotient of the principal amount of the
Loan assigned to such Lender over the aggregate principal amount of the Loan.
"LOAN-TO-VALUE RATIO" means the ratio, as of the applicable
date of determination, of (a) the outstanding principal amount of the Loan to
(b) the aggregate fair market value of the Mortgaged Properties then subject to
the Mortgage, as established by the Initial Appraisals (or Interim Appraisal, if
applicable) until the Initial Maturity Date or, thereafter, the Second
Appraisals.
"MAJOR LEASE" means any Lease for premises in any Mortgaged
Property (A) which has total annual fixed rent (calculated on a straight line
average rent basis over the term of such Lease) that exceeds ten percent (10%)
of the annual Net Income of all Mortgaged Properties then subject to the
Mortgage (based upon the most recently reported 3-month period "grossed-up" to
annualize such Net Income) or (B) the rentable area of which Lease exceeds fifty
percent (50%) of the total rentable area of such Mortgaged Property.
"MANAGEMENT CONTROL" shall mean, with respect to any direct or
indirect interest in any Borrower Party or a Mortgaged Property, the power and
authority to make and implement material decisions with respect to the
operation, management, financing and disposition of the specified interest
(without rights of others (except in the case of Beacon only, shareholders of
Beacon) to veto or approve such decisions).
"MANAGEMENT FEES" shall mean, with respect to any Mortgaged
Property, all fees, commissions, expenses and other compensation (including,
without limitation, any incentive management fees) payable by Borrower to any
Acceptable Property Manager, which
<PAGE>
Management Fees shall be commercially reasonable based upon the then current
market for the area in which the particular Mortgaged Properties are located for
a Mortgaged Property of similar type and quality, but in no event to exceed four
percent (4%) of the Rents of the applicable Mortgaged Property.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse
effect upon (i) the business operations, economic performance, assets or
condition (financial or otherwise) of (A) the Mortgaged Properties, taken as a
whole or (B) the Borrower Parties, taken as a whole, (ii) the ability of any
Borrower Party to perform, in all material respects, its obligations under each
of the Loan Documents, (iii) the enforceability or validity of any Loan Document
or the perfection or priority of any Lien created under any Loan Document, (iv)
the value of, or cash flow from, the Mortgaged Properties or the operations
thereof, taken as a whole, or (v) the rights, interests and remedies of Agent or
any Lender under the Loan Documents; provided, however, that, subject to
Guarantor=s obligations under Section 6.1(h)(ii), the distribution by Guarantor
to its partners and by Beacon to its shareholders (or to one or more voting
trusts for the benefit of said partners and shareholders) of all or part of the
$150,000,000 preferred stock investment to be made by Guarantor (or an Affiliate
thereof) in Patriot American Hospitality, Inc. (to be renamed Wyndham
International, Inc.) will NOT be deemed to have a Material Adverse Effect upon,
or to otherwise constitute a material adverse change in the financial condition
of, the Borrower Parties (or any of them) for purposes hereof.
"MATERIAL AGREEMENTS" means each contract and agreement (other
than Leases) relating to the ownership, management, development, use, operation,
maintenance, repair or improvement of any Mortgaged Property or portion thereof,
or otherwise imposing obligations on Borrower, under which Borrower would have
the obligation to pay more than $250,000 per annum.
"MATERIAL CONDEMNATION" shall mean a Condemnation where the
loss is in an aggregate amount equal to or in excess of fifteen percent (15%) of
the outstanding principal amount of the Loan.
"MATURITY DATE" shall mean the Initial Maturity Date, as such
date may be extended in accordance with SECTION 2.9, or if such day is not a
Business Day then on the first Business Day prior thereto, or such other date on
which the final payment of principal of the Notes becomes due and payable as
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"MINIMUM DEBT YIELD" shall have the meaning set forth in
SECTION 5.1(aa).
"MINIMUM INTEREST COVERAGE" shall have the meaning set forth
in SECTION 5.1(bb).
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall have the meaning
set forth in SECTION 2.3.1.
<PAGE>
"MORTGAGE" shall mean, collectively, those certain first
priority Mortgages, Deeds of Trust, Security Agreements, Assignment of Leases,
Rents and Revenues and Fixture Filings, each dated as of the date hereof,
executed and delivered by the applicable Borrower as security for the Loan and
encumbering each Mortgaged Property, as the same may be amended, restated,
replaced, supplemented, consolidated or otherwise modified from time to time
pursuant to the provisions thereof or of the other Loan Documents.
"MORTGAGED PROPERTIES" shall mean each parcel or group of
parcels of land described on one of the SCHEDULES 1.1(b)-1 through 1.1(b)-10,
the improvements thereon and all equipment, fixtures and other personalty
located thereon or therein owned or leased by Borrower, less, however, in each
case, any Mortgaged Property (or portion thereof) released from the Lien of the
Mortgage in accordance with the terms hereof.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any member of the applicable ERISA Group
is making or accruing an obligation to make contributions or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"NET INCOME" shall mean, with respect to any Mortgaged
Property for any period, Operating Income less Operating Expenses for such
Mortgaged Property for such period.
"NET SALE OR REFINANCING PROCEEDS" means, for any Mortgaged
Property, an amount equal to either (as applicable) (a) the gross sales price
and all other consideration derived or to be derived from the sale of such
Mortgaged Property, MINUS the sum of (i) the amount of any sales commission
actually paid or payable to an independent broker unaffiliated with Borrower
with respect to such sale, (ii) the amount of any transfer taxes actually paid
or payable by Borrower with respect to such sale, and (iii) other reasonable,
actual and customary third party closing and transaction costs; or (b) the gross
proceeds of the refinancing of such Mortgaged Property with a lender
unaffiliated with Borrower, MINUS the sum of (i) the amount of any commissions
actually paid or payable to an independent broker unaffiliated with Borrower
with respect to such refinancing, (ii) the amount of any mortgage tax, recording
or filing fees or charges actually paid or payable by Borrower with respect to
such refinancing, (iii) the amount of all commitment, placement, structuring,
advisory or other similar fees payable to the lender with respect to such
refinancing, and (iv) other reasonable, actual and customary third party closing
and transaction costs incurred or paid by Borrower in connection with such
refinancing.
"NOTE" or "NOTES" shall mean the promissory notes made by
Borrower in favor of each Lender evidencing that portion of the principal amount
of the Loan Amount owing to such Lender, as such promissory notes may be
amended, modified, restated, supplemented, extended, renewed, or replaced from
time to time.
"NOTICE DATE" shall mean, with respect to the making of each
Loan, each
<PAGE>
Prepayment, each selection of a Base Rate Loan, and each selection of an
Interest Accrual Period pursuant to the definition of "Interest Accrual Period",
(a) for any Base Rate Loan, the day on which such Base Rate Loan is made,
elected or prepaid, as applicable, and (b) for any Eurodollar Rate Loan, three
(3) Business Days prior to the day on which (i) such Eurodollar Rate Loan is
made or prepaid, or (ii) the then current Interest Accrual Period in respect
thereof expires.
"OFFICER'S CERTIFICATE" shall mean, with respect to any
Borrower Party, a certificate signed by an officer of such Borrower Party or, to
the extent applicable, any constituent Person of such Borrower Party. Without
limiting the foregoing, if the individual signing the certificate is doing so on
behalf of a corporation, then such individual shall hold the office of
President, Vice President, Chief Financial Officer, Treasurer or Controller (or
the equivalent) with respect to such corporation and if the certificate is being
delivered in connection with any financial statement, report or record, then
such certificate shall be signed by the treasurer or chief financial officer of
such Borrower Party.
"OPERATING AGREEMENTS" shall mean reciprocal easement and/or
operating agreements, covenants, conditions and restrictions, and similar
agreements affecting any Mortgaged Property and binding upon and/or benefitting
Borrower and other third parties.
"OPERATING EXPENSES" shall mean, for any specified period and
for any Mortgaged Property, on an accrual basis, all expenses paid (or due and
payable) by a Borrower (or by an Acceptable Property Manager for the account of
a Borrower) during such period in connection with the operation of such
Mortgaged Property (including Basic Carrying Costs), as well as bookkeeping,
accounting, insurance costs, actual Management Fees, wages and other costs and
expenses incurred for such Mortgaged Property and legal expenses incurred in
connection with the operation of a Mortgaged Property, determined, in each case,
consistently with GAAP. "OPERATING EXPENSES" shall not include (i) depreciation
or amortization or other noncash items (other than expenses that are accrued but
not yet paid), (ii) the principal of and interest on the Notes or any other
indebtedness of Borrower, (iii) income taxes or other taxes in the nature of
income taxes, (iv) any expenses (including legal, accounting and other
professional fees, expenses and disbursements) incurred in connection with and
allocable to the issuance of the Notes, (v) the cost of actual Capital
Expenditures; PROVIDED that Operating Expenses shall be deemed to include
Capital Expenditures equal to $0.20 per rentable square foot of the Mortgaged
Properties per annum for the period ending December 31, 1999, and $0.50 per
rentable square foot of the Mortgaged Properties per annum thereafter (provided
that for the Mortgaged Properties commonly known as 565 Technology Square,
Cambridge, MA and 555 Technology Square, Cambridge, MA there shall be no deemed
inclusion in Operating Expenses on account of Capital Expenditures), (vi)
distributions to the members or partners in Borrower or any management fees or
similar compensation payable to any Affiliate of Borrower, and (vii) any item of
expense which otherwise would be considered within Operating Expenses but is
paid directly by any Tenant. Expenses that are accrued as Operating Expenses
during any period shall not be included in Operating Expenses when paid during
any subsequent period.
<PAGE>
"OPERATING INCOME" shall mean, for any specified period and
for any Mortgaged Property, all income received by a Borrower (or by an
Acceptable Property Manager for the account of a Borrower) from any Person
during such period in connection with the operation of such Mortgaged Property,
determined on an accrual basis of accounting consistent with GAAP (except that
Rents shall be determined on an actual and not level payment basis), including
the following:
(i) all Rents and, without duplication, all charges received
by a Borrower (or by an Acceptable Property Manager for the account of
Borrower) for electricity, oil, gas, water, steam, heat, ventilation,
air conditioning and any other energy, telecommunications, telephone,
utility or similar items, including overtime usage, HVAC equipment
charges, sprinkler charges, escalation charges, maintenance and
cleaning fees, charges for improvements, Taxes and Other Charges and
other amounts payable to a Borrower (or to an Acceptable Property
Manager for the account of a Borrower) under any Lease (including
tenant security deposits but only to the extent such Borrower is
entitled to apply or retain the security deposit in accordance with the
Lease and any interest income earned thereon and retained by a
Borrower) or other agreement relating to such Mortgaged Property;
(ii) all amounts payable to a Borrower (or to an Acceptable
Property Manager for the account of a Borrower) pursuant to Operating
Agreements relating to any one or more of the Mortgaged Properties;
(iii) condemnation awards to the extent that such awards are
compensation for lost rent allocable to such specified period;
(iv) business interruption and loss of "rental value"
insurance proceeds to the extent such proceeds are allocable to such
specified period; and
(v) all other income which is recurring and collected in the
ordinary course of business of operating the Mortgaged Properties.
Notwithstanding the foregoing clauses (i) through (v), Operating Income shall
not include (A) any condemnation or insurance proceeds (other than of the types
described in clauses (iii) and (iv) above), (B) any proceeds resulting from the
sale, exchange, transfer, financing or refinancing of all or any part of any
Mortgaged Property (other than of the types described in clause (iii) above),
(C) any type of income that would otherwise be considered Operating Income
pursuant to the provisions above but is paid directly by any Tenant to a Person
other than a Borrower or its agent, and (D) any fees or other amounts payable by
a Tenant or another Person that are reimbursable by a Borrower to Tenant or such
other Person.
"OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including vault
charges and license fees for the use of
<PAGE>
vaults and similar areas adjoining any Mortgaged Property, now or hereafter
levied or assessed or imposed against any Mortgaged Property or any part thereof
and payable by Borrower.
"OTHER PROPERTY" shall have the meaning set forth in SECTION
5.1(cc).
"OTHER TAXES" shall have the meaning set forth in SECTION
2.2.2(d).
"OUTSIDE ADVANCE DATE" shall have the meaning set forth in
SECTION 2.1.1(c).
"PARTICIPATION" shall have the meaning set forth in SECTION
5.1(v).
"PAYMENT DATE" means the first (1st) day of each calendar
month, EXCEPT that if any such date is not a Business Day, then the Payment Date
for that month shall be the immediately preceding Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means an employee pension benefit plan as
defined in SECTION 3(3) of ERISA (other than a Multiemployer Plan) which (i) is
subject to the provisions of Title IV of ERISA or is subject to the minimum
finding standards under Section 412 of the Code and (ii) which is maintained by,
or contributed to by, Borrower or any member of the applicable ERISA Group or
with respect to which any member of the ERISA Group could reasonably be expected
to incur liability under Section 4069 of ERISA.
"PERMITS" means all licenses, permits, variances and
certificates used in connection with the ownership, operation, use or occupancy
of any one or more of the Mortgaged Properties (including, without limitation,
business licenses, state health department licenses, licenses to conduct
business, licenses to own and operate the Mortgaged Properties and all such
other permits, licenses and rights, obtained from any Governmental Authority or
private Person).
"PERMITTED ENCUMBRANCES" shall mean, collectively, (i) the
Liens and security interests created by the Loan Documents, (ii) all Liens,
encumbrances and other matters disclosed in a Qualified Title Policy, (iii)
Liens, if any, for Taxes or Other Charges not yet payable or delinquent or which
are being diligently contested in good faith in accordance with SECTION
5.1(b)(ii), (iv) Liens in respect of any Mortgaged Property or assets imposed by
law which were incurred in the ordinary course of business, such as carriers0,
warehousemen0s, landlord0s, mechanic0s, materialmen0s, repairmen0s and other
similar Liens, and Liens for workers0 compensation, unemployment insurance and
similar programs, in each case arising in the ordinary course of business which
are being diligently contested in good faith in accordance with SECTION
5.1(b)(ii), (v) Leases, (vi) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
incurred or entered into by Borrower in the ordinary course of business which in
each case do not diminish in any material
<PAGE>
respect the value of a Mortgaged Property or affect in any respect the validity,
enforceability or priority of the Liens created by the Loan Documents, and (vii)
such other title and survey exceptions as Agent has approved or may approve in
writing in Agent0s sole discretion.
"PERMITTED INDEBTEDNESS" shall mean (i) the Debt, (ii) Trade
Payables incurred in the ordinary course of Borrower's business, customarily
paid by Borrower within sixty (60) days of incurrence and in fact not more than
sixty (60) days outstanding (subject to Borrower's right to contest the same in
accordance with SECTION 5.1(b)(ii)), (iii) written indemnities entered into in
the ordinary course of business and on customary terms and conditions in
connection with the acquisitions of goods or services, or in connection with the
execution of Leases or amendments thereto, or in connection with the acquisition
of the Mortgaged Properties, and (iv) any other unsecured indebtedness approved
by Agent in its sole discretion.
"PERMITTED INVESTMENTS" shall mean the following, subject to
qualifications hereinafter set forth:
(i) Obligations of, or obligations guaranteed as to principal
and interest by, the U.S. government or any agency or instrumentality
thereof, when such obligations are backed by the full faith and credit
of the United States of America. These obligations include, but are not
limited to:
(a) Treasury obligations;
(b) All direct or fully guaranteed obligations;
(c) Farmers Home Administration Certificates of
beneficial ownership;
(d) General Services Administration Participation
certificates;
(e) U.S. Maritime Administration Guaranteed Title XI
financing;
(f) Small Business Administration Guaranteed
participation certificates Guaranteed pool certificates;
(g) U.S. Department of Housing and Urban Development
Local authority bonds; and
(h) Washington Metropolitan Area Transit Authority
Guaranteed transit bonds.
(ii) Obligations of government-sponsored agencies that are not
backed by the full faith and credit of the United States of America,
where the obligation is limited to those instruments that have a
predetermined fixed dollar amount of principal due at maturity that
cannot vary or change. These obligations are limited to:
(a) Federal Home Loan Mortgage Corp. (FHLMC) debt
obligations;
(b) Farm Credit System (formerly: Federal Land Banks,
Federal Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated system wide bonds and notes;
(c) Federal Home Loan Banks (FHL Banks);
<PAGE>
(d) Federal National Mortgage Association (FNMA) debt
obligations;
(e) Student Loan Marketing Association (SLMA) debt
obligations;
(f) Financing Corp. (FICO) debt obligations; and
(g) Resolution Funding Corp. (REFCORP) debt
obligations.
(iii) Federal funds, unsecured certificates of deposit, time
deposits, banker0s acceptances, and repurchase agreements having
maturities of not more than 365 days of any bank, the short-term debt
obligations of which are rated "A-1+" (or the equivalent) by the Rating
Agencies.
(iv) Deposits that are fully insured by the Federal Deposit
Insurance Corp. (FDIC).
(v) Debt obligations maturing in 365 days or less that are
rated AAA or higher (or the equivalent) by the Rating Agencies.
(vi) Commercial paper rated "A-1+" (or the equivalent) by the
Rating Agencies and maturing in 365 days or less.
(vii) Investments in certain short-term debt of issuers rated
"A-1+" (or the equivalent) by the Rating Agencies may be permitted with
certain restrictions. The total amount of debt from "A-1+" (or the
equivalent) issuers must be limited to the investment of an amount
equal to Monthly Debt Service Payment Amount. The total amount of
"A-1+" investments should not represent more than twenty percent (20%)
of the rated issue0s outstanding principal amount and each investment
should not mature beyond thirty (30) days. Investment in "A-1+" (or the
equivalent) rated securities are not eligible for reserve accounts,
cash collateral accounts, or other forms of credit enhancement.
Short-term debt for purposes of this definition includes: commercial
paper, federal funds, repurchase agreements, unsecured certificates of
deposit, time deposits, and banker0s acceptances.
(viii) Investment in money market funds rated "AAAm" or
"AAm-G" (or the equivalent) by the Rating Agencies.
Notwithstanding the foregoing, "Permitted Investments": (A) shall exclude any
security with the Standard & Poor0s "r" symbol (or any other Rating Agency0s
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (B) shall not have maturities in excess of one year; (C) as to the
investments described in (i), (ii), (iii), (iv), (v), (vi) and (vii): the
obligations shall be limited to those instruments that have a predetermined
fixed dollar of principal due at maturity that cannot vary or change; interest
may either be fixed or variable; and any variable interest should be tied to a
single interest rate index plus a single fixed spread (if any), and move
proportionately with that
<PAGE>
index; and (D) shall exclude any investment where the right to receive principal
and interest derived from the underlying investment provides a yield to maturity
in excess of 120% of the yield to maturity at par of such underlying investment.
"PERSON" shall mean any individual, sole proprietorship,
corporation, general partnership, limited partnership, limited liability company
or partnership, joint venture, association, joint stock company, bank, trust,
estate, unincorporated organization, any federal, state, county or municipal
government (or any agency or political subdivision thereof), endowment fund or
any other form of entity.
"PLAN" means an employee benefit plan as defined in Section
3(3) of ERISA (other than a Multiemployer Plan) which is maintained or
contributed to by either Borrower or any member of its ERISA Group.
"PLAN ASSETS" means assets of (i) an employee benefit plan, as
defined in Section 3(3) of ERISA, whether or not it is subject to the provisions
of Title I of ERISA (including governmental plans), (ii) a plan described in
Section 4975(e)(1) of the Code, and (iii) an entity the underlying assets of
which include plan assets by reason of a plan0s investment in the entity.
"POLICIES" shall have the meaning specified in SECTION
8.1.1(c).
"PREPAYMENT" shall have the meaning specified in SECTION
2.4.2.
"PREPAYMENT DATE" shall have the meaning specified in SECTION
2.4.2.
"PROCEEDS" shall mean amounts, awards or payments payable to
Borrower or Agent on behalf of the Lenders in respect of all or any part of a
Mortgaged Property in connection with a Casualty or Condemnation thereof (after
the deduction therefrom and payment to Borrower and Agent, respectively, of any
and all reasonable expenses incurred by Borrower and Agent in the recovery
thereof, including all attorneys0 fees and disbursements, the fees of insurance
experts and adjusters and the costs incurred in any litigation or arbitration
with respect to such Casualty or Condemnation).
"PROPERTY MANAGEMENT AGREEMENT" shall mean, with respect to
each Mortgaged Property, each management agreement entered into by Borrower
(and/or Beacon Management or another Affiliate of Borrower) and the applicable
Property Manager and approved by Agent as set forth in SECTION 10.1 hereof,
pursuant to which such Property Manager is to provide management and other
services with respect to such Mortgaged Property, and any other management
agreement entered into with the prior written consent of Agent, which consent
shall not be unreasonably withheld or delayed.
"PROPERTY MANAGER" shall mean any "Acceptable Property
Manager" or any replacement "Property Manager" appointed in accordance with
SECTION 10.1.
<PAGE>
"QUALIFIED SURVEY" shall mean a current title survey of each
Mortgaged Property, certified to the title company and Agent for the benefit of
the Lenders and their successors and assigns, that, except as otherwise approved
by Agent, (i) is in form and content satisfactory to Agent, (ii) is prepared by
a professional and properly licensed land surveyor satisfactory to Agent in
accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys, (iii) meets the classification of an "Urban Survey", and the
following additional items from the list of "Optional Survey Responsibilities
and Specifications" (Table A) should be added to each survey: 2, 3, 4, 6, 7, 8,
9, 10, 11 and 13, (iv) reflects the same legal description contained in the
Qualified Title Policy relating to the applicable Mortgaged Property, (v)
includes, among other things, a metes and bounds description of the real
property comprising part of the applicable Mortgaged Property satisfactory to
Agent, and (vi) contains a certification in form and substance acceptable to
Agent.
"QUALIFIED TITLE POLICY" shall mean an ALTA title insurance
policy (1970 unmodified form, where issuable) issued by one or more title
companies acceptable to Agent, with ALTA facultative reinsurance and direct
access agreements acceptable to Agent, which title insurance policy shall (i)
provide coverage, on an aggregate basis with respect to all of the Mortgaged
Properties, equal to the Loan Amount, (ii) insure Agent for the benefit of the
Lenders that the Mortgage creates a valid first mortgage lien on the applicable
Mortgaged Property, free and clear of all exceptions from coverage other than
Permitted Encumbrances and such standard exceptions and exclusions from coverage
as Agent shall approve, (iii) contain such endorsements and affirmative
coverages as Agent may reasonably request, (iv) name Agent for the benefit of
the Lenders as the insured and (v) be assignable by its terms with a transfer of
the Loan.
"RATABLE SHARE" or "RATABLY" means, with respect to any
Lender, its share of the Loan based on the proportion of the outstanding
principal of the Loan advanced by such Lender to the total outstanding principal
of the Loan.
"RATING AGENCY" shall mean any one or more of Standard &
Poor0s Rating Group, a division of McGraw-Hill, Inc., Moody0s Investors Service,
Inc., Duff & Phelps Credit Rating Co., Fitch IBCA, Inc., or any other
nationally-recognized statistical rating agency selected by Agent, and their
respective successors.
"RBC CHANGE" shall have the meaning given such term in SECTION
2.2.2(b).
"REFERENCE BANKS" means four (4) major banks in the London
interbank market selected by the Agent.
"REFERENCE BANK RATE" shall have the meaning specified in the
definition of "BASE LIBOR".
"REGISTER" shall have the meaning provided in SECTION
2.1.3(b).
<PAGE>
"REGULATION D" means Regulation D of the Federal Reserve
Board, as in effect from time to time.
"REGULATORY CHANGE" means any change after the date of this
Agreement in federal, state or foreign laws or regulations or the adoption or
the making, after such date, of any interpretations, directives or requests
applying to a class of banks or companies Controlling banks, including any
Lender or any company Controlling a Lender, of or under any federal, state or
foreign laws or regulations by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"RELATED PARTY" means any member, shareholder, partner,
principal, Affiliate, employee, officer, director, agent or representative of
any Borrower Party, other than limited partners of Guarantor and shareholders of
Beacon.
"RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
the movement of Hazardous Substances through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata).
"RELEASE AMOUNT" means, for any Mortgaged Property, the
greater of (A) 125% of the Allocated Loan Amount for such Mortgaged Property,
and (B) if the Mortgaged Property is sold or refinanced, 90% of the Net Sale or
Refinancing Proceeds of the sale or refinancing of such Mortgaged Property.
"RELEASE INSTRUMENTS" shall have the meaning set forth in
SECTION 2.5.2.
"RELEASE PARCEL" shall have the meaning specified in SECTION
2.5.5.
"RELEASE PAYMENT NOTICE" shall have the meaning specified in
SECTION 2.5.2(f).
"RELEASE PREPAYMENT" shall have the meaning specified in
SECTION 2.5.2(f).
"RENTS" shall mean all rents, rent equivalents, moneys payable
as damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties
(including all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Mortgaged Properties and/or the use
and occupancy thereof, including, without limitation, any obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of any
Mortgaged Property or rendering of services by Borrower and proceeds, if any,
from business interruption or other loss of income insurance.
<PAGE>
"REQUIRED LENDERS" means, if there is only one Lender
hereunder, that Lender, and if there is more than one Lender, at least one or
more Lenders holding more than 66b% of the total principal amount outstanding
under the Loan.
"REQUIRED RATING" shall mean "AA" (or its equivalent) by the
Rating Agencies.
"RESERVE PERCENTAGE" shall mean, for any day, the stated
maximum rate (expressed as a decimal) in effect on such day at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained under Regulation D by a member bank of the Federal Reserve System
against "Eurocurrency Liabilities" (as such term is used in Regulation D) but
without benefit of or credit for proration, exemptions or offsets that might
otherwise be available to such member bank from time to time under Regulation D.
Without limiting the effect of the foregoing, the reserve percentage shall
reflect any other reserves required to be maintained by such member bank against
(i) any category of liabilities that includes deposits by reference to which the
Adjusted LIBOR for the Loan is to be determined or (ii) any category of
extension of credit or other assets that includes the Loan, but not including
any risk-based or other capital requirements relating to extensions of credit.
The Reserve Percentage shall be expressed in decimal form and rounded upward, if
necessary, to the nearest 1/100th of one percent, and shall include marginal,
emergency, supplemental, special and other reserve percentages. The parties
hereto acknowledge that, as of the Closing Date, the Reserve Percentage is zero.
"RESTORATION" shall have the meaning set forth in SECTION
8.1.2(b).
"RISK-BASED CAPITAL GUIDELINES" shall have the meaning
specified in SECTION 2.2.2(b).
"SECOND APPRAISALS" shall have the meaning set
forth in SECTION 5.1(d).
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
"SUBJECT PROPERTY" shall have the meaning set forth in SECTION
5.1(cc).
"SUBSEQUENT ADVANCE" shall mean an Advance to Borrower of any
portion of the Loan Amount which is not the Initial Advance.
"SUBSIDIARY" shall mean (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
<PAGE>
(ii) any partnership, association, trust, joint venture, limited liability
company or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at any time.
"TAXES" shall mean all real estate and personal property
taxes, assessments, fees, taxes on rents or rentals, water rates or sewer rents,
and other governmental charges now or hereafter levied or assessed or imposed
against any Mortgaged Property or rents therefrom or which may become Liens.
"TELERATE PAGE 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service (or such other page as may replace Page
3750 on that service or such other service as may be nominated by the British
Bankers0 Association as the information vendor for the purpose of displaying
British Bankers0 Association Interest Settlement Rates for U.S. Dollar
deposits).
"TENANT" shall mean any Person liable by contract or otherwise
to pay monies (including a percentage of gross income, revenue or profits)
pursuant to a Lease.
"TNRC" shall have the meaning specified in SECTION 5.1(dd).
"TRADE PAYABLES" shall mean unsecured amounts payable by or on
behalf of Borrower for or in respect of the operation of the Mortgaged
Properties in the ordinary course and which would under GAAP be regarded as
ordinary expenses, including amounts payable to suppliers, vendors, contractors,
mechanics, materialmen or other Persons providing property, goods or services to
any Mortgaged Property or Borrower.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the state in which a Mortgaged Property is
located.
"U.S. GOVERNMENT SECURITIES" shall mean securities evidencing
an obligation to pay principal and interest in a full and timely manner that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person Controlled
or supervised by and acting as an agency or instrumentality of and guaranteed as
a full faith and credit obligation by the United States of America (including a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such securities or a specific
payment of principal of or interest on any such securities held by such
custodian for the account of the holder of such depository receipt; PROVIDED
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the securities or the
specific payment of principal of or interest on the securities evidenced by such
depository receipt).
"U.S. TAX" shall mean any present or future tax, assessment or
other charge or
<PAGE>
levy imposed by or on behalf of the United States of America or any taxing
authority thereof.
Section 1.2 PRINCIPLES OF CONSTRUCTION. All references to
sections, schedules and exhibits are to sections, schedules and exhibits in or
to this Agreement unless otherwise specified. Unless otherwise specified, the
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The words "includes", "including" and
similar terms shall be construed as if followed by the words "without
limitation". The terms "Mortgaged Property" or "Mortgaged Properties" shall be
construed to be followed by the phrase "or any part or portion thereof". Unless
otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so
defined. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP, as may be modified herein. As a matter of convenience
herein, rating categories are generally stated in the nomenclature of Standard &
Poor0s Ratings Group, it being understood that unless otherwise expressly stated
to the contrary, reference to such category shall also be deemed to be a
reference to the comparable category of each other Rating Agency.
ARTICLE II
GENERAL
Section 2.1 THE LOAN.
2.1.1 COMMITMENT. (a) Subject to and upon the terms and
conditions set forth herein, including the conditions precedent set forth in
SECTION 3.1 and SECTION 3.2, the Lenders hereby agree to lend to Borrower the
Loan Amount. The Loan shall mature on the Maturity Date. Borrower hereby agrees
to accept the Initial Advance of the Loan as of the date hereof, subject to and
upon the terms and conditions set forth herein.
(b) Anything to the contrary provided in subsection (a) above
notwithstanding, the proceeds of the Loan shall be used only to (i) finance the
Mortgaged Properties, (ii) provide funds to Guarantor for the acquisition of
additional properties, the making of further investments and redevelopment of
properties owned or controlled by Guarantor, (iii) fund the working capital
needs of Borrower, Beacon and/or Guarantor, and (iv) fund the closing costs of
Borrower actually incurred in connection with the closing of the Loan.
(c) Advances of the Loan (each, an "ADVANCE") by Lenders to
Borrower shall not exceed, in the aggregate, the Loan Amount. The Initial
Advance hereunder has been made on the date hereof in the amount of Seventy
Million and No/100 Dollars ($70,000,000). From and after the Closing Date to the
date which is three (3) months subsequent to the Closing Date (the "OUTSIDE
ADVANCE DATE"), Borrower may request (each request being a "SUBSEQUENT ADVANCE
REQUEST") that Lenders make a Subsequent Advance to Borrower. Each Subsequent
<PAGE>
Advance Request shall specify a date at least five (5) Business Days subsequent
to the date of the Subsequent Advance Request upon which Borrower requests that
Lender fund the Subsequent Advance. Borrower may not deliver more than two (2)
Subsequent Advance Requests and, subject to the terms and conditions contained
herein, including, without limitation, the conditions precedent specified in
SECTION 3.2, Lenders shall not be required to make more than two (2) Subsequent
Advances. Each Subsequent Advance shall be in the minimum amount of Five Million
and no/100 Dollars ($5,000,000.00) and no Subsequent Advance shall exceed the
difference between (i) the Loan Amount and (ii) the sum of (A) the Initial
Advance and (B) the amount of any Subsequent Advance made prior thereto.
2.1.2 NO RE-ADVANCES. Any amount borrowed and repaid hereunder
in respect of the Loan may not be reborrowed.
2.1.3 THE NOTES. (a) The Loan shall be evidenced by a Note or
Notes aggregating the Loan Amount. The Notes shall bear interest at the
Applicable Interest Rate to and including the Maturity Date. The Notes shall be
subject to repayment as provided in SECTIONS 2.3, 2.4 and 2.5, shall be entitled
to the benefits of this Agreement and shall be secured by the Mortgage granting
a first mortgage lien on each Mortgaged Property and by certain of the other
Loan Documents.
(b) The Agent shall maintain, or cause to be maintained, a
register (the "REGISTER") at the address to which notices to the initial Lender
are to be sent hereunder, on which it shall enter the name or names of the
registered owner or owners from time to time of the Notes or multiple Notes.
Each Note may be independently assigned or otherwise transferred in whole or in
part in accordance with the terms of this Agreement by registration of such
assignment or transfer on the Register (and each Note shall expressly so
provide). Any assignment or transfer of all or part of the Loan (and the Notes
or Notes evidencing the same) may be effected by registration of such assignment
or transfer on the Register. At the request of any Lender or any designated
assignee or transferee of a Note, Borrower shall issue to such Lender or the
designated assignee or transferee one or more new Notes in the same aggregate
principal amount of the Notes so assigned or transferred upon delivery to
Borrower of the Notes so assigned or transferred. The Register shall be
available for inspection by Borrower at any reasonable time upon reasonable
prior notice.
Section 2.2 INTEREST.
2.2.1 GENERALLY. Interest on the Loan and the Notes shall
accrue at the Applicable Interest Rate and shall be calculated on the basis of
the actual number of days elapsed in the applicable Interest Accrual Period in a
360-day year.
2.2.2 DETERMINATION OF INTEREST RATE. (a) The rate or rates at
which the outstanding principal amount of the Loan bears interest from time to
time shall be referred to as the "APPLICABLE INTEREST RATE". Subject to the
terms and conditions of this SECTION 2.2.2,
<PAGE>
Borrower shall pay interest on the outstanding principal amount of the Loan at
the Applicable Interest Rate. Each determination by the Agent of the Applicable
Interest Rate shall be conclusive and binding for all purposes, absent manifest
error. The Applicable Interest Rate with respect to the Loan shall be:
(i) BASE RATE. During any Base Rate Periods, a rate per annum
equal at all times to the sum of the Base Rate plus either Base Rate
Spread A or Base Rate Spread B, as applicable, payable monthly in
arrears on each Payment Date. If the Loan-to-Value Ratio during any
Base Rate Period is 60% or less, then during the period that such
Loan-to-Value Ratio is 60% or less, Base Rate Spread A shall apply to
the determination of interest pursuant to this SECTION 2.2.2(a)(i). If
the Loan-to-Value Ratio during any Base Rate Period is greater than
60%, then during the period that such Loan-to-Value Ratio is greater
than 60%, Base Rate Spread B shall apply to the determination of
interest pursuant to this SECTION 2.2.2(a)(i). Notwithstanding the
foregoing, Base Rate Spread B shall apply to the determination of
interest pursuant to this SECTION 2.2.2(a)(i) during any Base Rate
Period occurring between the Closing Date and the Outside Advance Date,
unless subsequent to the Closing Date either (I) (A) no Subsequent
Advances have been made hereunder, (B) Borrower has made a Prepayment
hereunder and (C) giving effect to such Prepayment the Loan-to-Value
Ratio is 60% or less, in which event, during the period that such
Loan-to-Value Ratio is 60% or less, Base Rate Spread A shall apply to
the determination of interest pursuant to this SECTION 2.2.2(a)(i), or
(II) the Loan Amount has been fully advanced hereunder or the maximum
number of Subsequent Advances permitted hereunder have been made or
Borrower shall have irrevocably waived its right to any (further)
Subsequent Advances, and (in any such case) the Loan-to-Value Ratio is
60% or less, then, during the period that such Loan-to-Value Ratio is
60% or less, Base Rate Spread A shall apply to the determination of
interest pursuant to this SECTION 2.2.2(a)(i).
(ii) EURODOLLAR RATE. During any Eurodollar Rate Periods, the
Loan shall bear interest as a Eurodollar Rate Loan at a rate per annum
equal at all times during each Interest Accrual Period to the sum of
the Adjusted LIBOR for such Interest Accrual Period plus either
Eurodollar Spread A or Eurodollar Spread B, as applicable, payable
monthly in arrears on each Payment Date. If the Loan-to-Value Ratio
during any Interest Accrual Period is 60% or less, then during the
period that such Loan-to-Value Ratio is 60% or less, Eurodollar Spread
A shall apply to the determination of interest pursuant to this SECTION
2.2.2(a)(ii). If the Loan-to-Value Ratio during any Interest Accrual
Period is greater than 60%, then during the period that such
Loan-to-Value Ratio is greater than 60%, Eurodollar Spread B shall
apply to the determination of interest pursuant to this Section
2.2.2(a)(ii). Notwithstanding the foregoing provisions of this SECTION
2.2.2(a)(ii), Eurodollar Spread B shall apply to the determination of
interest pursuant to this SECTION 2.2.2(a)(ii) during any Interest
Accrual Period occurring between the Closing Date and the Outside
Advance Date, unless subsequent to the Closing Date either (I) (A) no
Subsequent Advances have been made hereunder, (B) Borrower has made a
Prepayment
<PAGE>
hereunder and (C) giving effect to such Prepayment the Loan-to-Value
Ratio is 60% or less, in which event, during the period that such
Loan-to-Value Ratio is 60% or less, Eurodollar Spread A shall apply to
the determination of interest pursuant to this SECTION 2.2.2(a)(ii), or
(II) the Loan Amount has been fully advanced hereunder or the maximum
number of Subsequent Advances permitted hereunder have been made or
Borrower shall have irrevocably waived its right to any (further)
Subsequent Advances, and (in any such case) the Loan-to-Value Ratio is
60% or less, then, during the period that such Loan-to-Value Ratio is
60% or less, Eurodollar Rate Spread A shall apply to the determination
of interest pursuant to this SECTION 2.2.2(a)(ii).
(iii) Borrower shall elect on the Notice Date with respect to
each Advance hereunder and with respect to any outstanding Loan
hereunder whether such Advance or Loan shall be a Base Rate Loan or a
Eurodollar Rate Loan. If Borrower does not make such election with
respect to any Advance, then such Advance shall be a Base Rate Loan. If
Borrower does not make such election with respect to any outstanding
Eurodollar Rate Loan, then the provisions of clause (iv) of the
definition of "Interest Accrual Period" shall apply.
(b) If as a result of any Regulatory Change or RBC Change:
(i) the basis of taxation of payments to any Lender of the
principal of or interest on the Loan is changed; or
(ii) any reserve, special deposit or similar requirements
(other than such requirements as are taken into account in determining
Adjusted LIBOR) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities of any Lender is imposed,
modified or deemed applicable to any Lender; or
(iii) any other condition affecting the Loan is imposed on any
Lender;
and such Lender reasonably determines that, by reason thereof, the cost to such
Lender of making or maintaining the Loan is increased or its rate of return is
reduced, or any amount receivable by such Lender hereunder in respect of any
portion of the Loan is reduced, in each case by an amount reasonably deemed by
such Lender to be material (such increases in cost and reductions in amounts
receivable being herein called "INCREASED COSTS"), then Borrower agrees that it
will pay to such Lender upon that Lender0s request such additional amount or
amounts as will compensate such Lender for such Increased Costs to the extent
that such Lender reasonably determines that such Increased Costs are allocable
to the Loan, and provided that such Lender is generally imposing similar
Increased Costs on its other borrowers. Agent on behalf of the Lenders will
notify Borrower of any event occurring after the date hereof which will entitle
any Lender to compensation pursuant to this subsection (b) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Notwithstanding the foregoing, in no event shall Borrower be
required to compensate Lender for any portion of the
<PAGE>
income or franchise taxes of such Lender, whether or not attributable to
payments made by Borrower. If any Lender requests compensation under this
SECTION 2.2.2(b), Borrower may, by notice to Agent or such Lender, require that
(i) such Lender furnish to Borrower a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof;
and/or (ii) the interest rate on the Loan be converted from a Eurodollar Rate
Loan to a Base Rate Loan. As used in this SECTION 2.2.2(b), the term "Lender"
shall mean "Lender or any Person controlling Lender". "RBC CHANGE" shall mean
(1) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (2) adoption of or change in any other law, governmental or
quasi-governmental rule, statute, ordinance, order, decree, injunction,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
lending office or any company controlling any Lender. "RISK-BASED CAPITAL
GUIDELINES" means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices entitled "International Convergence
of Capital Measurements and Capital Standards", including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.
(c) Without limiting the effect of subsection (b) above, in
the event that, (i) by reason of any Regulatory Change, any Lender incurs
Increased Costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Lender, which
includes deposits by reference to which Adjusted LIBOR is determined, or (ii)
Agent shall have determined in good faith after reasonable investigation that
U.S. dollar deposits in the principal amount of the Loan are not generally
available in the London interbank market, or (iii) Agent shall have determined
that reasonable means do not exist for ascertaining Adjusted LIBOR, then, if
such Lender or Agent so elects by notice to Borrower (such Lender hereby
agreeing that it will not make such election if it is not generally imposing
similar charges or making similar such elections on or with respect to its other
borrowers), the interest rate applicable to the then outstanding principal
balance of the Loan (in the case of a notice given by Agent pursuant to CLAUSE
(ii) or (iii) above) or the portion thereof held by such Lender (in the case of
a notice given by such Lender pursuant to CLAUSE (i) above) shall be converted
to a Base Rate Loan. As used in this SECTION 2.2.2(c), the term "Lender" shall
mean "Lender or any Person controlling Lender".
(d) In addition, Borrower agrees to pay any present or future
stamp or documentary taxes or other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder, or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, or the Loan (herein referred to as "OTHER
TAXES"); PROVIDED, HOWEVER, that Other Taxes shall not include, in the case of
Agent and each Lender, taxes that are imposed on its overall net income by the
United States and taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or
<PAGE>
foreign jurisdiction under the laws of which Agent or such Lender, as the case
may be, is organized or any political subdivision thereof.
(e) Borrower shall indemnify each Lender and the Agent for the
full amount of Other Taxes (including any Other Taxes imposed by any
Governmental Authority on amounts payable under this SECTION 2.2.2) paid by such
Lender or the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within ten (10) days after the date such Lender or
the Agent (as the case may be) makes written demand therefor.
(f) Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Lender executing this Agreement
on the date hereof, and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender in the case of each other Lender, and from time to
time thereafter as requested by the Agent, submit to Agent Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to the
benefits under an income tax treaty to which the United States is a party that
eliminates withholding tax on payments under this Agreement or any other Loan
Document or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If any form or document referred to in this paragraph requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by Internal Revenue Service
form 1001 or 4224 (or any such successor form), that any Lender reasonably
considers to be confidential, such Lender shall give notice thereof to Agent and
shall not be obligated to include in such form or document such confidential
information. If any Lender shall fail to provide to Agent the applicable
Internal Revenue Service form 1001 or 4224 (or any such successor form) or
information required in connection therewith, then Agent may deduct any
withholding tax from any payments made hereunder.
(g) Each Lender represents and warrants to the Borrower that,
as of the date such Lender becomes a party to this Agreement, such Lender is
entitled to receive payments hereunder from the Borrower and the Guarantor
without deduction or withholding for or on account of any U.S. Taxes or Other
Taxes.
(h) Within 30 days after the date of any payment of Other
Taxes, Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment. In the case of any payment hereunder or under
the Notes by or on behalf of a Borrower through an account or branch outside the
United States or by or on behalf of a Borrower by a payor that is not a United
States person, if such Borrower determines that no Other Taxes are payable in
respect thereof, such Borrower shall furnish, or shall cause such payor to
furnish, to the Agent an opinion of counsel reasonably acceptable to the Agent
stating that such payment is exempt from
<PAGE>
Other Taxes.
(i) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower contained in
SECTION 2.2.2(b)-(h) shall survive the payment in full of principal and interest
hereunder, and the termination of this Agreement.
2.2.3 DEFAULT RATE. If an Event of Default shall have occurred
and is continuing, Borrower shall pay interest at the Default Rate, from the
date of such Event of Default to and including the date such Event of Default
has been cured, on the outstanding amount of the Loan and accrued but unpaid
interest thereon, upon demand from time to time (which interest is payable both
before and after any Lender has obtained a judgment with respect to the Loan),
to the extent permitted by applicable law. Payment or acceptance of the
increased rates provided for in this subsection is not a permitted alternative
to timely payment or full performance by Borrower and shall not constitute a
waiver of any Default or Event of Default or an amendment to this Agreement or
any other Loan Document and shall not otherwise prejudice or limit any rights or
remedies of any Lender.
Section 2.3 LOAN PAYMENT.
2.3.1 MONTHLY DEBT SERVICE PAYMENTS. Commencing on August 2,
1999 (for the period from and including the date hereof through and including
August 1, 1999), and on each and every Payment Date thereafter until the
Maturity Date, Borrower shall pay interest at the Applicable Interest Rate on
the outstanding principal balance of the Loan as computed in accordance with
SECTION 2.2.2 (the "MONTHLY DEBT SERVICE PAYMENT AMOUNT").
2.3.2 PAYMENT ON MATURITY DATE. Borrower shall repay any and
all outstanding principal indebtedness of the Loan in full on the Maturity Date
of the Loan, together with all accrued and unpaid interest thereon to (but
excluding) the date of repayment and all other amounts due to Lenders or Agent
hereunder or under the Notes, the Mortgage, and the other Loan Documents.
2.3.3 MAKING OF PAYMENTS. Each payment by Borrower hereunder
or under the Notes shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to the
payee thereof by 11:00 a.m. New York City time, on the date such payment is due
and shall be made in lawful money of the United States of America by wire
transfer in federal or other immediately available funds. Payments of interest
and principal in respect of each Note shall be made to Agent in respect of such
Note (subject to SECTIONS 2.7 and 2.8) to Agent0s account pursuant to the wiring
instructions provided by Agent to Borrower. Any funds received by Agent after
such time shall, for all purposes hereof, be deemed to have been paid on the
next succeeding Business Day. Except as otherwise provided herein, whenever any
payment hereunder or under the Notes shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the first Business Day
immediately
<PAGE>
prior thereto. Promptly upon its receipt of payments by Borrower hereunder,
Agent will cause like funds to be distributed (a) if such payment by the
Borrower is in respect of principal, interest or any other obligation then
payable hereunder and under the Notes to more than one Lender, to such Lender
for the account of their applicable lending offices ratably, and (b) if such
payment by the Borrower is in respect of any obligation then payable hereunder
to one Lender, to such Lender for the account of its applicable lending office,
in each case to be applied in accordance with this Agreement.
2.3.4 APPLICATION OF PAYMENTS. Payments made by Borrower in
respect of the principal and interest of the Loan shall be applied first to the
payment of interest at the Applicable Interest Rate and other sums due and
outstanding under the Loan Documents, with the remainder of such payment being
applied to the reduction of the outstanding principal balance of the Notes,
PROVIDED, HOWEVER, that notwithstanding any provision hereof to the contrary,
following and during a continuance of an Event of Default, each Lender may apply
any payments received to the Debt in such order, manner and amount as such
Lender in its sole discretion shall determine and Agent may exercise any
remedies available under this Agreement, at law and in equity.
2.3.5 NO SETOFFS. All amounts due hereunder or under the Notes
or the other Loan Documents shall be payable without setoff, counterclaim or any
other deduction whatsoever.
2.3.6 LOAN ACCOUNT. Agent on behalf of the Lenders shall
maintain a loan account on its books in the name of Borrower in which will be
recorded the Loan and all payments and prepayments of principal of and interest
on the Loan (PROVIDED that any error in such loan account shall not in any
manner affect the obligations of Borrower to repay the Loan in accordance with
the terms of this Agreement, the Notes and the other Loan Documents, and the
Lenders and Borrower acknowledge that Agent0s ability to maintain such loan
account shall be dependent on, among other things, Borrower0s accurate reporting
of payments made and the Lenders0 objection to any inaccuracies therein). Agent
shall, upon the written request of Borrower, not more often than monthly,
provide such information as it has in its possession regarding the records
maintained in accordance with the first sentence hereof.
Section 2.4 PREPAYMENT.
2.4.1 MANDATORY PREPAYMENT. If at any time during the term of
the Loan the outstanding principal balance of the Loan has been reduced to less
than $20,000,000 by Prepayment, repayment, releases of Mortgaged Properties or
otherwise, then Borrower shall, within twenty (20) Business Days of such
reduction, prepay the Loan in whole together with all accrued and unpaid
interest on the Loan, all other sums then due under the Notes, this Agreement
(including, without limitation, any Breakage Costs, if applicable), the Mortgage
and the other Loan Documents, and all reasonable costs and expenses of the Agent
incurred in connection with such Prepayment, including, without limitation,
reasonable attorneys' fees and disbursements.
<PAGE>
2.4.2 PERMITTED PREPAYMENT. Subject to the terms and
conditions set forth in this SECTION 2.4.2, Borrower may prepay the Loan in
whole or in part (hereinafter, a "PREPAYMENT"). With respect to a Prepayment,
Borrower shall provide not less than three (3) Business Days* prior written
notice to Agent specifying the date on which the Prepayment is to occur (the
"PREPAYMENT DATE"), which notice shall indicate the principal amount of the
Notes to be prepaid. The Agent shall provide each Lender with written notice of
such prepayment within one (1) day of receiving notice of prepayment from the
Borrower. On the Prepayment Date, Borrower shall pay to the Agent the amount of
the prepayment specified in the notice, all accrued and unpaid interest on the
principal amount being prepaid, any other then outstanding unpaid interest on
the Loan, any Breakage Costs, if applicable, and all reasonable costs and
expenses of the Agent incurred in connection with the Prepayment, including
reasonable attorneys* fees and disbursements. Agent shall not be obligated to
accept any prepayment of the principal balance of the Notes, or any portion
thereof, unless it is accompanied by all sums due in connection therewith
pursuant to the terms hereof.
2.4.3 REPAYMENT UPON DEFAULT. If all or any part of the
principal amount of the Loan is prepaid upon acceleration of the Loan following
the occurrence of an Event of Default, Borrower shall be obligated to pay all
accrued and unpaid interest on the principal balance of the Notes to the date of
repayment (including interest owed at the Default Rate), all other sums then due
under the Notes, this Agreement (including any Breakage Costs, if applicable),
the Mortgage and the other Loan Documents, and all costs and expenses of Agent
and any Lender incurred in connection with such Event of Default including
reasonable attorneys0 fees and disbursements.
Section 2.5 RELEASE OF MORTGAGED PROPERTIES. Except as set
forth in this SECTION 2.5, no repayment or prepayment of all or any portion of
the Notes shall cause, give rise to a right to require, or otherwise result in,
the release of the Lien of the Mortgage on any Mortgaged Property.
2.5.1 RELEASE ON PAYMENT IN FULL. Agent on behalf of the
Lenders shall, at the expense of Borrower, upon payment in full of all principal
and interest on the Loan, any applicable Breakage Costs and all other amounts
due and payable under the Loan Documents in accordance with the terms and
provisions of the Notes and this Loan Agreement, release the Lien of the
Mortgage and related Loan Documents.
2.5.2 RELEASES. On one or more occasions, PROVIDED no Event of
Default shall have previously occurred more than twice prior to such date
(regardless of whether cured) and (subject to clause (g) below) no Default or
Event of Default is continuing, Borrower may obtain (i) the release of any
Mortgaged Property from the Lien of the Mortgage thereon (and related Loan
Documents), (ii) the release of Borrower*s obligations under the Loan Documents
with respect to such Mortgaged Property (other than those expressly stated to
survive), upon satisfaction of each of the following conditions, and (iii) if,
upon the release of the applicable Mortgaged Property or Mortgaged Properties,
the Mortgaged Properties remaining hereunder are not owned by a Borrower, such
Borrower shall be released as a Borrower hereunder (except with
<PAGE>
respect to those matters which expressly survive repayment of the Loan) upon
delivery to the Agent of such releases of Agent and Lenders as Agent shall
reasonably require:
(a) Borrower shall have paid the Release Amount for such
Mortgaged Property.
(b) Borrower shall submit to Agent, not less than ten (10)
days prior to the date of such release, a release of Liens (and related
Loan Documents) for each applicable Mortgaged Property (for execution
by Agent on behalf of the Lenders) in a form appropriate in the
applicable state and otherwise satisfactory to Agent in its reasonable
discretion and all other documentation Agent reasonably requires to be
delivered by Borrower in connection with such release (collectively,
"RELEASE INSTRUMENTS"), together with an Officer0s Certificate
certifying that the release to be effected (i) will not violate the
terms of this Agreement, (ii) will not impair or otherwise adversely
affect the Liens, security interests and other rights of Agent or the
Lenders under the Loan Documents not being released (or as to the
parties to the Loan Documents and Mortgaged Properties subject to the
Loan Documents not being released) and (iii) complies with all of the
terms and provisions of this Agreement and satisfies all of the
conditions set forth in this SECTION 2.5.2.
(c) Giving effect to payment of the Release Amount and any
other Prepayments made prior to the date of the release, the applicable
Minimum Debt Yield and Minimum Interest Coverage shall have been
satisfied for the preceding fiscal quarter (as evidenced by the most
recent required quarterly financial statement) for the Mortgaged
Properties for which Borrower is not requesting a release.
(d) Agent shall have received payment of all reasonable
third-party costs and expenses, including, without limitation, legal
fees and disbursements, incurred by Agent in effecting the release.
(e) Except as provided in Section 2.5.5, in the case of the
release of a Mortgaged Property in connection with a sale of such
Mortgaged Property, Agent shall not release such Mortgaged Property
unless such Mortgaged Property is sold in its entirety.
(f) If the requested release of a Mortgaged Property by
Borrower is not pursuant to a bona fide sale of such Mortgaged Property
to an unaffiliated third party or a bona fide refinancing of such
Mortgaged Property with an unaffiliated lender, then Borrower shall
provide Agent with a notice (the "RELEASE PAYMENT NOTICE") specifying
the Mortgaged Property or Properties to be released and the aggregate
principal amount of the Notes to be prepaid assuming Release Amounts of
125% of the Allocated Loan Amounts for such Mortgaged Properties (the
"RELEASE PREPAYMENT"). Within ten (10) Business Days after receipt of
the Release Payment Notice, Agent may designate
<PAGE>
different Mortgaged Properties to be released in connection with the
Release Prepayment; PROVIDED, HOWEVER, that (i) the Release Amount for
each such substitute Mortgaged Property shall be equal to 125% of the
Allocated Loan Amount for such Mortgaged Property and (ii) the
aggregate of such Release Amounts for all Mortgaged Properties being
released (including those designated by Agent) shall not exceed the
Release Prepayment nor be less than Five Million and No/100 Dollars
($5,000,000.00) less than the Release Prepayment.
(g) If, at the time of the requested release of a Mortgaged
Property, a Default or Event of Default has occurred and is continuing
hereunder, then, subject to Borrower's satisfaction of all of the other
conditions contained in this SECTION 2.5.2, Borrower may obtain such
release only if the release of such Mortgaged Property and payment of
the Release Amount therefor would conclusively cure such Default and
Event of Default.
2.5.3 FURTHER ASSURANCES. To the extent any Release Instrument
executed and delivered under SECTION 2.5.2(b) is insufficient to effect the
release to be effected in accordance with the terms hereof, Agent shall remain
obligated to execute and deliver, at Borrower0s expense, such further Release
Instruments as Borrower may reasonably request and submit to Agent, together
with an Officer0s Certificate covering the matters to be covered in the
Officer0s Certificate described in SECTION 2.5.2(b).
2.5.4 APPLICATION. If the Loan has been tranched by Agent into
a senior and subordinate loan structure, then Agent shall apply the Release
Amount received with respect to a Mortgaged Property released pursuant to this
SECTION 2.5 pro rata to reduce the outstanding principal amount of the
respective senior and subordinate tranches.
2.5.5 PARTIAL RELEASES. Notwithstanding the foregoing,
provided no Event of Default shall have previously occurred more than twice
prior to such date (regardless of whether cured) and no Default or Event of
Default is continuing, Borrower may obtain (a) the release of a portion of any
Mortgaged Property (the "RELEASE PARCEL") from the Lien of the Mortgage thereon
(and related Loan Documents) and (b) the release of Borrower's obligations under
the Loan Documents with respect to such Release Parcel (other than those
expressly stated to survive), if (i) the Release Parcel is not necessary or
required for the continued operation of the Improvements on the Mortgaged
Property as previously conducted, (ii) there are no material Improvements on the
Release Parcel (other than the portion of the Mortgaged Property commonly known
as 545 Technology Square, Cambridge, Massachusetts on which there is the
building known as 549 Technology Square, Cambridge, Massachusetts), (iii) the
release of the Release Parcel is incident to a subdivision of the Mortgaged
Property in compliance with all Legal Requirements, and (iv) the Release Parcel
is not a revenue-generating portion of the Mortgaged Property (other than the
portion of the Mortgaged Property commonly known as 545 Technology Square,
Cambridge, Massachusetts on which there is the building known as 549 Technology
Square, Cambridge, Massachusetts), upon satisfaction of each of the following
conditions:
<PAGE>
(A) Borrower shall have satisfied the conditions specified in
SECTIONS 2.5.2(b) (other than the portion of CLAUSE (iii) thereof which
requires satisfaction of all of the conditions of SECTION 2.5.2) and
(D) with respect to the Release Parcel;
(B) Borrower shall certify to Agent that upon a release
pursuant to this SECTION 2.5.5, (i) the balance of the Mortgaged
Property shall continue to be subject to the Lien of the Mortgage
thereon (and related Loan Documents) and the release will not have a
material adverse effect on the value of the Mortgaged Property,
materially impair the utility and operation of the remaining portion of
the Mortgaged Property or adversely affect the security position of
Agent under the Mortgage thereon (and related Loan Documents), (II)
ingress and egress to and from the portion of the Mortgaged Property
remaining subject to the Lien of the Mortgage thereon (and related Loan
Documents) will not be terminated or materially restricted as a result
of any such release, (III) such release shall not cause or result in a
violation of any provision of any Loan Document, and (IV) the remaining
portion of the Mortgaged Property will continue to comply with all
Legal Requirements;
(C) if requested by Agent and if reasonably required to ensure
continuing first lien title insurance coverage of the Mortgage,
Borrower shall provide Agent with an endorsement to Agent's title
insurance policy insuring that the priority of the Lien of the Mortgage
(subject to Permitted Exceptions) is unaffected as to the Mortgaged
Property remaining encumbered by the Lien of the Mortgage by reason of
the fact that the Release Parcel has been released from the Lien
thereof, and Borrower shall pay for the cost of such endorsement;
(D) all instruments of release shall contain such covenants,
conditions and restrictions and shall reserve such rights and easements
with respect to the Release Parcel as are necessary to protect and
preserve Lender's interests in the portion of the Mortgaged Property
remaining subject to the Lien of the Mortgage thereon (and related Loan
Documents) after any such release;
(E) Borrower shall provide Agent with such surveys,
descriptions, title insurance endorsements, computations of acreage and
other information as Agent may in its reasonable discretion require in
connection with any release made pursuant to this SECTION 2.5.5; and
(F) Borrower shall obtain all subdivision and zoning approvals
with respect to the Release Parcel and the portion of the Mortgaged
Property remaining subject to the Lien of the Mortgage thereon (and
related Loan Documents) as may reasonably be required by Agent to
insure that the Release Parcel and the portion of the Mortgaged
Property remaining subject to the Lien of the Mortgage thereon (and
related Loan Documents) shall thereafter be independent of each other
for all zoning, subdivision and
<PAGE>
taxing purposes and to insure that the ability of Agent to foreclose
the Mortgage shall not be hindered or compromised in any manner
whatsoever as a result of any such release.
Section 2.6 INTENTIONALLY OMITTED.
Section 2.7 PRO RATA TREATMENT. Except to the extent otherwise
provided herein, the Loan, each payment or prepayment of principal of the Loan
and each payment of interest on the Loan shall be allocated PRO RATA among the
Lenders in accordance with their respective Loan Percentages.
Section 2.8 SHARING OF PAYMENTS. Each Lender agrees that, in
the event that any Lender shall obtain payment in respect of any Loan owing to
such Lender under this Agreement through the exercise of a right of set-off,
banker0s lien, counterclaim or otherwise (including, but not limited to,
pursuant to the Bankruptcy Code) in excess of its Loan Percentage as provided
for in this Agreement, such Lender shall promptly notify the Agent of such fact
and purchase from the other Lenders a participation in the portion of the Loan
held by such Lender, in such amounts and with such other adjustments from time
to time as shall be equitable in order that all Lenders share such payment in
accordance with their respective Loan Percentages as provided for in this
Agreement. Each Lender further agrees that if a payment to a Lender (which is
obtained by such Lender through the exercise of a right of set-off, banker0s
lien, counterclaim or otherwise) shall be rescinded or must otherwise be
restored, each Lender which shall have shared the benefit of such payment shall,
by repurchase of a participation theretofore sold, return its share of that
benefit to each Lender whose payment shall have been rescinded or otherwise
restored. Borrower agrees that any Lender so purchasing such a participation
may, to the fullest extent permitted by law, exercise all rights of payment,
including set-off, banker0s lien or counterclaim, with respect to such
participation as fully as if such Lender were a holder of the Loan or other
obligation in the amount of such participation; PROVIDED, HOWEVER, that in no
event shall this provision be construed to require Borrower to duplicate any
payment required of Borrower hereunder, and Borrower shall incur no increased
cost hereunder in connection therewith. The Agent shall keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased pursuant to this Section and shall in each case notify
the Lenders following any such purchases. Except as otherwise expressly provided
in this Agreement, if any Lender shall fail to remit to the Agent or any other
Lender an amount payable by such Lender to the Agent or such other Lenders
pursuant to this Agreement on the date when such amount is due, such payments
shall accrue interest thereon, for each day from the date such amount is due
until the day such amount is paid to the Agent or such other Lender, at a rate
per annum equal to the Federal Funds Rate.
Section 2.9 EXTENSION OF INITIAL MATURITY DATE. Subject to the
provisions of this SECTION 2.9, Borrower may, by notice (the "EXTENSION NOTICE")
delivered to Agent no later than 60 days prior to the Initial Maturity Date,
extend the Maturity Date to June 28, 2001. Borrower's right to extend the
Initial Maturity Date shall be subject to the satisfaction of the following
conditions precedent as of the delivery of the Extension Notice (except as to
CLAUSES
<PAGE>
(a) and (f) below) and as of the Initial Maturity Date:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) no Event of Default shall have occurred more than twice
prior to the Initial Maturity Date (regardless of whether such Default
or Event of Default had been cured prior to delivery of the Extension
Notice);
(c) Borrower shall have delivered to Agent together with the
Extension Notice a certificate which shall be deemed remade as of the
Initial Maturity Date executed by an authorized officer of Borrower
having actual knowledge sufficient to make such certification,
representing and warranting to Agent that (i) the Loan Documents are in
full force and effect, (ii) the Loan Documents constitute the valid and
binding obligations of Borrower and the other Borrower Parties
enforceable in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency and similar laws
affecting the rights of creditors generally and general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), (iii) Borrower and the other Borrower Parties do not
have any offsets, counterclaims or defenses with respect to the payment
of the Loan or with respect to the Loan Documents or Borrower's or the
Borrower Parties' obligations and liabilities under the Loan Documents,
and (iv) all of the representations and warranties contained in the
Loan Documents, or otherwise made with respect to the Loan, remain true
and correct in all material respects (except to the extent of changes
resulting from transactions contemplated or not prohibited by this
Agreement or the other Loan Documents and changes occurring in the
ordinary course of business, and except to the extent that such
representations and warranties relate expressly to an earlier date);
(d) intentionally omitted;
(e) there shall not have occurred any change, event or
condition which has a Material Adverse Effect;
(f) the Loan-to-Value Ratio is equal to or less than 65%
(based upon the Second Appraisals); and
(g) Borrower shall have paid Agent on or prior to the Initial
Maturity Date an additional commitment fee in an amount equal to the
product of (i) the then outstanding principal balance of the Loan and
(ii) one-eighth of one percent (0.125%).
As soon as practicable following an extension of the Maturity Date pursuant to
this SECTION 2.9, the Borrower Parties and the Agent shall (if reasonably
requested by Agent) execute and deliver an amended and restated Note and shall
enter into such amendments to the related Loan Documents as may be necessary or
appropriate to effectuate the provisions of this SECTION 2.9;
<PAGE>
PROVIDED, HOWEVER, that no failure by the Borrower Parties or the Agent to enter
into any such amendments shall affect the rights or obligations of the Borrower
Parties or the Agent with respect to the outstanding Loan.
Section 2.10 ADMINISTRATION FEE. In consideration of the
services to be provided by Agent to Borrower hereunder, Borrower shall pay to
Agent a fee (the "ADMINISTRATIVE FEE") equal to $50,000 per annum payable
quarterly in advance on the date hereof and on the first day of the third
subsequent month thereto and the first day of each third subsequent month
thereafter, and if the Loan is extended in accordance with SECTION 2.9, on the
first Business Day subsequent to the Initial Maturity Date and on the first day
of the third subsequent month thereto and the first day of each third subsequent
month thereafter; PROVIDED, HOWEVER, that the portion of the Administrative Fee
paid for any quarter shall be appropriately apportioned and pro-rated if the
Loan is repaid in full prior to the end of such quarter and Agent shall refund
to Borrower the applicable pro-rated amount.
Section 2.11 FACILITY FEE. Borrower shall pay to Agent for the
account of each Lender a facility fee on the aggregate unadvanced amount of the
Loan Amount from the date hereof until the earlier of (a) the date that the
entire Loan Amount has been advanced to Borrower pursuant to SECTION 2.1, (b)
the date of the second Subsequent Advance hereunder, and (c) the Outside Advance
Date (the earlier of such dates being the "FINAL FACILITY FEE DATE") at a rate
per annum equal to one-fifth of one percent (0.20%), payable in arrears monthly
on each Payment Date, commencing August 2, 1999, and ending on the Final
Facility Fee Date.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO THE LOAN. To induce
Lenders to enter into this Agreement, Borrower hereby agrees that the following
conditions precedent shall be satisfied no later than the Closing Date (unless
waived by Agent):
(a) REPRESENTATION AND WARRANTIES; COMPLIANCE WITH CONDITIONS.
Each of the representations and warranties of any Borrower Party
contained in this Agreement or any other Loan Document shall be true
and correct in all material respects on and as of the Closing Date with
the same effect as if made on and as of such date, and no Default or
Event of Default shall have occurred and be continuing, and Borrower
shall be in compliance in all respects with all terms and conditions
set forth in this Agreement and in each other Loan Document on its part
to be observed or performed. The materiality threshold in the preceding
sentence shall not be applicable with respect to any representation or
warranty which itself contains a materiality threshold.
(b) LOAN AGREEMENT AND NOTES. Agent shall have received an
original of this
<PAGE>
Agreement and the Notes, in each case duly executed and delivered on
behalf of each Borrower Party that is a party thereto.
(c) DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES.
(i) MORTGAGE, ASSIGNMENTS OF AGREEMENTS. Agent shall have
received from Borrower fully executed and acknowledged counterparts of
each Mortgage, Assignment of Leases and the appropriate UCC financing
statements, each in form satisfactory for recording or filing in the
appropriate public records, and evidence that counterparts of each
Mortgage, Assignment of Leases and UCC financing statements shall have
been delivered to the title company for recording or filing, so as to
effectively create upon such recording or filing a valid and
enforceable Lien upon each Mortgaged Property, of first lien priority,
in favor of Agent for the benefit of the Lenders (or a deed of trust if
required or desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents. Agent shall have also received fully executed counterparts
of the Environmental Indemnity and each of the other Loan Documents.
(ii) TITLE INSURANCE. Agent shall have received a Qualified
Title Policy (or a binding commitment from the title company to issue
the same) with respect to each of the Mortgaged Properties in the form
and manner required hereunder and evidence that all premiums in respect
thereof have been paid.
(iii) SURVEY. Agent shall have received a Qualified Survey
with respect to each Mortgaged Property.
(iv) INSURANCE. Agent shall have received valid certificates
of insurance for the policies of insurance required hereunder,
satisfactory to Agent in its reasonable discretion, and evidence of the
payment of all premiums then due and payable for the existing policy
period. Such certificates shall indicate that the Agent for the benefit
of the Lenders is named as an additional insured, and shall contain a
loss payee endorsement in favor of the Agent with respect to the
insurance policies to be maintained hereunder.
(v) ENVIRONMENTAL REPORTS. Agent shall have received
environmental reports in respect of each Mortgaged Property that is
satisfactory to Agent.
(vi) ZONING. Agent shall have received, at Agent's option,
letters or other evidence with respect to each Mortgaged Property from
the appropriate authorities (or other Persons) concerning applicable
zoning and building laws, or zoning endorsements in the Qualified Title
Policy, if available.
(vii) ENCUMBRANCES. Borrower shall have taken or caused to be
taken such actions in such a manner so that Agent on behalf of the
Lenders has a valid and perfected first priority Lien as of the Closing
Date with respect to the Mortgage on each Mortgaged
<PAGE>
Property, subject only to the Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents, and evidence
thereof satisfactory to Agent shall have been received by Agent.
(viii) ENGINEERING REPORTS. Agent shall have received
engineering reports (including code compliance and compliance with the
Americans with Disabilities Act, as well as a schedule of expected
capital expenditures recommended over the next three (3) years
subsequent to the Closing Date) in respect of each Mortgaged Property
satisfactory to Agent.
(ix) INTENTIONALLY OMITTED.
(x) OPERATING AGREEMENTS. Agent shall have received true and
complete copies of all Operating Agreements and any ground leases with
respect to any Mortgaged Property.
(xi) LIEN SEARCH REPORTS. Agent shall have received search
reports satisfactory to it with respect to UCC financing statement, tax
lien and judgment searches conducted by a search firm acceptable to the
Agent with respect to the Mortgaged Properties and Borrower Parties in
such jurisdiction as Agent shall have requested.
(d) INTENTIONALLY OMITTED.
(e) DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Agent
copies certified by an officer of Borrower or any analogous officer of
each Borrower Party of all organizational documentation related to each
Borrower Party and/or the formation, structure, existence, good
standing and/or qualification to do business as Agent may reasonably
request, including good standing certificates, qualifications to do
business in the appropriate jurisdictions, resolutions authorizing the
entering into of the Loan and incumbency certificates as may be
requested by Agent.
(f) OPINIONS OF BORROWER'S COUNSEL. Agent shall have received
legal opinions from counsel reasonably satisfactory to Agent with
respect to due execution, delivery, authority and enforceability of
each Mortgage and each of the other Loan Documents, and such other
matters as Agent may reasonably require, all such opinions in form,
scope and substance reasonably satisfactory to Agent and Agent0s
counsel.
(g) BUDGETS. Borrower shall have delivered the Budget for the
Mortgaged Properties for the period ending December 31, 1999.
(h) COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and the other Loan Documents and all
documents incidental thereto shall be reasonably
<PAGE>
satisfactory in form and substance to Agent, and Agent shall have
received all such counterpart originals or certified copies of such
documents as Agent may reasonably request.
(i) NO MATERIAL ADVERSE CHANGE. Agent and each Lender shall be
satisfied that as of the Closing Date, there shall have been no
material adverse change or development involving a prospective material
adverse change, since March 31, 1999, to the physical condition of the
Mortgaged Properties, taken as a whole, or in the financial condition,
business, business prospects or operations of any Borrower Party.
(j) INTENTIONALLY OMITTED.
(k) OPERATING AGREEMENT ESTOPPELS. Agent shall have received
an executed estoppel letter from each party to an Operating Agreement
which is required to deliver an estoppel pursuant to such Operating
Agreement, which shall be in form and substance satisfactory to Agent.
(l) APPRAISALS. Agent shall have received an Appraisal for
each Mortgaged Property satisfactory to Agent and the ratio of (i)
$100,000,000 to (ii) the aggregate value of all such Appraisals (based
on the stabilized values reflected therein) shall not exceed 70% (such
Appraisals being the "INITIAL APPRAISALS").
(m) FINANCIAL STATEMENTS. Borrower shall have provided (i)
operating statements for each Mortgaged Property for the 1997 (if and
to the extent available) and 1998 (if and to the extent available for
that period during 1998 when Borrower did not own the Mortgaged
Property) calendar years, and (ii) audited financial statements of
Beacon for the 1998 calendar year, all of which statements shall be
satisfactory to Agent and accompanied by an Officer0s Certificate
certifying that each such financial statement covering Borrower's
period of ownership presents fairly the financial condition or
operating results, as applicable, of Beacon and the Mortgaged Property
in question (as the case may be) and has been prepared in accordance
with GAAP, as applicable.
(n) OTHER MATERIAL AGREEMENTS. Agent shall have received true
and complete copies of (i) each indenture, loan or credit agreement to
which either Borrower is a party, except for those documents and
agreements relating to loans secured solely by properties of any
Borrower other than the Mortgaged Properties, and (ii) any other
documents or agreement which is reasonably likely to have a Material
Adverse Effect.
(o) PROPERTY MANAGEMENT AGREEMENT; CONSENT OF MANAGER. Agent
shall have received a copy of each Property Management Agreement duly
executed by the Borrower and the applicable Acceptable Property Manager
and a Consent of Manager duly executed by each Acceptable Property
Manager, which shall be in form and substance reasonably satisfactory
to Agent.
<PAGE>
(p) FEES. Borrower shall have paid all commitment and other
fees due to Agent and its affiliates upon the closing of the Loan.
(q) CONSENTS, LICENSES, APPROVALS, ETC. Agent shall have
received copies or other evidence of all material consents, licenses
and approvals, if any, required in connection with the execution,
delivery and performance by Borrower of its obligations under, and the
validity and enforceability of, the Loan Documents, and such consents,
licenses and approvals shall be in full force and effect.
(r) INTENTIONALLY OMITTED.
(s) NO INJUNCTION. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority
shall have been issued, and no litigation shall be pending or
threatened, which in the good faith judgment of Agent would enjoin,
prohibit or restrain, or impose or result in the imposition of any
material adverse condition upon, the making or repayment of the Loan or
the consummation of the transactions contemplated hereby.
(t) PAYMENTS BY BORROWER. Borrower shall have paid all Lender
Expenses.
(u) ESTOPPELS. Agent shall have received an executed estoppel
letter from each tenant under a Lease whose current annual fixed rental
obligation exceeds 10% of the Net Income of all of the Mortgaged
Properties (which Net Income, for purposes of this CLAUSE (u), shall be
the projected Net Income for the period July 1, 1999 through September
30, 1999 multiplied by four (4)), which shall be in form and substance
reasonably satisfactory to Agent.
(v) SNDAS. Agent shall have received an executed
subordination, non-disturbance and attornment agreement from each
tenant under a Lease whose current annual fixed rental obligation
exceeds 10% of the Net Income of all of the Mortgaged Properties (which
Net Income, for purposes of this CLAUSE (v), shall be the projected Net
Income for the period July 1, 1999 through September 30, 1999
multiplied by four (4)), except that Borrower shall have no obligation
to deliver such an agreement from The Charles Stark Draper Laboratory,
Inc.
(w) NEW LEASES. Agent shall have received executed Leases for
(i) at least approximately 104,000 rentable square feet at the
Mortgaged Property commonly known as 565 Technology Square, Cambridge,
MA, with Forrester Research, Inc. as the tenant thereunder for a rent
per rentable square foot of at least $35.00 and otherwise in form and
substance acceptable to Agent, (ii) at least approximately 21,000
rentable square feet at the Mortgaged Property commonly known as 565
Technology Square, Cambridge, MA, with Curl Corporation as the tenant
thereunder for a rent per rentable square foot of at
<PAGE>
least $37.50 and otherwise in form and substance acceptable to Agent
and (iii) at least 136,000 rentable square feet at the Mortgaged
Property commonly known as 545 Technology Square, Cambridge, MA, with
The Massachusetts Institute of Technology as the tenant thereunder for
a rent per rentable square foot of at least $33.00 and otherwise in
form and substance acceptable to Agent.
(x) SITE INSPECTIONS. At Agent's election, Agent shall have
performed or caused to be performed on its behalf, on-site due
diligence reviews of the Mortgaged Properties.
(y) ADDITIONAL INFORMATION. Agent shall have received such
other information and documentation with respect to Borrower and its
Affiliates, the Mortgaged Properties and the transactions contemplated
herein as Agent may reasonably request, such information and
documentation to be satisfactory in form and substance reasonably
acceptable to Agent.
Section 3.2 CONDITIONS OF ADVANCES SUBSEQUENT TO THE CLOSING
DATE. The obligation of Agent to make a Subsequent Advance of any portion of the
Loan Amount not advanced on the Closing Date shall be subject to the following
conditions precedent (unless waived by Agent):
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) no Event of Default shall have occurred more than twice
prior to the date of the Subsequent Advance (regardless of whether such
Event of Default had been cured prior to such date);
(c) the Borrower shall have delivered to the Lender a
certificate which shall be deemed remade as of the date of the
Subsequent Advance, executed by an authorized officer of Borrower
having actual knowledge sufficient to make such certification,
representing and warranting to Agent that (i) the Loan Documents are in
full force and effect, (ii) the Loan Documents constitute the valid and
binding obligations of Borrower and the other Borrower Parties (as
applicable) enforceable in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency and similar laws
affecting the rights of creditors generally and general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), (iii) Borrower and the other Borrower Parties do not
have any offsets, counterclaims or defenses with respect to the payment
of the Loan or with respect to the Loan Documents or Borrower's or
Borrower Parties' obligations and liabilities under the Loan Documents,
and (iv) all of the representations and warranties contained in the
Loan Documents, or otherwise made with respect to the Loan, remain true
and correct in all material respects (except to the extent of changes
resulting from transactions contemplated or not prohibited by this
Agreement or the other Loan Documents and changes occurring in the
ordinary course of business,
<PAGE>
and except to the extent that such representations and warranties
relate expressly to an earlier date);
(d) the Loan Documents shall be in full force and effect;
(e) the representations and warranties made by Borrower and
any other Borrower Party in the Loan Documents or otherwise made by or
on behalf of Borrower or any other Borrower Party in connection
therewith or after the date thereof shall have been true and correct in
all material respects on the date on which made and shall continue to
be true and correct in all material respects on the date of the
Subsequent Advance (except to the extent of changes resulting from
transactions contemplated or not prohibited by this Agreement or the
other Loan Documents and changes occurring in the ordinary course of
business, and except to the extent that such representations and
warranties relate expressly to an earlier date);
(f) there shall not have occurred any change, event or
condition which has a Material Adverse Effect;
(g) the date of the Subsequent Advance is no later than three
(3) months subsequent to the Closing Date;
(h) there has been no more than one (1) Subsequent Advance
prior to the date of the Subsequent Advance; and
(i) if reasonably required to ensure continuing first lien
title insurance coverage of the Mortgage, the Agent shall have
received, at the Borrower's sole expense, an endorsement to, or
continuation of, the Qualified Title Policy, in form and substance
reasonably satisfactory to the Agent, (i) insuring priority of the full
amount of all Advances hereunder over all intervening Liens on the
Mortgaged Properties, including, without limitation, all mechanics' or
materialmen's Liens for work performed or material supplied to the date
of such Subsequent Advance, (ii) revealing no matters affecting title
to the Mortgaged Properties other than Permitted Encumbrances and (iii)
if required by Agent, containing such affirmative insurance and
endorsements as Agent shall reasonably require.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
BORROWER AND GUARANTOR
Section 4.1 REPRESENTATIONS AND WARRANTIES OF BORROWER.
Borrower represents and warrants to Agent and the Lenders that, as of the
Closing Date:
<PAGE>
(a) ORGANIZATION. It has been duly organized and is validly
existing and is in good standing with requisite power and authority to
own its Mortgaged Properties and to transact the businesses in which it
is now engaged. It is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified
in connection with its properties, businesses and operations. To the
best of its knowledge, it possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to
own its Mortgaged Properties and to operate the businesses in which it
is now engaged.
(b) PROCEEDINGS. All necessary action has been taken by it to
authorize the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party. This Agreement and
such other Loan Documents have been duly authorized, executed and
delivered by it and constitute its legal, valid and binding obligations
enforceable against it in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally and general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(c) NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party will
not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation
or imposition of any Lien (other than pursuant to the Loan Documents)
upon any of its Mortgaged Properties or assets pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement, partnership
agreement, trust agreement or other material agreement or instrument to
which it or any of its Subsidiaries is a party or by which it or any of
its Subsidiaries0 properties or assets is subject, nor will such action
result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over it or any of its Subsidiaries0 properties or assets,
and any consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory authority or
other governmental agency or body required for the execution, delivery
and performance by it of this Agreement or any other Loan Documents to
which it is a party has been obtained and is in full force and effect
in all material respects.
(d) LITIGATION. Except for those matters disclosed in any
filings by Beacon prior to the date hereof with the Securities and
Exchange Commission, there are no actions, suits or proceedings at law
or in equity by or before any Governmental Authority or other agency
now pending or, to the best of its knowledge, threatened against or
affecting it or its Subsidiaries, which actions, suits or proceedings,
alone or in the aggregate, if determined against the party in question
might have a Material Adverse Effect.
(e) AGREEMENTS. Neither it nor any of its Subsidiaries is in
default (beyond
<PAGE>
the expiration of any applicable notice, grace or cure period) in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to
which it is a party or by which it is bound which could have a Material
Adverse Effect.
(f) TITLE. Borrower has good, marketable and indefeasible
title in fee to the real property comprising part of each Mortgaged
Property, in each case free and clear of all Liens whatsoever except
the Permitted Encumbrances, such other Liens as are permitted pursuant
to the Loan Documents and the Liens created by the Loan Documents. With
respect to the Mortgaged Properties, each Mortgage, when properly
recorded in the appropriate records, together with the Assignment of
Leases and any Uniform Commercial Code financing statements required to
be filed in connection therewith, will create (i) a valid, perfected
first priority lien on the Mortgaged Properties, subject only to
Permitted Encumbrances and the Liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty owned or leased by Borrower (including
the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances, such other Liens
as are permitted pursuant to the Loan Documents and the Liens created
or permitted by the Loan Documents. To the best of its knowledge, the
Permitted Encumbrances do not and will not materially adversely affect
or interfere with the value, or current use or operation, of any
Mortgaged Property, or the security intended to be provided by the
Mortgage or its ability to repay the Notes or any other Loan Document
in accordance with the terms of the Loan Documents. Except as indicated
in and insured over by a Qualified Title Insurance Policy, to the best
of its knowledge, there are no claims for payment for work, labor or
materials affecting any Mortgaged Property which are or may become a
lien prior to, or of equal priority with, the Liens created by the Loan
Documents (other than mechanics0 or materialmen0s liens for work or
materials performed or supplied the costs for which are not yet past
due or which are being contested in accordance with SECTION
5.1(b)(ii)). Nothing in this paragraph may be relied on by the title
insurance company issuing a policy covering any Mortgaged Property.
Each Assignment of Leases, when properly recorded in the appropriate
records, creates a valid first priority assignment of, or a valid first
priority security interest in, certain rights under the related Leases,
subject only to the terms of such Assignments of Leases, including a
license granted to Borrower to exercise the rights and to perform the
obligations of the lessor under such Leases, including the right to
operate the applicable Mortgaged Property. No Person other than
Borrower owns any interest in any payments due under such Leases that
is superior to or of equal priority with the Agent0s interest therein.
(g) NO BANKRUPTCY FILING. Neither it nor any of its
Subsidiaries is contemplating either the filing of a petition by it
under any state or federal bankruptcy or insolvency laws or the
liquidation of its assets or property, and it has no knowledge of any
Person contemplating the filing of any such petition against it or any
of its Subsidiaries.
<PAGE>
(h) FULL AND ACCURATE DISCLOSURE. No information contained in
this Agreement, the other Loan Documents, or any written statement
furnished by or on behalf of it pursuant to the terms of this Agreement
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they
were made. There is no fact or circumstance presently known to it which
has not been disclosed to Agent and which has, or is likely to have, a
Material Adverse Effect.
(i) COMPLIANCE WITH ERISA. Each member of its ERISA Group is
in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan, except for
such noncompliance as would not reasonably be expected to have a
Material Adverse Effect. No member of its ERISA Group has (i) an
accumulated funding deficiency under Section 412 of the Code in respect
of any Pension Plan, whether or not waived, (ii) failed to make any
contribution or payment to any Pension Plan, or made any amendment to
any Pension Plan which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under Section
302(f) of ERISA or Section 401 (a)(29) of the Code, (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC
for premiums under Section 4007 of ERISA, all of which have been paid
or (iv) engaged in a transaction with respect to a Plan which has
resulted or could reasonably be expected to result in such member being
subject to a material tax or penalty imposed by Section 4975 of the
Code or Section 502 of ERISA, which in any of the cases described in
clauses (i) through (iv), alone or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. Borrower has not
incurred any withdrawal liability under Part I of Subtitle E of Title
IV of ERISA with respect to a Multiemployer Plan, nor has Borrower
received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated where such reorganization or
termination has had or could reasonably be expected to have, through
increases in the contributions required to be made or otherwise, a
Material Adverse Effect.
(j) COMPLIANCE. It and, to the best of its knowledge, each
Mortgaged Property and the use thereof comply in all material respects
with all applicable Legal Requirements, including building and zoning
ordinances and codes. It is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority
(including laws and regulations concerning facility licensing and
operation and certificate of need), the violation of which could have a
Material Adverse Effect. There has not been committed by or on behalf
of it or, to the best of its knowledge, any other person in occupancy
of or involved with the operation or use of any Mortgaged Property any
act or omission affording the federal government or any state or local
government the right of forfeiture as against any Mortgaged Property or
any part thereof or any monies paid in performance of its obligations
under any of the Loan Documents. It hereby covenants
<PAGE>
and agrees not to commit, and to use all reasonable efforts not to
permit or suffer to exist, any act or omission affording such right of
forfeiture.
(k) CONTRACTS. Except for the Property Management Agreements
with Beacon Management, each contract affecting each Mortgaged Property
has been (and, with respect to any such contract entered into prior to
its acquisition of a Mortgaged Property, to the best of its knowledge,
such contract has been) entered into at arm0s length in the ordinary
course of business by or on behalf of it and provides for the payment
of fees in amounts and upon terms not less favorable to it than market
rates and terms.
(1) FINANCIAL INFORMATION. All financial data and statements
prepared by or on behalf of it and delivered to Agent prior to the date
hereof with respect to all periods during which it has owned a
Mortgaged Property, (i) are true, complete and correct in all material
respects, to the extent not subsequently corrected in a written
document delivered to Agent, (ii) accurately represent in all material
respects the financial condition or operating results, as applicable,
of Beacon and the Mortgaged Properties as of the date of such reports,
and (iii) have been prepared in accordance with GAAP. It does not have
any material contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, that are known to it and reasonably
likely to have a Material Adverse Effect, except as referred to or
reflected in said financial statements and operating statements. Except
as set forth in the certified information delivered to Agent pursuant
to SECTION 3.1(m), since March 31, 1999, there has been no change in
the financial condition, operations or business of Beacon or any
Mortgaged Property from that set forth in said financial statements
that would have a Material Adverse Effect.
(m) CONDEMNATION. No Condemnation or other similar proceeding
has been commenced or, to its best knowledge, is contemplated with
respect to all or any portion of any Mortgaged Property or for the
relocation of roadways providing access to any Mortgaged Property.
(n) FEDERAL RESERVE REGULATIONS. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulation U or any other Regulations
of such Board of Governors, or for any purposes prohibited by Legal
Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.
(o) UTILITIES AND PUBLIC ACCESS. Except as disclosed by a
Qualified Survey: Each Mortgaged Property has rights of access to
dedicated public ways (and makes no material use of any means of access
or egress that is not pursuant to such dedicated public ways or
recorded, irrevocable rights-of-way or easements) and is served by
water, sewer,
<PAGE>
sanitary sewer and storm drain facilities adequate to service such
Mortgaged Property for its current uses. To the best of its knowledge,
all public utilities necessary for the full use and enjoyment of each
Mortgaged Property are located in the public right-of-way abutting the
applicable Mortgaged Property or in or through a recorded irrevocable
easement in favor of such Mortgaged Property, and all such utilities
are connected so as to serve the applicable Mortgaged Property without
passing over other property, except to the extent that such utilities
are accessible to the applicable Mortgaged Property by virtue of a
recorded irrevocable easement or similar agreement or right. All roads
necessary for the use of each Mortgaged Property for its current
purposes have been completed and are either part of the applicable
Mortgaged Property (by way of deed or recorded easement) or dedicated
to public use and accepted by all Governmental Authorities.
(p) NOT A FOREIGN PERSON. Neither it nor any of its
Subsidiaries is a "foreign person" within the meaning of Section
1445(f)(3) of the Code.
(q) SEPARATE LOTS. Each Mortgaged Property is a separate,
legally subdivided lot. Each Mortgaged Property is comprised of one (1)
or more parcels which constitute one or more separate tax lots which do
not include any property not a part of the applicable Mortgaged
Property (other than Lots 17, 22 and 23 of the property commonly known
as Technology Square in Cambridge, MA which are taxed together with Lot
16, 565 Technology Square, Cambridge, MA).
(r) BASIC CARRYING COSTS, ASSESSMENTS. It has paid all Basic
Carrying Costs due and payable as of the date hereof. To the best of
its knowledge, there are no pending or proposed special or other
assessments for public improvements or other matters affecting any
Mortgaged Property (except as shown in the financial statements
described in CLAUSE (1) above), nor, to the best of its knowledge,
except in connection with the contemplated redevelopment of Technology
Square in Cambridge, MA, are there any contemplated improvements to any
Mortgaged Property that are likely to result in such special or other
assessments.
(s) ENFORCEABILITY. Each Loan Document to which it is a party
is its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject only to laws affecting the
enforcement of the rights or remedies of creditors generally and/or
equitable principles of general application. The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by
it or Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of
any right thereunder, render the Loan Documents unenforceable, subject
to laws affecting the enforcement of the rights or remedies of
creditors generally and/or equitable principles of general application,
and it has not asserted any right of rescission, set-off, counterclaim
or defense with respect thereto.
(t) NO PRIOR ASSIGNMENT. There are no prior assignments of the
Leases or
<PAGE>
any portion of the Rents due and payable or to become due and payable
which are presently outstanding.
(u) INSURANCE. It has obtained and has delivered to Agent
insurance policies or certificates thereof reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement.
All premiums on such insurance policies required to be paid as of the
date hereof have been paid for the current policy period. No claims
have been made under any such policy by Borrower, and, to the best of
its knowledge, no Person, including Borrower, has done, by act or
omission, anything which would impair the coverage of any such policy.
(v) CERTIFICATE OF OCCUPANCY; LICENSES. To the best of its
knowledge, except as set forth in the Engineering Report, Borrower has
obtained, or has caused each of the Property Managers to obtain
pursuant to the Property Management Agreements, all certifications,
permits, licenses, approvals, registrations, authorizations,
accreditations or consents (collectively, the "LICENSES"), including
certificates of completion and occupancy permits (or other local
equivalent), required by, and accomplished all filings, notifications,
registrations and qualifications with (or obtained exemptions from any
of the foregoing from), any federal, state, or local government or
government department, agency, board, commission, bureau or
instrumentality to properly and legally own, manage and operate the
Mortgaged Properties and necessary for the conduct of its business. To
the best of its knowledge, each License has been duly obtained, is
valid and in full force and effect, and is not subject to any pending
or, to its knowledge, threatened administrative or judicial proceeding
to revoke, cancel or declare such License invalid in any respect. It is
not in default or violation with respect to any of the Licenses in a
manner that would have a Material Adverse Affect, and no event has
occurred which constitutes, or with due notice or lapse of time or both
may constitute, a default by it under, or a violation of, any License
that would have a Material Adverse Affect. To the best of its
knowledge, except as set forth in the Engineering Report, each
Mortgaged Property has a certificate of occupancy or other local
equivalent (where required by applicable Legal Requirements) and the
use being made of each Mortgaged Property is in conformity with such
applicable certificate of occupancy.
(w) FLOOD ZONE. Except as disclosed by a Qualified Survey, to
the best of its knowledge, none of the Improvements on any Mortgaged
Property is located in an area as identified by the Federal Emergency
Management Agency or the Federal Insurance Administration as an area
having special flood hazards (Zone A), and, to the extent that any part
of any Mortgaged Property is located in an area identified by the
Federal Emergency Management Agency as an area federally designated a
"100 year flood plain", such Mortgaged Property is covered by flood
insurance meeting the requirements set forth in SECTION 8.1.1(b)(i).
(x) PHYSICAL CONDITION. To the best of its knowledge, except
as disclosed in
<PAGE>
the Engineering Report, each Mortgaged Property, including all
buildings, improvements, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and
doors, landscaping, irrigation systems and all structural components,
are in good condition, order and repair in all respects material to the
use, operation or value of the applicable Mortgaged Property. To the
best of its knowledge, except as disclosed in the Engineering Report,
there exists no structural or other material defects or damages in any
Mortgaged Property, whether latent or otherwise, which will materially
impair the value of or the annual Net Income from such Mortgaged
Property after taking into account remedial efforts being taken by
Borrower to correct such defect or damages following discovery thereof.
It has not received written notice and is not otherwise aware from any
insurance company or bonding company of any defects or inadequacies in
any Mortgaged Property, or any part thereof, which would, alone or in
the aggregate, materially adversely affect the insurability of the same
or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance
or bond.
(y) LEASES. No person has any possessory interest in any
Mortgaged Property or right to occupy the same except under and
pursuant to the provisions of the Leases, and true and complete copies
of Leases with Forrester Research, Inc., The Charles Stark Draper
Laboratory, Inc. and The Massachusetts Institute of Technology have
been delivered to Agent. Except as disclosed in SCHEDULE 4.1(y)(v), the
Leases are in full force and effect and, to the best of its knowledge,
there are no material defaults thereunder by either party thereto
beyond the expiration of any applicable notice, grace or cure periods
contained therein, and, with respect to each Lease in excess of 50,000
rentable square feet, to the best of its knowledge there are no
conditions that, with the passage of time or the giving of notice, or
both, would constitute a material default thereunder. As to all present
Leases and (upon execution thereof) all future Leases relating to each
Mortgaged Property, the Borrower will be the sole owner of the lessor0s
interest. As to all Leases at the Mortgaged Properties:
(i) except as set forth in the Leases, there are no
outstanding landlord obligations with respect to tenant
allowances or free rent periods or tenant improvement work; to
the best of its knowledge, all of the material obligations and
duties of landlord under the Leases that are due or are to be
performed (as applicable) on or prior to the date hereof have
been fulfilled, and, to the best of its knowledge, there are
no pending claims asserted by any Tenant for offsets or
abatements against rent or any other monetary claim under any
Lease in excess of 50,000 rentable square feet;
(ii) except as may have been incurred in the
ordinary course of business, no brokerage or leasing
commission or other compensation is or will be due or payable
to any person, firm, corporation or other entity with respect
to or
<PAGE>
on account of any of the Leases;
(iii) SCHEDULE 4.1(y)(iii) sets forth all security
deposits and letters of credit held by or on behalf of the
lessor under the Leases. All security deposits have been held
in accordance with law and the terms of the applicable Leases;
(iv) Borrower is the sole owner of the lessor0s
interest in all of the Leases and Borrower has not given or
suffered any other assignment, pledge or encumbrance in
respect of any of the Leases or its interests thereunder, and
Borrower has the sole right to collect rents and other amounts
due under the Leases;
(v) except as disclosed on SCHEDULE 4.1(y)(v), no
Tenant is more than thirty (30) days in arrears on its rent or
other amounts due to the landlord under its Lease;
(vi) none of the Leases contains any option to
purchase or any right of first refusal to purchase (except for
the Lease with The Charles Stark Draper Laboratory, Inc., the
Tenant of the Mortgaged Property located at 555 Technology
Square, Cambridge, MA); and
(vii) SCHEDULE 4.1(y)(vii) sets forth a true,
correct and complete schedule of all Leases of any portion of
the Mortgaged Properties as of June 23, 1999, and the name of
the tenant, the Lease expiration date and base or fixed rent
payable thereunder.
(z) MATERIAL AGREEMENTS. To the best of its knowledge,
Borrower is not in default of any of its obligations under any Material
Agreement beyond the expiration of any notice, grace or cure period
contained therein, and Borrower has not delivered any notice of default
with respect to any Material Agreement to the other party thereunder
which has not been cured.
(aa) FILING AND RECORDING TAXES. To the best of its knowledge,
all transfer taxes, deed stamps, intangible taxes or other amounts in
the nature of transfer taxes required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with
the transfer of any Mortgaged Property to it have been paid in full or
deposited with the issuer of a Qualified Title Policy for payment upon
recordation of the deeds effecting such transfer. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in
effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents,
including the Mortgage, and the Liens intended to be created thereby,
have been paid or deposited with a title company for payment upon
recordation of the Mortgage.
<PAGE>
(bb) TAXES. It and each of its Subsidiaries has filed, or
caused to be filed, all material tax returns (federal, state, local and
foreign) required to be filed and paid all amounts of taxes shown
thereon to be due (including interest and penalties) and has paid all
other taxes (including intangible fees, assessments and other
governmental charges taxes) owing (or necessary to preserve any Liens
in favor of the Agent) by it, except for such taxes (i) which are not
yet delinquent or (ii) as are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP, but only so long as there is no
risk of loss, sale or forfeiture of any collateral pledged to the
Agent. It is not aware of any proposed material tax assessment against
it or any of its Subsidiaries. No extension of time for assessment or
payment by it or any of its Subsidiaries of any federal, state or local
tax is in effect.
(cc) INVESTMENT COMPANY ACT. Neither it nor any of its
Subsidiaries is (i) an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended; or (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either
a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(dd) FRAUDULENT TRANSFER. It (i) has not entered into the Loan
or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (ii) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Giving effect
to the transactions contemplated by the Loan Documents, the fair
saleable value of its assets exceeds and will, immediately following
the execution and delivery of the Loan Documents, exceed its total
liabilities, including subordinated, unliquidated, disputed or
contingent liabilities. The fair saleable value of its assets is and
will, immediately following the execution and delivery of the Loan
Documents, be greater than its probable liabilities, including the
maximum amount of its contingent liabilities or its debts as such debts
become absolute and matured. Its assets do not and, immediately
following the execution and delivery of the Loan Documents, will not
constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. It does not intend to, and
does not believe that it will, incur debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay
such debts as they mature (taking into account the timing and amounts
to be payable on or in respect of its obligations).
(ee) MANAGEMENT AGREEMENTS. Each Property Management Agreement
relating to the Mortgaged Properties is in full force and effect and is
valid and enforceable in all material respects, subject in each case to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors0 rights and to general equity principles; to the best of its
knowledge, there are no defaults, breaches or violations thereunder by
it or any other
<PAGE>
party thereto, and, to the best of its knowledge, there are no
conditions (other than payments that are due but not yet delinquent and
other non-delinquent executory obligations) that, with the passage of
time or the giving of notice, or both, would constitute a default by
any party thereunder, where (with respect to any such Agreement) the
effect of one or more of any such defaults would have a Material
Adverse Effect. Neither the execution and delivery of the Loan
Documents, its performance thereunder nor the recordation of each
Mortgage will adversely affect its rights under any of the Property
Management Agreements relating to the Mortgaged Properties.
(ff) OWNERSHIP. The direct and indirect ownership interests in
each Borrower Party are as set forth in SCHEDULE 4.1(ff).
(gg) OTHER MATERIAL AGREEMENTS. Neither Borrower is a party to
any indenture or loan or credit agreement, guaranty or indemnity,
except in connection with non-recourse loans secured solely by
properties of any Borrower other than the Mortgaged Properties. No
Borrower Party is a party to any document or agreement which is
reasonably likely to have a Material Adverse Effect.
(hh) LEGAL COMPLIANCE. To its best knowledge, neither any
Mortgaged Property, nor any portion thereof, is on the date hereof in
violation of any Legal Requirement or any Insurance Requirement
(including, without limitation, all Legal Requirements relating to all
security deposits with respect to any Mortgaged Property), in a manner
that is likely to have a Material Adverse Effect.
(ii) NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by it to Agent and in all financial statements
prepared by it and in all rent rolls, reports, certificates and other
documents submitted by it in connection with the Loan or in
satisfaction of the terms thereof and all statements of fact made by it
in this Agreement or in any other Loan Document, are accurate, complete
and correct in all material respects. There has been no material
adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise
misleading in any material respect or that otherwise materially and
adversely affects the business operations or the financial condition of
the Borrower or any Mortgaged Property. It has disclosed to Agent all
material facts to which it has knowledge and has not failed to disclose
any material fact of which it has knowledge that would cause any
representation or warranty made herein to be materially misleading.
(jj) ILLEGAL ACTIVITY. It has not purchased any portion of any
Mortgaged Property with proceeds of any illegal activity.
(kk) INTENTIONALLY OMITTED.
(ll) BREACH BY AFFILIATE. To the best of its knowledge, the
breach by an
<PAGE>
Affiliate of any agreement to which it and its Affiliates are parties
shall not affect the enforceability of the terms hereof or of any Loan
Document against it.
(mm) CONSENTS. No consent, approval, authorization or order
of, or qualification with, any court or Governmental Authority is
required in connection with the execution, delivery or performance by
it of this Agreement or the other Loan Documents that has not been
obtained.
(nn) ENVIRONMENTAL MATTERS. Except for matters set forth in
the Environmental Reports:
(i) To the best of its knowledge, each Mortgaged
Property is in compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the
possession by the Borrower or the applicable Property Manager
of all environmental, health and safety permits, approvals,
licenses, registrations and other governmental authorizations
required in connection with the ownership and operation of
each Mortgaged Property under all Environmental Laws, except
where the failure to comply with such laws is not reasonably
likely to result in a Material Adverse Effect).
(ii) There is no Environmental Claim pending or, to
the actual knowledge of any Borrower Party, threatened, except
as is not reasonably likely to result in a Material Adverse
Effect.
(iii) To the best of its knowledge, there are no
present or past Releases of any Hazardous Substance that are
reasonably likely to form the basis of any Environmental
Claim, except as is not reasonably likely to result in a
Material Adverse Effect.
(iv) Without limiting the generality of the
foregoing, to the best of its knowledge, there is not present
at, on, in or under any Mortgaged Property, PCB-containing
equipment, asbestos or asbestos containing materials,
underground storage tanks or surface impoundments for
Hazardous Substances, lead in drinking water, or lead-based
paint (except in each case in concentrations that comply with
all Environmental Laws), except as is not reasonably likely to
result in a Material Adverse Effect.
(v) No Liens are presently recorded with the
appropriate land records under or pursuant to any
Environmental Law with respect to any Mortgaged Property and,
to Borrower's actual knowledge, no Governmental Authority has
been taking or is in the process of taking any action to
subject any Mortgaged Property to Liens under any
Environmental Law.
<PAGE>
(vi) There have been no material environmental
investigations, studies, audits, reviews or other analyses
conducted by Borrower or that are in its possession in
relation to any Mortgaged Property which have not been made
available to Agent.
(oo) MORTGAGED PROPERTY OPERATIONS. To the best of its
knowledge, each employee of Borrower and of each of its Affiliates (or
other person otherwise under contract with any of them) employed at or
directly in connection with the Mortgaged Properties has obtained and
maintained in force all licenses, permits or similar authorizations
required to authorize such employee (or other person) to perform his or
her duties on behalf of Borrower and/or its Affiliates with such
exceptions that individually or in the aggregate would not have a
Material Adverse Effect.
Section 4.2 REPRESENTATIONS OF GUARANTOR AND BEACON. Each of
Guarantor and Beacon hereby represents and warrants to Agent and the Lenders as
follows:
(a) ORGANIZATION. It has been duly organized and is validly
existing and in good standing with requisite power and authority to own
(indirectly) the Mortgaged Properties and to transact the businesses in
which it is now engaged. It is duly qualified to do business and is in
good standing in each jurisdiction where it is required to be so
qualified in connection with its properties, businesses and operations.
It possesses all material rights, licenses, permits and authorizations,
governmental and otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged.
(b) PROCEEDINGS. All necessary action has been taken by it to
authorize the execution, delivery and performance of this Agreement and
each of the Loan Documents to which it is a party. This Agreement and
each of the other Loan Documents to which it is a party have been duly
authorized, executed and delivered by it and constitutes its legal,
valid and binding obligations enforceable against it in accordance with
their respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors
generally and general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(c) NO CONFLICTS. Its execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party will
not conflict with or result in a breach of any of the terms of
provisions of, or constitute a default under, or result in the creation
or imposition of any Lien upon any of its properties or assets pursuant
to the terms of, any indenture, mortgage or deed of trust to which it
is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over it or any of
its properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any court or any such
regulatory authority or other governmental
<PAGE>
agency or body required for the execution, delivery and performance by
it of this Agreement and the other Loan Documents to which it is a
party has been obtained and is in full force and effect in all material
respects.
(d) NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
statements of fact made by it in this Agreement or in any other Loan
Document are accurate, complete and correct in all material respects.
There has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects its business operations or
financial condition. It has disclosed to Agent all material facts to
which it has knowledge and has not failed to disclose any material fact
of which it has knowledge that would cause any representation or
warranty made herein to be materially misleading.
(e) LITIGATION. Except for those matters disclosed in any
filings by Beacon prior to the date hereof with the Securities and
Exchange Commission, there are no actions, suits or proceedings at law
or in equity by or before any Governmental Authority or other agency
now pending or, to the best of its knowledge, threatened against it
which actions, suits or proceedings, alone or in the aggregate, if
determined against it, might materially adversely affect its condition
(financial or otherwise) or business.
(f) ERISA. Each of the entities comprising Beacon and
Guarantor is either a "venture capital operating company" or a "real
estate operating company" as such terms are defined in the regulations
promulgated under ERISA, or does not hold Plan Assets.
(g) BEACON AND GUARANTOR. Beacon and Guarantor, in the
aggregate, do not have Indebtedness, other than non-recourse
Indebtedness, in excess of $50,000,000.
Section 4.3 SURVIVAL OF REPRESENTATIONS. The parties hereto
agree that all of the representations and warranties set forth in SECTIONS 4.1
and 4.2 and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any portion of the Debt is outstanding (it being
acknowledged by Agent and Lenders that such representations and warranties have
been made as of the Closing Date). All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents by Borrower
or any Borrower Party, as applicable, shall be deemed to have been relied upon
by Agent and Lenders notwithstanding any investigation heretofore or hereafter
made by Agent, Lenders or on behalf of Agent or Lenders.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS WITH RESPECT TO BORROWER.
Borrower (and
<PAGE>
each other Borrower Party, but only if and to the extent expressly provided in
this Article V) hereby covenants and agrees with Agent and Lenders as set forth
below in this ARTICLE V.
(a) EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
Borrower shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects
with all Legal Requirements applicable to it and each of the Mortgaged
Properties. Borrower shall at all times maintain and preserve each
Mortgaged Property and shall keep each Mortgaged Property in good
working order and repair, reasonable wear and tear and Casualty and
Condemnation excepted, and from time to time make, or cause to be made,
all reasonably necessary and desirable repairs, renewals, replacements,
betterments and improvements thereto. Borrower will operate, maintain,
repair and improve each such Mortgaged Property in compliance with all
Legal Requirements, and will not cause or allow the same to be misused
or wasted or to deteriorate.
(b) TAXES AND OTHER CHARGES; CONTEST FOR TAXES AND OTHER
CHARGES, LEGAL REQUIREMENTS AND LIENS. (i) Subject to the provisions of
SECTION 5.1(b)(ii) hereof, Borrower shall pay or cause to be paid all
Taxes and Other Charges now or hereafter levied or assessed or imposed
against any Mortgaged Property or any part thereof prior to the date on
which such sums become delinquent. Borrower will deliver to Agent on
behalf of the Lenders, upon request, receipts for payment or other
evidence reasonably satisfactory to Agent on behalf of the Lenders that
the Taxes and Other Charges have been so paid. Subject to the
provisions of SECTION 5.1(b)(ii) hereof and other than Permitted
Encumbrances, Borrower shall not suffer and shall promptly cause to be
paid and discharged any lien or charge whatsoever that may be or become
a lien or charge against any Mortgaged Property, and shall promptly pay
for or cause to be paid all utility services provided to each Mortgaged
Property. Subject to SECTION 5.1(b)(ii) hereof, Borrower shall pay,
bond, insure over or otherwise discharge, from time to time when the
same shall become due, all claims and demands of mechanics,
materialmen, laborers and others that, if unpaid, might result in, or
permit the creation of, a lien or encumbrance on any Mortgaged
Property, or on the Rents arising therefrom.
(ii) Notwithstanding the foregoing, after prior written notice
to Agent, Borrower, at its own expense, may contest by appropriate
legal, administrative or other proceedings, promptly initiated and
conducted in good faith and with due diligence, the amount or validity
or application in whole or in part of any Taxes or Other Charges or
Lien therefor or any Legal Requirement or Insurance Requirement or the
application of any instrument of record affecting a Mortgaged Property
or any part thereof (other than the Loan Documents) or any claims or
judgments of mechanics, materialmen, suppliers, vendors or other
Persons or any Lien therefor, and may withhold payment of the same
pending such proceedings if permitted by law; PROVIDED that (A) no
Event of Default has occurred and remains uncured, (B) such proceeding
shall suspend any collection of the contested Taxes, Other Charges or
Liens from the applicable Mortgaged Property,
<PAGE>
Borrower or Agent on behalf of the Lenders, (C) such proceeding shall
be permitted under and be conducted in accordance with the provisions
of any other instrument to which Borrower is subject and shall not
constitute a default beyond cure periods thereunder, (D) neither the
applicable Mortgaged Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, canceled or
lost prior to the end of such contest, (E) in the case of an Insurance
Requirement, failure by Borrower to comply therewith shall not impair
the validity of any insurance required to be maintained by Borrower
hereunder or the right to full payment of any claims thereunder, (F) in
the case of any essential or significant service with respect to any
Mortgaged Property, any contest or failure to pay will not result in a
discontinuance of any such service, (G) in the case of any instrument
of record affecting a Mortgaged Property or any part thereof, the
contest or failure to perform under any such instrument shall not
result in the placing of any Lien on such Mortgaged Property or any
part thereof (except if such Lien would be removed upon completion of
such proceedings and the compliance by the parties with the terms of
the resulting order, decision or determination and the removal costs
for such Lien have been reserved by Borrower or escrowed with Agent on
behalf of the Lenders or in the proceeding or bonded or otherwise
deposited or paid in connection with such proceedings), (H) neither the
failure to pay or perform any obligation which Borrower is permitted to
contest under this Section nor an adverse determination of any such
contest shall result in a Material Adverse Effect, and (I) Borrower
shall promptly upon final determination thereof pay the amount of any
such Taxes, Other Charges or Liens, together with all costs, interest
and penalties that may be payable in connection therewith.
(c) LITIGATION. Each Borrower Party shall give prompt written
notice to Agent on behalf of the Lenders of any litigation or
governmental proceedings pending or threatened in writing against it or
against or affecting a Mortgaged Property that, if determined adversely
to it or any Mortgaged Property, might be expected to result in a
Material Adverse Effect.
(d) INSPECTION; APPRAISALS. (i) Subject to reasonable and
customary rights of Tenants, Borrower shall permit agents,
representatives and employees of the Agent to inspect any Mortgaged
Property. In the event Agent becomes aware of an environmental event or
condition which is reasonable to investigate, Agent shall have the
right to cause to be performed environmental inspections of the
applicable Mortgaged Property at Borrower's expense; PROVIDED that
prior to causing any Phase II environmental assessment to be performed,
(A) Agent shall consult with both Borrower and a reputable
environmental consultant selected by Agent in its sole discretion (but
Agent shall be under no duty to refrain from conducting any such Phase
II environmental assessment as a result of such consultations), and (B)
Agent shall give notice to Borrower that it elects to conduct a Phase
II environmental assessment and, prior to Agent conducting such
assessment, Borrower shall have 45 days after delivery of such notice
in which to obtain a release of the applicable Mortgaged Property in
accordance with Section 2.5.
(ii) At any time after the six (6) month anniversary of the
date hereof, but
<PAGE>
prior to the Initial Maturity Date, Borrower shall have the one-time
right to furnish an Appraisal (the "INTERIM APPRAISAL") of 565
Technology Square, Cambridge, Massachusetts, and upon delivery to Agent
of the Interim Appraisal, (I) the Allocated Loan Amounts shall be
readjusted as provided in the definition thereof and (II) if
applicable, the Applicable Interest Rate shall be adjusted as provided
in SECTION 2.2.2. If Borrower has elected to extend the Loan in
accordance with SECTION 2.9, at any time within 60 days prior to the
Initial Maturity Date ,Borrower shall permit Agent to conduct
Appraisals (the "SECOND APPRAISALS") of the Mortgaged Properties at
Borrower's expense.
(e) NOTICE OF DEFAULT. Each Borrower Party shall promptly
advise Agent on behalf of the Lenders of any change in the condition
(financial or otherwise) of any Borrower Party that could be expected
to have a Material Adverse Effect or materially impair its ability to
comply with its obligations hereunder, or of the occurrence of any
Default or Event of Default of which any Borrower Party has knowledge.
(f) COOPERATE IN LEGAL PROCEEDINGS. Each Borrower Party shall
cooperate fully with Agent on behalf of the Lenders with respect to any
proceedings before any court, board or other Governmental Authority
that may in any way affect the rights of any Lender or Agent hereunder
or any rights obtained by any Lender or Agent under any of the other
Loan Documents and, in connection therewith, after an Event of Default
permit any Lender or Agent, at its election, to participate in any such
proceedings.
(g) PERFORM LOAN DOCUMENTS. Borrower shall observe, perform
and satisfy all of the terms, provisions, covenants and conditions
required to be observed, performed or satisfied by it under the Loan
Documents.
(h) INSURANCE BENEFITS. Borrower shall cooperate with Agent in
obtaining for Agent on behalf of the Lenders the benefits of any
insurance proceeds lawfully or equitably payable in connection with any
Mortgaged Property and to which Agent is entitled under the terms of
this Agreement, and Agent shall be reimbursed for any reasonable
out-of-pocket expenses reasonably incurred in connection therewith
(including reasonable attorneys0 fees and disbursements, and, if
reasonably necessary to collect such proceeds, the expense of an
appraisal on behalf of Agent in case of a fire or other casualty
affecting a Mortgaged Property or any part thereof) out of such
insurance proceeds.
(i) FURTHER ASSURANCES. Each Borrower Party shall, at its sole
cost and expense:
(i) furnish to Agent on behalf of Lenders 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 by such Borrower Party
pursuant to the terms of the Loan
<PAGE>
Documents or, without additional material expense to any
Borrower Party, reasonably requested by Agent in connection
therewith;
(ii) execute and deliver to Agent on behalf of
Lenders such documents, instruments, certificates, assignments
and other writings, and do such other acts necessary or
desirable, to evidence, preserve and/or protect the Lien of
the Agent for the benefit of the Lenders at any time securing
or intended to secure the obligations of any Borrower Party
under the Loan Documents, as Agent may reasonably require; and
(iii) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better and
more effective carrying out of the intents and purposes of
this Agreement and the other Loan Documents, as Agent shall
reasonably require from time to time.
(j) FINANCIAL REPORTING AND OTHER INFORMATION. (i) Each
Borrower Party will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP, to the
extent applicable, proper and accurate books, records and accounts
reflecting all of its financial affairs and, in the case of each
Borrower, all items of Operating Income, Operating Expenses and Capital
Expenditures. Agent or any Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice
to examine such books, records and accounts at the office of any
Borrower Party or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof, as Agent shall
desire. After the occurrence and during the continuance of an Event of
Default, Borrower shall pay any costs and expenses incurred by Agent or
any Lender to examine its accounting records with respect to the
Mortgaged Properties, as Agent shall determine to be necessary or
appropriate.
(ii) Each Borrower Party (as applicable) shall furnish or
cause to be furnished to Agent on behalf of Lenders within ninety-five
(95) days following the end of each Fiscal Year, (A) a complete copy of
Beacon's annual consolidated financial statements, audited by a "Big
Five" accounting firm or another independent certified public
accounting firm reasonably acceptable to Agent, in accordance with
GAAP, for such Fiscal Year and containing a consolidated balance sheet
and a consolidated income statement, (B) for so long as the Interest
Guaranty is in effect, an unaudited balance sheet and income statement
of Guarantor, and (C) unaudited operating statements for each Mortgaged
Property, all in such detail as Agent may reasonably request. Such
annual financial statements shall be accompanied by an Officer's
Certificate certifying that each such annual financial statement
presents fairly, in all material respects, the financial condition and
results of operation of Beacon, Guarantor and the Mortgaged Properties
being reported upon and has been prepared in accordance with GAAP and
whether, to the signatory's knowledge, there exists a Default or Event
of Default, and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action
<PAGE>
then being taken to remedy the same.
(iii) Each Borrower Party will furnish, or cause to be
furnished, to Agent on behalf of Lenders on or before the fiftieth
(50th) day after the end of each of the first three (3) fiscal quarters
of each Fiscal Year, the following items, accompanied by an Officer0s
Certificate certifying that such items are true, correct, accurate and
complete and fairly present, in all material respects, the financial
condition and results of the operations of Beacon, Guarantor and the
Mortgaged Properties in a manner consistent with GAAP (subject to
normal year-end adjustments and the absence of footnotes), to the
extent applicable:
(A) quarterly and year-to-date unaudited
consolidated financial statements prepared for such fiscal
quarter with respect to Beacon, including a consolidated
balance sheet and consolidated income statement for such
quarter, a balance sheet and operating statement for each
Borrower, and an operating statement for each Mortgaged
Property; and
(B) a current rent roll for each Mortgaged Property,
together with summaries of all new Leases (if already
prepared), statements of cash flows, budgets, and any other
information reasonably requested by Agent.
(iv) It shall furnish to Agent on behalf of Lenders, within
ten (10) Business Days after request, such further detailed information
with respect to the operation of any Mortgaged Property and the
financial affairs of the Borrower Parties as may be reasonably
requested by Agent.
(v) Borrower will, at any and all times, within a reasonable
time after written request by Agent on behalf of Lenders, furnish or
cause to be furnished to Agent, in such manner and in such detail as
may be reasonably requested by Agent on behalf of Lenders, such
information as may be necessary to permit Agent or any Lender to comply
with any reasonable request for information made by an investor or
prospective institutional holder of a Note in connection with an
Assignment or Participation to be furnished under Rule 144A(d) under
the Securities Act (including any of the same relating to a Borrower
Party).
(vi) Intentionally Omitted.
(vii) Agent on behalf of Lenders shall have the right at any
time and from time to time to audit the financial information provided
pursuant to the terms of this Agreement in accordance with the then
customary audit policies and procedures of Agent. Agent shall pay for
the costs of its auditors, PROVIDED, HOWEVER, if such audit shall have
been commenced during the continuance of an Event of Default, Borrower
shall pay the cost and expenses of such audit.
<PAGE>
(k) BUSINESS AND OPERATIONS; MATERIAL AGREEMENTS. Borrower
will continue to engage in the businesses currently conducted by it as
and to the extent the same are necessary for the ownership,
maintenance, management and operation of each Mortgaged Property.
Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are
required for the ownership, maintenance, management and operation of
each Mortgaged Property. Borrower shall at all times (i) maintain each
Mortgaged Property or cause each Mortgaged Property to be maintained at
a standard at least equal to that maintained by prudent owners of
similar properties in the region where the applicable Mortgaged
Property is located; (ii) maintain or cause to be maintained sufficient
inventory and Equipment of types and quantities at each Mortgaged
Property to enable the operation of each Mortgaged Property; (iii)
maintain such licenses and permits, or arrangements in connection
therewith, so as to permit each of the Mortgaged Properties to be
maintained at a standard at least equal to that maintained by prudent
owners of similar properties located near any Mortgaged Property; (iv)
promptly perform and/or observe in all material respects the covenants
and agreements required to be performed and observed by it under each
Property Management Agreement and any other Material Agreement, and do
all things necessary to preserve and to keep unimpaired its rights
thereunder; (v) promptly notify Agent on behalf of Lenders in writing
of the giving of any written notice of any default by any party under
any Property Management Agreement; and (vi) promptly enforce (without
any obligation to cause a termination unless Borrower so elects) the
performance and observance of the material covenants and agreements
required to be performed and/or observed by the other party under each
Property Management Agreement.
(l) TITLE TO THE PROPERTIES. Borrower will warrant and defend
against the claims of all Persons whomsoever (i) its title to each
Mortgaged Property and every part thereof and (ii) the validity and
priority of the Liens of the Mortgage, subject only in each case to
Liens permitted under the Loan Documents (including Permitted
Encumbrances). Nothing in this paragraph may be relied upon by the
title insurance company issuing a policy covering any Mortgaged
Property.
(m) COSTS OF ENFORCEMENT; LENDER EXPENSES. In the event (i)
that any Mortgage is foreclosed in whole or in part or the Notes, any
Loan Document, including any Mortgage, is put into the hands of an
attorney for collection, suit, action or foreclosure after an Event of
Default, (ii) of the foreclosure of any Lien or mortgage prior to or
subsequent to any Mortgage in which proceeding any Lender or Agent is
made a party, (iii) of the bankruptcy, insolvency, rehabilitation or
other similar proceeding in respect of either Borrower or an assignment
by either Borrower for the benefit of its creditors, or (iv) Agent or
any Lender shall attempt to remedy any Event of Default hereunder,
Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all reasonable costs incurred by Agent or such Lender or
Lenders as a result thereof, including costs of collection and defense
(including reasonable attorneys', experts', consultants' and witnesses'
fees and disbursements) in connection therewith and in
<PAGE>
connection with any appellate proceeding or post-judgment action
involved therein, which shall be due and payable together with all
required service or use taxes. Borrower shall be responsible for, and
shall pay to Agent, within thirty (30) days after demand therefor, all
Lender Expenses.
(n) ESTOPPEL STATEMENT. After written request by Agent on
behalf of Lenders, Borrower shall within fifteen (15) Business Days
furnish Agent with a statement, duly acknowledged and certified,
setting forth (A) the unpaid principal amount of the Notes, (B) the
Applicable Interest Rate(s), (C) the date installments of interest
and/or principal were last paid, (D) any offsets or defenses to the
payment of the Debt, (E) that the Notes, this Agreement, each Mortgage
and the other Loan Documents are valid, legal and binding obligations
and have not been modified or, if modified, giving particulars of such
modification, and (F) such other matters as Agent may reasonably
request. Any prospective purchaser of any interest in the Loan shall be
permitted to rely on such certificate.
(o) LOAN PROCEEDS. Borrower shall use the proceeds of the Loan
received by it only for the purposes set forth in SECTION 2.1.1(b)
hereof.
(p) PERFORMANCE BY THE BORROWER. Each Borrower Party shall in
a timely manner observe, perform and fulfill each and every covenant,
term and provision of each Loan Document executed and delivered by it
(but in the case of Guarantor or Beacon, only to the extent expressly
applicable thereto), and shall not enter into or otherwise suffer or
permit any amendment, waiver, supplement, termination or other
modification of any Loan Document executed and delivered by it without
the prior written consent of the Required Lenders.
(q) ANNUAL BUDGET. Borrower shall prepare and deliver to Agent
on behalf of Lenders, on or before the thirtieth (30th) day prior to
the commencement of each Fiscal Year, a budget in respect of the
Mortgaged Properties for such Fiscal Year; PROVIDED, HOWEVER, that,
prior to Closing Date, Borrower shall prepare and deliver to Agent a
budget for the period commencing on January 1, 1999 and ending on
December 31, 1999. Borrower shall submit revisions to the budget as
Borrower determines to be necessary or desirable from time to time.
Provided that each budget (and revision thereto) is prepared in good
faith, Agent shall have no right to approve the budget (or any
revisions thereto).
(r) NO JOINT ASSESSMENT. Except as contemplated by Sections
4.1(q) and 5.1(cc), neither Borrower shall suffer, permit or initiate
the joint assessment of any Mortgaged Property (i) with any other real
property constituting a tax lot separate from such Mortgaged Property,
and (ii) unless required by applicable law, with any portion of such
Mortgaged Property that may be deemed to constitute personal property,
or any other procedure whereby the lien of any taxes that may be levied
against such personal property shall be assessed or levied or charged
to the applicable Mortgaged Property.
<PAGE>
(s) LEASING MATTERS. (i) Neither Borrower shall hereafter
enter into any Major Lease (or amendment or modification of any Major
Lease, except in implementation of a right or option contained in such
Major Lease) without Agent's consent, not to be unreasonably withheld.
(ii) Except for Leases for management offices of not greater
than reasonable and customary size, all new Leases entered into from
and after the date hereof shall be the result of arm's-length
negotiations, shall provide for "market" rental rates and other market
terms and shall not contain any terms that would adversely affect any
Lender's or Agent's rights under the Loan Documents.
(iii) Borrower (A) shall observe and perform in all material
respects the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (B) shall enforce (without an
obligation to cause a termination unless Borrower so elects) the
material terms, covenants and conditions contained in the Leases on the
part of the lessee thereunder to be observed or performed in a
commercially reasonable manner; (C) shall not collect any of the base
or minimum rents more than one (1) month in advance (other than the
last month's rent and security deposits) and (D) shall not execute any
assignment of lessor's interest in the Leases or the Rents (except for
the Assignment of Leases).
(iv) Agent shall be required to deliver to any Tenant under
any Lease approved by Agent after the date hereof a subordination,
non-disturbance and attornment agreement in respect of such Lease in
Agent's customary form with such changes as may be requested by the
applicable Tenant and approved by Agent (not to be unreasonably
withheld or delayed).
(v) Agent shall either approve or disapprove any Major Lease
(or any amendment or modification thereto) within ten (10) days after
its delivery to Agent together with reasonably detailed financial
information relating to the Tenant under such Major Lease (if not
previously delivered to Agent) and PROVIDED that such Major Lease (or
amendment or modification thereto) is delivered to Agent accompanied by
a notice stating in bold faced type: "THIS IS A FIRST REQUEST FOR LEASE
APPROVAL. IF AGENT FAILS TO RESPOND WITHIN 10 DAYS, BORROWER MAY
DELIVER A SECOND 5 DAY DEEMED APPROVAL NOTICE". If Agent fails to
either approve or reject said Major Lease (or amendment or
modificationt hereto) within said 10 day period, Borrower may
re-deliver the Major Lease (or amendment or modification thereto) to
Agent accompanied by a notice stating in bold-faced type: "THIS IS A
SECOND REQUEST FOR LEASE APPROVAL. IF AGENT FAILS TO APPROVE OR REJECT
THE ENCLOSED LEASE (OR AMENDMENT OR MODIFICATION THERETO), THE LEASE
(OR THE AMENDMENT OR MODIFICATION) WILL BE DEEMED APPROVED". If Agent
fails to approve or reject the Major Lease (or amendment or
<PAGE>
modification thereto) within said 5 day period (notice by facsimile
on the same day being acceptable), the Major Lease (or amendment or
modification thereto) will be deemed approved by Agent.
(t) SECURITY DEPOSITS. Borrower shall hold all Security
Deposits in accordance with all Legal Requirements and all Leases.
(u) ERISA. Each Borrower Party will comply in all material
respects with the provisions of ERISA and the Code applicable to it
with respect to each Plan and furnish to the Agent (i) within 10 days
after such Borrower Party knows or has reason to know that any
"reportable event" (as defined in Section 4043(b) of ERISA) has
occurred with respect to a Pension Plan, a statement setting forth
details as to such reportable event and the action proposed to be taken
with respect thereto, (ii) promptly, but in no event later than ten
(10) days, after any Borrower Party becomes aware of the receipt
thereof, a copy of any notice that such Borrower Party or any member of
its ERISA Group may receive from the PBGC relating to the intention of
the PBGC to terminate any Pension Plan or to appoint a trustee to
administer any Plan, (iii) promptly, but in no event later than ten
(10) days, after any Borrower Party becomes aware of the filing with
any affected party (as such term is defined in Section 4001 of ERISA)
of a notice of intent to terminate a Pension Plan, a copy of such
notice and a statement setting forth the details of such termination,
including the amount of liability, if any, such Borrower Party or any
member of its ERISA Group under Title IV of ERISA, (iv) within 10 days
after any Borrower Party becomes aware of the adoption of an amendment
to a Pension Plan if, after giving effect to such amendment, the
Pension Plan is a plan described in Section 4021(b) of ERISA, a
statement setting forth the details thereof, (v) within 30 days after
any Borrower Party becomes aware of the withdrawal from a Pension Plan
during a plan year for which such Borrower Party or any member of its
ERISA Group could be subject to liability under Section 4063 or 4064 of
ERISA, a statement setting forth the details thereof, including the
amount of such liability, (vi) within 30 days after any Borrower Party
becomes aware of the cessation of operations by such Borrower Party or
any member of its ERISA Group at a facility under the circumstances
described in Section 4062(e) of ERISA, a statement setting forth the
details thereof, including the amount of liability of such Borrower
Party or a member of its ERISA Group under Title IV of ERISA, (vii)
within ten (10) days after any Borrower Party becomes aware of the
adoption of an amendment to a Pension Plan that would require security
to be given to the Pension Plan pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA, a statement setting forth the details
thereof, including the amount of such security, (viii) within ten (10)
days after any Borrower Party becomes aware of the failure by such
Borrower Party or any member of its ERISA Group to make payment to a
Pension Plan which would give rise to a lien in favor of the Plan under
Section 302(f) of ERISA, a statement setting forth the details thereof,
including the amount of such lien, (ix) within 10 days after any
Borrower Party becomes aware of the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a
required
<PAGE>
installment or other payment with respect to a Pension Plan, a
statement setting forth details as to such failure and the action
proposed to be taken with respect thereto, and (x) promptly, but in any
event within 30 days, after any Borrower Party becomes aware of the
receipt thereof by such Borrower Party or any member of its ERISA Group
from the sponsor of a Multiemployer Plan, a copy of each notice
concerning the imposition of withdrawal liability or the termination or
reorganization of a Multiemployer Plan.
(v) ASSIGNMENT OR PARTICIPATION OF NOTES. In the event that
Agent on behalf of the Lenders notifies Borrower that a sale of any of
the Notes or any interest in any thereof (an "Assignment") (including,
without limitation, a sale or transfer of any Note held by Lenders to a
trust, partnership, business trust or other issuance vehicle
accompanied by the simultaneous issuance by such vehicle of a security
backed by or representing an interest in such Notes, either alone or
together with other assets transferred by a Lender or other parties),
or a sale of a participation interest in any of the Notes (a
"PARTICIPATION"), to one or more other parties in accordance with
SECTION 11.24 is desirable, then each of Borrower and the other
Borrower Parties agrees reasonably to cooperate with such Lender in
order to effectuate such Assignment or Participation; PROVIDED,
HOWEVER, that, except as provided in SECTION 11.24(e), no Borrower
Party shall be required to incur any out-of-pocket cost or pay any
amount under the Loan Documents in connection with the origination of
an Assignment or Participation.
(w) SPLITTING OF NOTES. Agent has the right, without any
Borrower Party's consent, on one or more occasions, upon consent of all
Lenders, to split the Loan into two (2) or more separate loans (and to
further split any such split loan), each in a principal amount as
determined by the Lenders and providing for such subordination as
between such split loans as the Lenders shall elect. The interest rate
and economic and other terms for each such split loan shall be as
determined by Agent; PROVIDED that the rights and obligations of the
Borrower Parties under all such split loans, taken as a whole, shall
not be less or greater (respectively) than the rights and obligations
of the Borrower Parties under the Loan Documents without giving effect
to such splitting (other than any increased administrative obligations
of the Borrower Parties resulting from compliance with several as
opposed to a single loan). The Lenders shall have the right (consistent
with the foregoing) to sever the Mortgage, the Guaranty and any other
Loan Document to separately secure such split loans; provided that each
severed Mortgage shall encumber all Mortgaged Properties. In connection
with any such splitting of the Loan, conforming changes shall be made
to the Loan Documents as required to reflect such splitting. Each
Borrower Party agrees to cooperate in any such splitting of the Loan,
including, without limitation, amending, modifying or restating this
Agreement or any of the other Loan Documents, or entering into such new
documentation (such as a note purchase agreement required by a
mezzanine lender) as reasonably required by Lender to effectuate the
splitting of the Loan. All of the Borrower Parties= costs and all of
the Agent's reasonable costs (including, without limitation, reasonable
attorneys' fees and disbursements) incurred in connection with any such
splitting shall be paid by Borrower; EXCEPT that the
<PAGE>
Agent's costs in connection with any such splitting after the first
splitting shall be paid by Agent.
(x) YEAR 2000. It will take reasonable steps to ensure that by
September 30, 1999 its financial management systems (including
financial reporting) reflect the available state-of-the-art in respect
of year 2000 technology, including, but not limited to, century
recognition of dates, calculations that correctly compute same century
and multi-century formulae and date values, and interface values that
reflect the date issues arising between the date hereof and the next
one hundred years.
(y) OWNERSHIP AND MANAGEMENT CONTROL OVER BORROWER. Guarantor
and Beacon (except in the case of a so-called Areverse merger@) shall
at all times (1) maintain the level of Management Control in respect of
the Borrower that they have as of the date hereof, and (2) own,
directly or indirectly, one hundred percent (100%) of the ownership
interests in Borrower (including ownership of both the power to vote
all such interests and all economic benefits relating thereto) and such
ownership interests shall not be pledged or encumbered. Alan Leventhal
and/or Lionel Fortin shall at all times maintain the level of
Management Control over each Borrower Party that he (or they) have as
of the date hereof or, in the event of the death or disability of both
of Alan Leventhal and Lionel Fortin, such level of Management Control
shall be held by another Person reasonably approved by Agent.
(z) LIQUIDITY. For so long as the Interest Guaranty has not
terminated in accordance with SECTION 12.1, Guarantor shall at all
times have in its possession or on deposit in accounts which may be
readily and unconditionally drawn upon by Guarantor and which accounts
are not pledged or encumbered Cash and Cash Equivalents of not less
than ten million dollars ($10,000,000).
(aa) MINIMUM DEBT YIELD. For each calendar quarter commencing
with the calendar quarter ending June 30, 1999, the ratio of annual Net
Income from the Mortgaged Properties to outstanding principal under the
Notes on the last day of such quarter ("MINIMUM DEBT YIELD") shall not
be less than (i) for the period ending December 31, 1999, 0.105:1.00,
(ii) for the period from January 1, 2000 through June 30, 2000,
0.13:1.00; and (iii) if the Initial Maturity Date is extended pursuant
to Section 2.9, for the period from July 1, 2000 through June 30, 2001,
0.14:1.00. Minimum Debt Yield shall be verified as of the end of each
calendar quarter. For purposes of this clause (aa), annual Net Income
shall be determined by multiplying Net Income for the applicable
calendar quarter by four (4). For purposes of calculating the
foregoing, (I) for the calendar quarter ending June 30, 1999, Net
Income shall be deemed equal to projected Net Income for the calendar
quarter ending September 30, 1999 (adjusted by assuming that the
Tenants under the Curl Corporation and Forrester Research, Inc. Leases
would be paying rent for the entire quarter and by assuming zero
Operating Expenses for all tenant spaces in the 565 Technology Square
building other than the tenant spaces demised to Curl
<PAGE>
Corporation and Forrester Research, Inc.) (such projection being
subject to Agent's reasonable approval) and (II) for the calendar
quarter ending September 30, 1999, Net Income shall be calculated
assuming that Curl Corporation and Forrester Research, Inc. had been
paying rent for the entire quarter and by assuming zero Operating
Expenses for all tenant spaces in the 565 Technology Square building
other than the tenant spaces demised to Curl Corporation and Forrester
Research, Inc.
(bb) MINIMUM INTEREST COVERAGE. For each calendar quarter
commencing with the calendar quarter ending June 30, 1999, the ratio of
annual Net Income from the Mortgaged Properties to annual Interest
Expense ("MINIMUM INTEREST COVERAGE") shall not be less than (i) for
the period ending December 31, 1999, 1.15:1.00, (ii) for the period
from January 1, 2000 through June 30, 2000, 1.40:1.00; and (iii) if the
Initial Maturity Date is extended pursuant to Section 2.9, for the
period from July 1, 2000 through June 30, 2001, 1.75:1.00. Minimum
Interest Coverage shall be verified as of the end of each calendar
quarter. For purposes of this clause (bb), (A) notwithstanding the
definition of Operating Expenses, Operating Expenses shall include
leasing costs (other than leasing costs for initial leases of space at
565 Technology Square) incurred for the calendar quarter in question
(on a GAAP basis) and (B) annual Net Income and Interest Expense shall
be determined by multiplying Net Income and Interest Expense
(respectively) for the applicable calendar quarter by four (4). For
purposes of calculating the foregoing, (I) for the calendar quarter
ending June 30, 1999, Net Income shall be deemed equal to projected Net
Income for the calendar quarter ending September 30, 1999 (adjusted by
assuming that the Tenants under the Curl Corporation and Forrester
Research, Inc. Leases would be paying rent for the entire quarter and
by assuming zero Operating Expenses for all tenant spaces in the 565
Technology Square building other than the tenant spaces demised to Curl
Corporation and Forrester Research, Inc.) (such projection being
subject to Agent's reasonable approval) and (II) for the calendar
quarter ending September 30, 1999, Net Income shall be calculated
assuming that Curl Corporation and Forrester Research, Inc. had been
paying rent for the entire quarter and by assuming zero Operating
Expenses for all tenant spaces in the 565 Technology Square building
other than the tenant spaces demised to Curl Corporation and Forrester
Research, Inc.
(cc) TAX LOT. Borrower has advised Agent that the Mortgaged
Property known as Lot 16 of Technology Square, Cambridge, MA (the
"SUBJECT PROPERTY") is not a separate tax lot and is part of a tax lot
which includes other property, namely Lots 17, 22 and 23 (the "OTHER
PROPERTY"), currently owned by Borrower. Borrower hereby agrees that in
the event of a foreclosure (or deed-in-lieu thereof) of the Subject
Property, Borrower shall cooperate with Agent (or any purchaser at
foreclosure or by deed-in-lieu thereof) in causing the Subject Property
to become a separate tax lot and shall pay or cause to be paid all
Taxes assessed to such tax lot which are not allocable to the Subject
Property. All of Agent=s reasonable costs and expenses incurred in
connection with the foregoing (other than Taxes allocable to the
Subject Property from and after the date of foreclosure or deed in lieu
thereof) shall be paid by Borrower.
<PAGE>
(dd) BANK ONE. Borrower shall use its diligent efforts to have
the Mortgaged Property commonly known as Bank One, 9401 LBJ Freeway,
Dallas, TX, entered into the Innocent Owner/Operator Program by the
Texas Natural Resource Conservation Commission ("TNRC") and to obtain
from TNRC an Innocent Owner/Operator Program certificate.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1 NEGATIVE COVENANTS. Borrower (and each other
Borrower Party but only if and to the extent expressly provided in this Article
VI) hereby covenants as follows:
(a) OPERATION OF PROPERTY. Neither Borrower shall (except as
elsewhere herein expressly provided) surrender or terminate any
Property Management Agreement (unless the applicable Property Manager
is in default thereunder or unless such Property Manager is being
replaced with an Acceptable Property Manager pursuant to a commercially
reasonable property management agreement reasonably acceptable to
Agent).
(b) LIENS. Subject to SECTION 5.1(b)(ii), neither Borrower
shall create, incur, assume, permit or suffer to exist any Lien on any
portion of any of the Mortgaged Properties, except: (i) Permitted
Encumbrances, (ii) Liens created by or permitted pursuant to the Loan
Documents, (iii) Liens for Taxes or Other Charges not yet delinquent,
and (iv) Liens on a Mortgaged Property to obtain the release of such
Mortgaged Property from the Lien of the applicable Mortgage in
accordance with SECTION 2.5.
(c) DISSOLUTION, ETC. None of the Borrower Parties shall
dissolve, terminate, wind up its affairs, liquidate, merge with or
consolidate into another Person without Agent's consent in its sole
discretion; PROVIDED that Beacon or Guarantor may merge with or
consolidate into another Person if (i) Beacon (except in the case of a
so-called Areverse merger@) and (ii) Alan Leventhal and/or Lionel
Fortin continue to have Management Control over the surviving entity to
the level that they have over Beacon and Guarantor as of the date
hereof or, in the event of the death or disability of both of Alan
Leventhal and Lionel Fortin, such level of Management Control shall be
held by another Person reasonably approved by Agent..
(d) CHANGE IN BUSINESS. No Borrower Party shall make any
material change in the nature of its business objectives or purposes,
or undertake or participate in activities other than the continuance of
its present business.
<PAGE>
(e) DEBT CANCELLATION. Neither Borrower shall cancel or
otherwise forgive or release any claim or debt owed to it in connection
with any Mortgaged Property, including any arising under any of the
Leases and Material Agreements, except for what Borrower in good faith
determines to be adequate consideration in the ordinary course of such
Person's business and on commercially reasonable terms, subject to
other restrictions contained herein or in any other Loan Document;
PROVIDED that Agent's consent (not to be unreasonably withheld or
delayed) shall be required for any cancellation, forgiveness or release
of any claim or debt in excess of $250,000 other than the release of a
Tenant from obligations under its Lease where all or substantially all
of the premises demised under such Lease have been or are being re-let
to another Tenant(s) on market terms.
(f) AFFILIATE TRANSACTIONS. Except for Property Management
Agreements with Beacon Management or another Affiliate of Borrower
which otherwise comply with the terms of this Agreement, neither
Borrower shall enter into, or be a party to, any transaction with any
other Borrower Party or any Affiliate of any Borrower Party relating to
or which affects any Mortgaged Property, other than (i) on terms and
conditions substantially as favorable to Borrower as would be
obtainable by any of them in a comparable arm's-length transaction with
a Person other than an Affiliate and (ii) after reasonable prior notice
to Agent. This SUBSECTION (f) shall not prohibit any transfer expressly
permitted by the terms of SECTION 6.1(c).
(g) ZONING, AND USES. Neither Borrower shall (i) initiate or
support any limiting change in the permitted uses of any Mortgaged
Property (or, to the extent applicable, limiting zoning
reclassification of any Mortgaged Property) or any portion thereof, or
seek any limiting variance under existing land use restrictions, laws,
rules or regulations (or, to the extent applicable, zoning ordinances)
applicable to any Mortgaged Property, or use or permit the use of any
Mortgaged Property in a manner that would violate the terms of any
Lease, Legal Requirements or any Permitted Encumbrance, (ii) without
Agent's consent, modify, amend or supplement any of the terms of any
Permitted Encumbrance in a manner adverse to the interests of Agent or
any Lender, (iii) impose or permit or suffer the imposition of any
restrictive covenants, easements or encumbrances upon any Mortgaged
Property, except for utility, access and similar easements entered into
in the ordinary course of business which do not adversely affect in any
material respect the value or utility of such Mortgaged Property, (iv)
except with respect to a Release Parcel under SECTION 2.5.5, execute or
file any subdivision plat affecting a Mortgaged Property, or, except as
contemplated under Section 5.1(cc), institute, or permit the
institution of, proceedings to alter any tax lot comprising any
Mortgaged Property or (v) permit or suffer a Mortgaged Property to be
used by the public or any Person in such manner as might make possible
a claim of adverse usage or possession or of any implied dedication or
easement.
(h) DEBT. (i) Other than indebtedness (1) where, in connection
with the
<PAGE>
release of a Mortgaged Property, the net proceeds thereof are applied
to the repayment of the Loan in accordance with SECTION 2.5 or (2) that
is Permitted Indebtedness, neither Borrower will incur or assume any
Indebtedness for borrowed money not existing as of the date hereof
which is secured by a Lien on any Mortgaged Property. Neither Borrower
shall have at any time outstanding Indebtedness (including outstanding
amounts under the Note which shall be allocated to each Borrower in
proportion to the relative values of the Mortgaged Properties owned by
the respective Borrowers determined pursuant to the Initial Appraisals
or, if obtained, the Interim Appraisal or the Second Appraisals) which
exceeds seventy percent (70%) of the Gross Asset Value of Borrower's
assets (including the Mortgaged Properties). Neither Borrower shall
have, incur, assume or suffer to exist at any time any Indebtedness
(other than Permitted Indebtedness) which is recourse to such Borrower
(other than customary indemnification, recourse carve-out and similar
contingent obligations) and which does not currently exist on the
Closing Date. The outstanding principal under the Note shall at no time
exceed seventy percent (70%) of the aggregate value of the Mortgaged
Properties then subject to the Mortgage determined pursuant to the
Initial Appraisals or, if obtained, the Interim Appraisal or the Second
Appraisals.
(ii) For so long as the Interest Guaranty has not terminated
in accordance with SECTION 12.1, Guarantor shall not at any time have
total Indebtedness for borrowed money (determined on a consolidated
basis but, for Persons in which Guarantor holds a direct or indirect
ownership interest (including Subsidiaries) but less than 100% of such
ownership interests, total Indebtedness shall only include Guarantor's
pro-rata share of the Indebtedness of such Person), which exceeds
seventy percent (70%) of the Gross Asset Value of Guarantor's assets.
Compliance by Guarantor with the foregoing covenant shall be verified
on a quarterly basis as of the end of each quarter by the financial
statements delivered pursuant to SECTION 5.1(j) For so long as the
Interest Guaranty is in effect, Guarantor will not have outstanding at
any time recourse Indebtedness (other than indemnification, recourse
carve-out and similar contingent obligations) in excess of fifty
million dollars ($50,000,000). Guarantor hereby agrees that any
Indebtedness of Guarantor owed to any wholly-owned Affiliate of
Guarantor is hereby and shall remain subordinated to Guarantor's
obligations under this Agreement.
(i) TRANSFERS. Except in compliance with SECTION 2.5, SECTION
6.1(c), or another express provision of this Agreement, there shall be
no direct of indirect transfer, sale, pledge, assignment or other
disposition of any Mortgaged Property or any portion thereof. Without
limiting any other provision of this Agreement, Borrower shall have no
right to substitute for any Mortgaged Property any other property as
collateral for the Loan without Agent's consent in its sole and
absolute discretion.
(j) SALE OF EQUIPMENT. Notwithstanding SECTION 6.1(i),
Borrower may transfer or dispose of Equipment that is either being
replaced or that is no longer necessary in connection with the
operation of any Mortgaged Property free from the interest of Lenders
or Agent under this Agreement or any other Loan Document, PROVIDED
<PAGE>
that such transfer or disposal (when compared to the non-transfer or
non-disposal of such Equipment) will not materially adversely affect
the value of any Mortgaged Property, will not materially impair the
utility thereof and will not result in a reduction or abatement of, or
right of offset against, the rentals or other amounts payable under any
Lease or any Operating Agreement, in either case as a result thereof,
PROVIDED that any new Equipment acquired by Borrower (and not so
disposed of) shall be subject to the interest of Agent for the benefit
of the Lenders under this Agreement and the other Loan Documents unless
leased to Borrower (in which event, Agent for the benefit of the
Lenders shall IPSO FACTO be deemed to be a collateral assignee of
Borrower's interest in such lease (but, unless expressly subsequently
assumed by Agent, Agent shall have no obligations under Borrower's
interest therein)).
(k) ASSIGNMENT OF LICENSES AND PERMITS. Except in connection
with a transfer permitted under SECTION 2.5, neither Borrower shall
assign or transfer any of its interest in any Permits pertaining to any
Mortgaged Property, or assign, transfer or remove or permit any other
Person to assign, transfer or remove any records pertaining to any
Mortgaged Property.
(l) PLACE OF BUSINESS. No Borrower Party shall change its
chief executive office or its principal place of business without
giving Agent at least thirty (30) days' prior written notice thereof
and promptly providing Agent such information as Agent may reasonably
request in connection therewith.
(m) ADVANCES, INVESTMENTS AND LOANS. Neither Borrower will
lend money or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make
any capital contribution to any Person.
(n) MANDATORY DISTRIBUTIONS. Borrower shall be required to
cause all excess cash received in connection with the operations, sale
and refinancing of its properties (including the Mortgaged Properties)
to be distributed or dividended (directly or indirectly) to Guarantor
not less than once each month.
(o) LIMITATION ON NEGATIVE PLEDGE CLAUSES. Neither Borrower
will enter into with any Person any agreement other than this Agreement
and the other Loan Documents, which prohibits or limits the ability of
Borrower to create, incur, assume or suffer to exist any Lien upon any
Mortgaged Property.
(p) LIMITATION ON SECURITIES ISSUANCES. Neither Borrower will
issue any additional equity interests, or warrants, rights or options,
except to their respective employees, officers and directors under
commercially reasonable compensation agreements.
(q) LIMITATION ON SUBSIDIARY FORMATION. Neither Borrower will
form any Subsidiaries.
<PAGE>
(r) GOVERNING DOCUMENTS. Except, with respect to Beacon or
Guarantor, as required to effect a transaction permitted under SECTION
6.1(c), no Borrower Party will without Agent's consent in its sole
discretion cause or permit any amendment, modification, supplement,
waiver or termination of any provisions of its respective
organizational instruments, or other governing document; PROVIDED that
such consent shall not be required for any modifications to Beacon's or
Guarantor's organizational documents if such modifications would not
impair or limit Beacon's or Guarantor's ability to satisfy its
obligations hereunder and under the other Loan Documents.
(s) ACQUISITIONS. Neither Borrower shall acquire, directly or
indirectly, by operation of law or otherwise, any additional real
property without Agent's consent, which may be granted or withheld in
its sole discretion.
ARTICLE VII
ALTERATIONS AND EXPANSIONS
Section 7.1 ALTERATIONS AND EXPANSIONS. No Borrower shall
perform or undertake any Alteration or Expansion at any Mortgaged Property
(other than in connection with a Restoration), except in accordance with the
following terms and conditions:
(a) The Alteration or Expansion shall be undertaken in
accordance with the applicable provisions of this Agreement, the other
Loan Documents, the Operating Agreements and the Leases, and all Legal
Requirements.
(b) No Event of Default shall have occurred and be continuing
or shall occur as a result of such action, although tenant improvement
work may be performed notwithstanding such Event of Default.
(c) The Alteration or Expansion may not in and of itself, upon
completion thereof, materially adversely affect the fair market value
of any Mortgaged Property.
(d) All work done in connection with any Alteration or
Expansion shall be performed with due diligence in a good and
workmanlike manner, all materials used in connection with any
Alteration or Expansion shall be not less than the standard of quality
of the materials generally used at the applicable Mortgaged Property as
of the date hereof (or, if greater, the then-current customary quality
in the submarket in which such Mortgaged Property is located) and all
work shall be performed and all materials used in accordance with all
applicable Legal Requirements and Insurance Requirements.
ARTICLE VIII
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CASUALTY AND CONDEMNATION
Section 8.1 INSURANCE, CASUALTY AND CONDEMNATION.
8.1.1 INSURANCE. (a) Borrower, at its sole cost and expense,
for the mutual benefit of itself and Agent on behalf of the Lenders, shall keep
or cause to be kept each Mortgaged Property insured and obtain and maintain or
cause to be obtained and maintained policies of insurance insuring against loss
or damage by standard perils included within the classification "All Risks of
Physical Loss." Such insurance (i) shall be in an aggregate amount equal to the
then full replacement cost of each Mortgaged Property and the Equipment (without
deduction for physical depreciation) or such lesser amounts approved by Agent in
its sole discretion and (ii) shall have deductibles no greater than $50,000 (as
escalated by the CPI Increase) (with such higher deductibles for wind and
earthquake coverage as the applicable issuer may require). The policies of
insurance carried in accordance with this paragraph shall contain a "Replacement
Cost Endorsement" with a waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual
benefit of itself and Agent on behalf of the Lenders, shall also obtain and
maintain or cause to be obtained and maintained the following policies of
insurance:
(i) Flood insurance if any part of any Mortgaged Property is
located in an area identified by the Federal Emergency Management
Agency as an area federally designated a "100 year flood plain" and if
(A) flood insurance is generally available at reasonable premiums and
in such amount as generally required by institutional lenders for
similar properties or (B) if not so available from a private carrier,
from the federal government at commercially reasonable premiums to the
extent available. In either case, the flood insurance shall be in an
amount at least equal to the Loan Amount or the maximum limit of
coverage available with respect to the applicable Mortgaged Property
under said program, whichever is less;
(ii) Commercial general liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing minimum
limits per occurrence of $1,000,000 with a $2,000,000 general aggregate
for any policy year. In addition, at least $25,000,000 excess and/or
umbrella liability insurance shall be obtained and maintained for any
and all claims, including all legal liability imposed upon Borrower and
all related court costs and attorneys' fees and disbursements;
(iii) Rental loss and/or business interruption insurance in an
amount sufficient to avoid any co-insurance penalty and equal to the
greater of (A) the estimated gross revenues from the operation of the
applicable Mortgaged Property (including (x) the total rent payable
under the Leases and (y) the total amount of all other amounts to be
received
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by the Borrower or third parties that are the legal obligation of the
Tenants), net of nonrecurring expenses, for a period of up to the next
succeeding eighteen (18) months, or (B) the projected Operating
Expenses (including debt service) for the maintenance and operation of
the applicable Mortgaged Property for a period of up to the next
succeeding eighteen (18) months, as the same may be reduced or
increased from time to time due to changes in such Operating Expenses.
The amount of such insurance shall be increased from time to time as
and when the Rents increase or the estimate of (or the actual) gross
revenue, as may be applicable, increases;
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems at each Mortgaged Property and (B) explosion of steam
boilers, air conditioning equipment, high pressure piping, machinery
and equipment, pressure vessels or similar apparatus now or hereafter
installed in any of the Improvements (without exclusion for explosions)
and insurance against loss of occupancy or use arising from any
breakdown, in such amounts as are generally available at reasonable
premiums and are generally required by institutional lenders for
properties comparable to the Mortgaged Properties;
(v) Worker's compensation insurance with respect to all
employees of Borrower as and to the extent required by any Governmental
Authority or Legal Requirement and employer's liability coverage of at
least $1,000,000 which is scheduled to the excess and/or umbrella
liability insurance as referenced in clause (ii) above;
(vi) During any period of repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full
insurable value of the applicable Mortgaged Property against such risks
(including fire and extended coverage and collapse of the Improvements
to agreed limits) as Agent may reasonably request, in form and
substance reasonably acceptable to Agent;
(vii) Coverage to compensate for the cost of demolition and
the increased cost of construction for the applicable Mortgaged
Property in an amount reasonably satisfactory to Agent;
(viii) If reasonably required by Agent if a Mortgaged Property
is in an area of high seismic activity or threat thereof, earthquake
insurance in an amount equal to the probable maximum loss (as
determined by Agent in its reasonable discretion) of the applicable
Mortgaged Property; and
(ix) Such other insurance as may from time to time be
reasonably required by Agent in order to protect its interests,
including, without limitation, law and ordinance coverage with respect
to the Mortgaged Properties, if consistent with what other lenders are
customarily requiring of their borrowers in the area in which the
Mortgaged Properties are located.
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(c) All policies of insurance (the "Policies") required
pursuant to this SECTION 8.1.1 shall be issued by companies approved by Agent on
behalf of the Lenders (which approval shall not be unreasonably withheld or
delayed) and licensed to do business in the state where the applicable Mortgaged
Property is located. Further, unless otherwise approved by the Agent on behalf
of the Lenders in writing, the issuer(s) of the Policies required under this
SECTION 8.1.1 shall have a claims paying ability rating of "AA" or better by the
Rating Agencies or an A.M. Best rating of A/X or better, except that the
issuer(s) of the Policies required under SECTION 8.1.1(b)(viii) hereof shall
have a claims paying ability rating of "A" or better by the Rating Agencies or
an A.M. Best rating of A/X or better. The Policies (other than those required by
SECTION 8.1.1(b)(v)) (i) shall name Agent for the benefit of the Lenders and its
successors and/or assigns as their interest may appear as an additional insured
or as a loss payee (except that in the case of general liability insurance,
Agent on behalf of the Lenders shall be named an additional insured and not a
loss payee); (ii) shall contain a Non-Contributory Standard Lender Clause and,
except with respect to general liability insurance, a Lender's Loss Payable
Endorsement, or their equivalents, naming Agent as the person to which all
payments made by such insurance company shall be paid; (iii) shall include
effective waivers by the insurer of all claims for insurance premiums against
all loss payees, additional insureds and named insureds (other than Borrower)
and all rights of subrogation against any loss payee, additional insured or
named insured; (iv) shall be assigned to Agent for the benefit of the Lenders;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the coverage
maintained, than the deductible for such coverage on the date hereof, (vi) shall
contain such provisions as Agent deems reasonably necessary or desirable to
protect its interest, including endorsements providing that neither any Borrower
Party, Agent, Lenders nor any other party shall be a co-insurer under said
Policies and that no reduction, cancellation or termination in amount of, or
material change (other than an increase) in, coverage of any of the Policies
shall be effective until at least thirty (30) days after receipt by each named
insured, additional insured and loss payee of written notice thereof or ten (10)
days after receipt of such notice with respect to nonpayment of premium; (vii)
shall permit Agent to pay the premiums and continue any insurance upon failure
of Borrower to pay premiums when due, upon the insolvency of Borrower or through
foreclosure or other transfer of title to the applicable Mortgaged Property (it
being understood that Borrower's rights to coverage under such policies may not
be assignable without the consent of the insurer); and (viii) shall provide that
any proceeds shall be payable to Agent for the benefit of the Lenders and that
the insurance shall not be impaired or invalidated by virtue of (A) any act,
failure to act, negligence of, or violation of declarations, warranties or
conditions contained in such policy by Borrower, Agent, Lenders or any other
named insured, additional insured or loss payee, except for the willful
misconduct of Borrower, Agent or a Lender knowingly in violation of the
conditions of such policy, (B) the occupation, use, operation or maintenance of
the applicable Mortgaged Property for purposes more hazardous than permitted by
the terms of the Policy, (C) any foreclosure or other proceeding or notice of
sale relating to the applicable Mortgaged Property or (D) any change in the
possession of the applicable Mortgaged Property without a change in the identity
of the holder of actual title to such Mortgaged Property (PROVIDED that with
respect to items (C) and (D), any notice requirements of the applicable Policies
are satisfied).
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(d) INSURANCE PREMIUMS, CERTIFICATES OF INSURANCE.
(i) Borrower shall pay or cause to be paid the premiums for
such Policies (the "INSURANCE PREMIUMS") as the same become due and payable and
shall furnish to Agent on behalf of the Lenders upon request the receipts for
the payment of the Insurance Premiums or other evidence of such payment
reasonably satisfactory to Agent (PROVIDED, HOWEVER, that such evidence shall
not be required if such Insurance Premiums are to be paid by Agent on behalf of
the Lenders pursuant to the terms of this Agreement). Within thirty (30) days
after request by Agent, Borrower shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Agent, taking into
consideration changes in liability laws, changes in prudent customs and
practices, and the like. In the event a Borrower satisfies the requirements
under this SECTION 8.1.1 through the use of a Policy covering properties in
addition to a Mortgaged Property or Properties, then (unless such policy is
provided in substantially the same manner as it is as of the date hereof),
Borrower shall provide evidence satisfactory to Agent that the Insurance
Premiums for the applicable Mortgaged Property or Properties are separately
allocated under such Policy to the applicable Mortgaged Property or Properties
and that payment of such allocated amount (A) shall maintain the effectiveness
of such Policy as to such Mortgaged Property or Properties and (B) shall
otherwise provide the same protection as would a separate policy that complies
with the terms of this Agreement as to such Mortgaged Property or Properties,
notwithstanding the failure of payment of any other portion of the insurance
premiums.
(ii) Borrower shall deliver to Agent on behalf of the Lenders
on or prior to the Closing Date certificates setting forth in reasonable detail
the material terms (including any applicable notice requirements) of all
Policies from the respective insurance companies (or their authorized agents)
that issued the Policies, including that such Policies may not be reduced,
cancelled, or terminated in amount of, or materially changed (other than
increased) in coverage without thirty (30) days' prior notice to Agent, or ten
(10) days' notice with respect to nonpayment of premium. Borrower shall deliver
to Agent, concurrently with each change in any Policy, a certificate with
respect to such changed Policy certified by the insurance company (or its agent)
issuing that Policy, in substantially the same form and containing substantially
the same information as the certificates required to be delivered by Borrower
pursuant to the first sentence of this CLAUSE (d)(ii) and stating that all
premiums then due thereon have been paid to the applicable insurers and that the
same are in full force and effect (or if such certificate and report shall not
be obtainable by Borrower, Borrower may deliver an Officer's Certificate to such
effect in lieu thereof).
(e) RENEWAL AND REPLACEMENT OF POLICIES.
(i) Not less than fifteen (15) Business Days prior to the
expiration, termination or cancellation of any Policy, Borrower shall renew such
policy or obtain a replacement policy or
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policies (or a binding commitment for such replacement policy or policies),
which shall be effective no later than the date of the expiration, termination
or cancellation of the previous policy, and shall deliver to Agent a certificate
in respect of such policy or policies (A) containing the same information as the
certificates required to be delivered pursuant to CLAUSE (d)(ii) above, or a
copy of the binding commitment for such policy or policies and (B) confirming
that such policy complies with all requirements hereof.
(ii) If the certificates as required under CLAUSE (e)(i) above
are not furnished to Agent, Agent shall give Borrower notice of same, and if
Borrower shall not furnish same within the earlier of (a) five (5) Business Days
or (b) the expiration, termination or cancellation of any Policy, Agent may
procure, but shall not be obligated to procure, such replacement policy or
policies and pay the Insurance Premiums therefor, and Borrower agrees to
reimburse Agent for the cost of such Insurance Premiums promptly on demand.
(f) SEPARATE INSURANCE. No Borrower Party will take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this SECTION 8.1.1 unless such
insurance complies with CLAUSE (c) above.
8.1.2 CASUALTY; APPLICATION OF PROCEEDS. (a) RIGHT TO ADJUST.
(i) If any Mortgaged Property is damaged or destroyed, in
whole or in part, by a Casualty, Borrower shall give prompt written notice
thereof to Agent, generally describing the nature and extent of such Casualty.
Following the occurrence of a Casualty, Borrower, as long as Agent shall make
the Proceeds available in accordance with this Agreement, but otherwise
regardless of whether such Proceeds are sufficient, shall in a reasonably prompt
manner proceed to restore, repair, replace or rebuild the affected Mortgaged
Property to the extent practicable to be of at least equal value and of
substantially the same character as prior to the Casualty, all in accordance
with the terms hereof applicable to Alterations.
(ii) Subject to clause (v) below, in the event of a Casualty
where the loss does not exceed $750,000, Borrower may settle and adjust such
claim; PROVIDED that such adjustment is carried out in a competent and timely
manner. In such case, Borrower is hereby authorized to collect and receipt for
Agent on behalf of the Lenders any Proceeds.
(iii) Subject to clause (v) below, in the event of a Casualty
where the loss exceeds $750,000, Borrower may settle and adjust such claim only
with the consent of Agent (which consent shall not be unreasonably withheld or
delayed) and Agent shall have the opportunity to participate, at Borrower's
cost, in any such adjustments.
(iv) Except as provided in clause (ii) above, the Proceeds of
any Policy shall be due and payable solely to Agent on behalf of the Lenders and
held and applied in accordance with the terms hereof (or, if mistakenly paid to
any Borrower Party, shall be held in trust by such Person for the benefit of
Agent and shall be paid over to Agent on behalf of the Lenders by such Person
within one Business Day of receipt).
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(v) Notwithstanding the terms of clauses (ii) and (iii) above,
Agent on behalf of the Lenders shall have the sole authority to adjust any claim
with respect to a Casualty and to collect all Proceeds if an Event of Default
shall have occurred and is continuing.
(b) BORROWER'S RIGHT TO APPLY TO RESTORATION. In the event of
(i) a Casualty, or (ii) a Condemnation that does not constitute a Material
Condemnation, Agent shall permit the application of the Proceeds (after
reimbursement of any reasonable expenses incurred by Agent) to pay Borrower for
the cost of restoring, repairing, replacing or rebuilding the applicable
Mortgaged Property (the "RESTORATION"), in the manner required hereby, PROVIDED,
and on the condition that, no Event of Default shall have occurred and be then
continuing and, in the reasonable judgment of Agent:
(i) the applicable Mortgaged Property can be restored to an
economic unit not materially less valuable (taking into account the
effect of the termination of any Leases and the proceeds of any rental
loss or business interruption insurance which Borrower receives or is
entitled to receive, in each case, due to such Casualty or
Condemnation) and not less useful than the same was prior to the
Casualty or Condemnation, and
(ii) the Restoration can be completed by the earlier to occur
of:
(A) the 60th day prior to the Maturity Date, and
(B) with respect to a Casualty, the expiration of
the payment period on the rental-loss insurance coverage in
respect of such Casualty.
Notwithstanding the foregoing, if any of the conditions set forth in the proviso
in this clause (b) is not satisfied, then, notwithstanding anything herein to
the contrary, unless Agent shall otherwise elect, at its sole option, the
Proceeds shall be applied to the prepayment of the Loan and the Borrower Parties
shall not be entitled to receive a release of the Lien of the Mortgage and the
other Loan Documents, unless such application shall pay the Debt, all accrued
and unpaid interest, and all other amounts due hereunder and under all other
Loan Documents in full.
(c) CASUALTY OR CONDEMNATION AND AGENT'S RIGHT TO APPLY. In
the event of a Casualty which does not satisfy the conditions specified in
SECTION 8.1.2(b), or a Material Condemnation, then Agent shall have the option
(in its sole discretion) to apply the Proceeds to the prepayment of the Loan or
make such Proceeds available to reimburse the Borrower for the cost of any
Restoration in the manner set forth below in SECTION 8.1.2(d).
(d) MANNER OF RESTORATION AND REIMBURSEMENT. If Borrower is
entitled pursuant to SECTION 8.1.2(b) or (c) above to payment out of Proceeds
(and the conditions specified therein shall have been satisfied), such Proceeds
shall be disbursed on a monthly basis upon Agent being furnished with (i) such
architect's certificates, waivers of lien, contractor's
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sworn statements, title insurance endorsements, plats of survey and such other
evidences of cost, payment and performance as Agent may reasonably require and
approve, and (ii) all plans and specifications for such Restoration, such plans
and specifications to be approved by Agent prior to commencement of any work
(such approval not to be unreasonably withheld or delayed). In addition, no
payment made prior to the final completion of the Restoration (I.E., after
completion of all punch-list items, receipt of lien waivers from all contractors
and subcontractors and receipt of all certificates of occupancy and "sign-offs"
from all Governmental Authorities with respect to the Restoration) shall exceed
ninety-five percent (95%) of the aggregate value of the work performed from time
to time; PROVIDED, HOWEVER, that one hundred percent (100%) payment shall be
made with respect to subcontractors who have completed their work in full prior
to final completion and have provided appropriate lien waivers; funds other than
Proceeds shall be disbursed prior to disbursement of such Proceeds; and at all
times, the undisbursed balance of such Proceeds remaining in the hands of Agent
on behalf of Lenders, together with funds deposited or irrevocably committed to
the satisfaction of Agent by or on behalf of Borrower for that purpose, shall be
at least sufficient, in the reasonable judgment of Agent, to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Prior to any disbursement, Agent shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the Restoration (such
estimate to be made by Borrower's architect or contractor and approved by Agent
in its reasonable discretion), and Borrower shall have deposited with Agent on
behalf of Lenders Eligible Collateral in an amount equal to the excess (if any)
of such estimated cost of completion over the Proceeds. If Eligible Collateral
is delivered to Agent pursuant to this Section, Agent shall use its reasonable
efforts to invest same (to the extent such Eligible Collateral is capable of
being invested) in Permitted Investments. Any surplus that may remain out of
Proceeds received pursuant to a Casualty or Condemnation shall be delivered to
Borrower.
8.1.3 CONDEMNATION. (a) Borrower shall promptly give Agent
written notice of the actual or threatened (in writing) commencement of any
Condemnation and shall deliver to Agent copies of any and all papers served in
connection with such Condemnation. Following the occurrence of a Condemnation,
Borrower, as long as Agent shall make the Proceeds available in accordance with
this Agreement, but otherwise regardless of whether such Proceeds are
sufficient, shall promptly proceed to restore, repair, replace or rebuild the
same to the extent practicable to be of at least equal value and of
substantially the same character as prior to such Condemnation.
(b) Upon the occurrence and during the continuance of an Event
of Default, Agent is hereby irrevocably appointed as Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain any Proceeds in respect of a Condemnation and to make any
compromise or settlement in connection with such Condemnation, subject to the
provisions of this Section. Provided no Event of Default has occurred and is
continuing, (x) in the event of a Condemnation where the loss does not exceed
$750,000, Borrower may settle
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and compromise such Proceeds; PROVIDED that the same is effected in a competent
and timely manner, and (y) in the event of a Condemnation where the loss exceeds
$750,000, Borrower may settle and compromise the Proceeds only with the consent
of Agent (which consent shall not be unreasonably withheld or delayed) and Agent
shall have the opportunity to participate, at Borrower's cost, in any litigation
and settlement discussions in respect thereof. Notwithstanding any Condemnation
by any public or quasi-public authority (including any transfer made in lieu of
or in anticipation of such a Condemnation), Borrower shall continue to pay the
Debt at the time and in the manner provided for in the Notes, this Agreement and
the other Loan Documents, and the Debt shall not be reduced unless and until any
Proceeds shall have been actually received and applied by Agent in accordance
with the terms hereof to expenses of collecting such Proceeds and to discharge
of the Debt. Agent shall not be limited to the interest paid on the Proceeds by
the condemning authority but shall be entitled to receive out of the Proceeds
interest at the rate or rates provided in the Notes.
ARTICLE IX
DEFAULTS
Section 9.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (each, an "EVENT OF DEFAULT"):
(i) PAYMENT. If Borrower fails to pay (i) any installment of
interest on the Notes when due and such failure to pay shall remain
unremedied two (2) Business Days after Agent delivers notice to
Borrower that the same shall be due and payable, or (ii) the principal
of the Loan when the same is due and payable, or (iii) any other amount
owing under this Agreement or the Loan Documents when due and such
failure remains unremedied five (5) Business Days (or such other longer
time period as expressly stated in the Loan Documents) after notice by
Agent;
(ii) TAXES AND OTHER CHARGES. If any of the Taxes or Other
Charges are not paid prior to the date on which the same become
delinquent and Borrower fails to cure such Default within five (5)
Business Days after Agent delivers notice to Borrower of such Default,
subject to Borrower's right to contest Taxes and Other Charges in
accordance with SECTION 5.1(b)(ii) hereof;
(iii) INSURANCE POLICIES. If the Policies are not kept in full
force and effect, or if the Policies are not delivered to Agent upon
request, and in either case, such Default is not cured within ten (10)
days after written notice thereof from Agent;
(iv) TRANSFERS. If (A) Borrower transfers or voluntarily
encumbers all or any portion of, or any interest in, any Mortgaged
Property (other than Permitted Encumbrances) or (B) there shall be a
violation of the terms of Section 5.1(y) or 6.1(c)
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hereof;
(v) REPRESENTATIONS. If any representation or warranty made by
any Borrower Party herein or in any other Loan Document shall be false
in any material respect as of the date the representation or warranty
was or shall be made and Borrower shall fail to cause such
representation or warranty to be accurate in all material respects
within 45 days after Agent delivers notice to Borrower of such
misrepresentation; PROVIDED that no such cure period shall apply if the
misrepresentation relates to a representation which is qualified to any
Borrower Party's knowledge and such misrepresentation was knowingly
made;
(vi) INABILITY TO PAY DEBTS. If any Borrower Party shall make
an assignment for the benefit of creditors, or if any Borrower Party
shall generally not be paying its debts as they become due or has
admitted in writing its inability to pay its debts;
(vii) BANKRUPTCY. If a receiver, liquidator or trustee shall
be appointed for any Borrower Party, or if any Borrower Party shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against,
consented to or acquiesced in by any Borrower Party, or if any
proceeding for the dissolution or liquidation of any Borrower Party
shall be instituted; PROVIDED, HOWEVER, if such appointment,
adjudication, petition or proceeding was involuntary and not consented
to by all of the Borrower Parties, upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(viii) BREACH OF COVENANT. If any Borrower Party breaches any
of its negative covenants contained in Article VI hereof or any of its
affirmative covenants set forth IN SECTION 5.1(z), (aa) or (bb) and, if
the same is susceptible of cure, the same is not cured within thirty
(30) days after written notice thereof from Agent;
(ix) DEFAULT UNDER OTHER LOAN DOCUMENTS. If an Event of
Default as defined or described herein or in any of the other Loan
Documents occurs;
(x) COVENANT DEFAULTS. If any Borrower Party shall continue to
be in default under any of the other terms, covenants or conditions of
this Agreement or any other Loan Document not specified in SUBSECTIONS
(i) TO (x) above for ten (10) days after notice from Agent, in the case
of any Default that can be cured by the payment of a sum of money, or
for thirty (30) days after notice from Agent in the case of any other
Default; PROVIDED, HOWEVER, that if such nonmonetary Default is
susceptible of cure but cannot reasonably be cured within such 30-day
period and PROVIDED FURTHER that Borrower shall have commenced to cure
such default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be
extended for an additional period of time as is reasonably necessary
for Borrower in the exercise of due
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diligence to cure such Default, but the aggregate cure period under
this SUBSECTION (xii) shall not exceed one hundred eighty (180) days;
(xi) FAILURE TO PAY INDEBTEDNESS. (A) Any Borrower Party shall
(i) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any other Indebtedness for
borrowed money in excess of one million dollars ($1,000,000), or (ii)
default (beyond cure periods) in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement evidencing the same or relating thereto,
or any other event or condition shall occur or condition exist beyond
the expiration of applicable cure periods, the effect of which default,
in the case of either (i) or (ii), or other event or condition would
permit the holder or holders of such Indebtedness (or trustee or agent
on behalf of such holders) to cause any such Indebtedness to become due
prior to its stated maturity or (B) any Indebtedness for borrowed money
in excess of one million dollars ($1,000,000) of any Borrower Party
shall not be paid upon its scheduled maturity, shall be declared (or
shall become) due and payable prior to the stated maturity thereof due
to a default beyond cure periods by such Borrower Party or shall be
required to be prepaid prior to the stated maturity thereof due to a
default beyond cure periods by such Borrower Party;
(xii) ERISA. (A) Notice of intent to terminate or to amend a
Pension Plan shall have been filed with any affected party (as defined
in Section 4001 of ERISA) if, after giving effect thereto, the Plan is
a plan described in Section 4041(c) of ERISA, or notice of an
application by the PBGC to institute proceedings to terminate a Pension
Plan pursuant to Section 4042 of ERISA shall have been received by
Borrower; (B) Borrower or any member of its ERISA Group incurs
liability under Sections 4062(e), 4063 or 4064 of ERISA in respect of a
Pension Plan; (C) an amendment is adopted to a Pension Plan which would
require security to be given to such Pension Plan pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA; or (D) Borrower or any
member of its ERISA Group fails to make a payment to a Pension Plan
that would give rise to a lien in favor of such Plan under Section
302(f) of ERISA, which in any case described in any of clauses (A)
through (D), alone or in the aggregate, would have a Material Adverse
Effect;
(xiii) MATERIAL ADVERSE CHANGE. Prior to the earlier to occur
of (i) the 120th day after the date hereof or (ii) the first date on
which the initial Lender named herein has assigned or participated not
less than $80,000,000 of the Loan to Persons which are not Affiliates
of the initial Lender, there occurs any change, event or condition
which has a Material Adverse Effect; or
(xiv) JUDGMENTS. One or more final unappealable judgments or
decrees shall be entered against either Borrower involving a liability
for which the creditor has recourse against Borrower of $500,000 or
more in any instance (not paid or fully covered by insurance provided
by a carrier who has acknowledged coverage) and any such judgments or
decrees shall not have been vacated, discharged, paid or stayed or
bonded
<PAGE>
over within thirty (30) days after entry thereof.
(b) Subject to Article XIV hereof, upon the occurrence and
during the continuation of an Event of Default and at any time thereafter, Agent
shall be entitled to exercise all remedies and actions available at law or in
equity, and Agent may take any such action, without notice or demand, that Agent
deems advisable to protect and enforce its rights against each and every (or
less than all) Borrower Party and in and to all or any of a Mortgaged Property,
including declaring the Debt to be immediately due and payable (PROVIDED,
HOWEVER, with respect to an Event of Default described in CLAUSE (vi) or (vii)
above, the Debt and all other obligations of Borrower and each other Borrower
Party hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower and
each Borrower Party hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding),
and Agent may enforce or avail itself of any or all rights or remedies provided
in the Loan Documents against Borrower or any other Borrower Party and all or
any portion of a Mortgaged Property, including all rights or remedies available
at law or in equity.
(c) Upon the occurrence and during the continuation of any
Event of Default, Agent on behalf of Lenders may, but without any obligation to
do so and without notice to or demand on any Borrower Party and without
releasing any Borrower Party from any obligation hereunder, take any action to
cure such Event of Default. Agent on behalf of Lenders may enter upon any
Mortgaged Property upon reasonable notice to any Borrower Party for such
purposes or appear in, defend, or bring any action or proceeding to protect the
Lenders' interests and the interests of Agent on behalf of Lenders in such
Mortgaged Property or to foreclose the applicable Mortgage or collect the Debt.
The costs and expenses incurred by Agent in exercising rights under this
paragraph (including reasonable attorneys' fees to the extent permitted by law),
with interest at the Default Rate for the period after notice from Agent that
such costs or expenses were incurred to the date of payment to Agent, shall
constitute a portion of the Debt, shall be secured by the Mortgages and the
other Loan Documents and shall be due and payable to Agent upon demand therefor.
Section 9.2 REMEDIES. Upon the occurrence and during the
continuation of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Agent against any Borrower
Party under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or such other Borrower Party or at law
(including, without limitation, an action for collection) or in equity may be
exercised by Agent at any time and from time to time, whether or not all or any
of the Debt shall be declared due and payable, and whether or not Agent shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to all or
any portion of a Mortgaged Property. Any such actions taken by Agent shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Agent may
determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the
<PAGE>
other rights and remedies of Agent permitted by law, equity or contract or as
set forth herein or in the other Loan Documents. Without limiting the generality
of the foregoing, each Borrower Party agrees that if an Event of Default is
continuing (i) Agent is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Agent shall remain in full force and effect until Agent
has exhausted all of its remedies against each Mortgaged Property and each
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full. All remedies
hereunder shall be exercised by the Agent upon the direction of the Required
Lenders. In exercising all remedies hereunder, the Agent shall at all times act
(or refrain from acting) hereunder upon the direction of the Required Lenders.
Section 9.3 REMEDIES CUMULATIVE. The rights, powers and
remedies of Agent under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Agent may have against any Borrower Party
pursuant to this Agreement or the other Loan Documents, or existing at law or in
equity or otherwise. Agent's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Agent may determine
in Agent's sole discretion. No delay or omission to exercise any remedy, right
or power accruing upon the occurrence and during the continuation of an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to any Borrower Party shall not be construed to be
a waiver of any subsequent Default or Event of Default with respect to such
Borrower Party or any other Borrower Party or to impair any remedy, right or
power consequent thereon. Subject to Section 11.26, nothing herein shall be
construed as prohibiting Agent from seeking, and Agent reserves the right to
seek, a deficiency judgment or preserve a deficiency claim to the extent that
Agent deems the same necessary in connection with any foreclosure or similar
proceeding.
ARTICLE X
PROPERTY MANAGEMENT
Section 10.1 TERMINATION OF PROPERTY MANAGER. Borrower
covenants that each Property Management Agreement with respect to any Mortgaged
Property hereafter entered into with respect to any Mortgaged Property
(including each renewal of the existing Property Management Agreements not
currently provided for in the Property Management Agreements) shall provide
(either on its own terms or by virtue of the applicable Consent of Manager)
Borrower the right to terminate the Property Management Agreement with respect
to the Mortgaged Property or Properties covered thereby, without any penalty or
fee (other than accrued and unpaid fees thereunder) on thirty (30) days' notice,
if there exists an Event of Default under this Agreement. Unless otherwise
waived by Agent, in the circumstances described in the immediately preceding
sentence, Borrower shall, within five (5) Business Days after Agent's
<PAGE>
written request, issue a notice of termination to terminate the applicable
Property Management Agreement (with respect to the Mortgaged Property(ies)
covered thereby) and replace each Property Manager with an Acceptable Property
Manager, on commercially reasonable terms and conditions approved by Agent (such
approval not to be unreasonably withheld or delayed). If Borrower fails to issue
the notice of termination to each Property Manager in the manner required above
within said five (5) Business Day period, then Agent shall have the right, and
each Borrower hereby irrevocably authorizes Agent, at its sole option, to
terminate on behalf and in the name of the Borrower, the applicable Property
Manager (with respect to the Mortgaged Property(ies) covered thereby) in
accordance with the foregoing provisions of this SECTION 10.1, PROVIDED that
Agent shall not have any liability if Agent shall not exercise such authority.
Borrower represents, warrants and covenants that each Mortgaged Property shall
at all times be managed by an Acceptable Property Manager. Each Property
Management Agreement hereafter entered into by Borrower (or Beacon Management or
another Affiliate of Borrower) with a third party shall be in substantially the
same form as the Property Management Agreements in effect on the date hereof
(unless otherwise approved by Agent, such approval not to be unreasonably
withheld or delayed) and with customary economic terms, shall be collaterally
assigned to Agent on behalf of Lenders and shall be the subject of a Consent of
Manager, executed and delivered to Agent by the applicable Acceptable Property
Manager.
ARTICLE XI
MISCELLANEOUS
Section 11.1 SURVIVAL. This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by the Lenders of the Loan
and the execution and delivery to the Lenders of the Notes, and shall continue
in full force and effect so long as all or any of the Debt of Borrower is
outstanding and unpaid. Whenever in this Agreement any Person is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such Person PROVIDED that the foregoing shall not be deemed to
permit any transfer of any ownership interest that is otherwise prohibited
hereunder. All covenants, promises and agreements in this Agreement by or on
behalf of Borrower shall inure to the benefit of the respective legal
representatives, successors and assigns of each Lender and Agent.
Section 11.2 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK,
AND MADE BY THE LENDERS AND THE AGENT AND ACCEPTED BY BORROWER AND EACH OTHER
BORROWER PARTY IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTES DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING
<PAGE>
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN
THE NOTES, THE ENVIRONMENTAL INDEMNITY AND THE ASSIGNMENT OF AGREEMENTS) SHALL
BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE IN WHICH THE
MORTGAGED PROPERTY IS LOCATED, AND, TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER AND EACH BORROWER PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, THE NOTES, THE ENVIRONMENTAL INDEMNITY AND THE ASSIGNMENT OF
AGREEMENTS, AND THIS AGREEMENT, THE NOTES, THE ENVIRONMENTAL INDEMNITY AND THE
ASSIGNMENT OF AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY
LENDER, AGENT, BORROWER OR ANY OTHER BORROWER PARTY ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN NEW YORK, NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND EACH OF BORROWER AND THE BORROWER PARTIES WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING, AND EACH OF BORROWER AND THE BORROWER
PARTIES HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. EACH BORROWER PARTY DOES HEREBY DESIGNATE AND
APPOINT CT CORPORATION SYSTEM, WITH OFFICES AT 1633 BROADWAY, NEW YORK, NEW
YORK 10019, OR AT SUCH OTHER OFFICE IN NEW YORK, NEW YORK, AS ITS AUTHORIZED
AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR
STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON
SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER
PARTY MAILED OR DELIVERED TO SUCH BORROWER PARTY IN THE MANNER PROVIDED
HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
EACH BORROWER PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO AGENT OF ANY CHANGED
ADDRESS OF ITS
<PAGE>
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE
SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 11.3 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of any Notes, or of any other Loan Document, nor any consent to
any departure by any Borrower Party therefrom, shall in any event be effective
unless the same shall be in a writing signed by Agent on behalf of the Lenders
and by the Borrower Party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on, any Borrower Party shall entitle such Borrower Party
(as applicable) to any other or future notice or demand in the same, similar or
other circumstances.
Section 11.4 DELAY NOT A WAIVER. Neither any failure nor any
delay on the part of Agent or any Lender in insisting upon strict performance of
any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege, hereunder, or under any Notes or under any other Loan
Document, or any other instrument given as security therefor, shall operate as
or constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right, power,
remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the due date of any amount payable under this Agreement, any Note
or any other Loan Document, Agent shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Notes or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 11.5 NOTICES. 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 (a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, addressed as follows (or at
such other address and person as shall be designated from time to time by any
party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section):
If to the initial Lender named herein or Agent:
Bankers Trust Company
130 Liberty Street
25th Floor
New York, New York 10006
<PAGE>
Attention: Alexander B.V. Johnson
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Mason C. Sleeper, Esq.
If to any Borrower Party:
c/o Beacon Capital Partners, Inc.
One Federal Street
Boston, Massachusetts 02110
Attention: General Counsel
with a copy to:
Goulston & Storrs
400 Atlantic Avenue
Boston, Massachusetts 02110-3333
Attention: Robert J. Mack, Esq.
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, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid overnight delivery, upon the first attempted delivery on a
Business Day.
Section 11.6 TRIAL BY JURY. EACH OF THE LENDERS, AGENT,
BORROWER AND THE OTHER BORROWER PARTIES HEREBY AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY EACH OF THE LENDERS, AGENT, BORROWER AND EACH OTHER BORROWER
PARTY AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS
TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. AGENT AND BORROWER
ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 11.7 HEADINGS. The Article and/or Section headings and
the Table of
<PAGE>
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
Section 11.8 SEVERABILITY. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 11.9 PREFERENCES. To the extent Borrower or any other
Borrower Party makes a payment or payments to any Lender or Agent, which payment
or proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received which are returned to any Borrower Party or to any other Person as may
be required, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by such Lender or Agent.
Section 11.10 WAIVER OF NOTICE. None of the Borrower Parties
shall be entitled to any notices of any nature whatsoever from any Lender or
Agent except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Agent
to such Borrower Parties and except with respect to matters for which any
Borrower Party is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice. To the fullest extent permitted by law, each
Borrower Party hereby expressly waives the right to receive any notice from any
Lender or Agent with respect to any matter for which this Agreement or the other
Loan Documents do not specifically and expressly provide for the giving of
notice by any Lender or Agent to such Borrower Party.
Section 11.11 REMEDIES OF BORROWER. In the event that a claim
or adjudication is made that Agent, any Lender or any of their respective
agents, including Servicer, have acted unreasonably or unreasonably delayed (or
refrained from), acting in any case where by law or under this Agreement or the
other Loan Documents, Agent, such Lender or such agent, as the case may be, has
an obligation to act reasonably or promptly, each Borrower Party agrees that
neither Agent, such Lender nor its agents, including Servicer, shall be liable
for any monetary damages, and the sole remedies of each Borrower Party shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment, except in any instance in which it has been finally determined that
the action of such Lender or Agent (as applicable) has constituted bad faith,
gross negligence, fraud, willful misconduct or an illegal act.
Section 11.12 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to reimburse Agent and each
Lender (but, for each Lender other than Agent, only in the case of clause (E)
below) upon receipt of written
<PAGE>
notice from Agent or such Lender for all (i) Lender Expenses; (ii) costs and
expenses reasonably incurred by Agent in connection with (A) each Borrower
Party's performance of and compliance with each Borrower Party's respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including confirming compliance with environmental and insurance requirements;
(B) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by any
Borrower Party or by Agent; (C) filing and recording fees and expenses, title
insurance and reasonable fees and disbursements of counsel for providing to
Agent all required legal opinions, and other similar expenses incurred in
creating and perfecting the Liens in favor of Agent on behalf of Lenders
pursuant to this Agreement and the other Loan Documents; (D) enforcing or
preserving any rights, in response to third party claims or the prosecuting or
defending of any action or proceeding or other litigation, in each case against,
under or affecting any Borrower Party, this Agreement, the other Loan Documents
or any other security given for the Loan or the Mortgaged Properties; (E) after
the occurrence of an Event of Default, enforcing any obligations of or
collecting any payments due from any Borrower Party under this Agreement, the
other Loan Documents or with respect to the Mortgaged Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; and (F) any and all present and future stamp taxes in
connection with any of the foregoing; provided, HOWEVER, no Borrower Party shall
be liable for the payment of any such costs and expenses to a Person to the
extent the same arise by reason of the gross negligence, illegal acts, fraud or
willful misconduct of such Person.
(b) Each Borrower shall indemnify and hold harmless Agent and
Lenders from and against any and all liabilities, obligations, losses, damages,
penalties, assessments, actions, judgments, suits, claims, demands, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for any Lender in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether a suit is brought or whether such Lender shall
be designated a party thereto), that may be imposed on, incurred by, or asserted
against such Lender in any manner relating to or arising out of any breach by
any Borrower Party of its obligations under, or any material misrepresentation
by any Borrower Party contained in, this Agreement or the other Loan Documents,
including, without limitation, any delay in failing to pay any Taxes; PROVIDED,
HOWEVER, that such indemnity and hold harmless agreement shall not apply to the
extent the same arise by reason of the gross negligence, illegal acts, fraud or
willful misconduct of such Person.
(c) The provisions of this SECTION 11.12 shall survive the
repayment of the Loan.
Section 11.13 EXHIBITS AND SCHEDULES INCORPORATED. The
Exhibits and Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as
<PAGE>
if set forth in the body hereof.
Section 11.14 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any
assignee of any Lender's interest in and to this Agreement, the Notes and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower Party may otherwise have against any assignor of such documents, and no
such unrelated counterclaim or defense shall be interposed or asserted by any
Borrower Party in any action or proceeding brought by any such assignee upon
such documents and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Borrower and each Borrower Party.
Section 11.15 NO JOINT VENTURE OR PARTNERSHIP. Each Borrower
Party, on the one hand, and Lenders and Agent, on the other hand, intend that
the relationships created hereunder and under the other Loan Documents be solely
that of borrower and lender. Nothing herein or therein is intended to create a
joint venture, partnership, tenancy-in-common, or joint tenancy relationship
between any Borrower Party, on the one hand, and Lenders and Agent, on the other
hand, nor to grant Lenders or Agent any interest in the Mortgaged Properties
other than that of mortgagee or lender.
Section 11.16 PUBLICITY. Except for disclosures required under
applicable securities laws, all news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents or to any Lender or Agent shall be subject to the prior written
approval of Agent, which approval shall not be unreasonably withheld or delayed.
Section 11.17 WAIVER OF MARSHALING OF ASSETS. To the fullest
extent a Borrower Party may legally do so, each Borrower Party waives all rights
to a marshaling of the assets of such Borrower Party, its partners, if any, and
others with interests in said Borrower Party and of the Mortgaged Properties, 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 marshaling of assets, the sale in inverse order of alienation,
homestead exemption or the administration of estates of decedents to defeat,
reduce or affect the right of any Lender or Agent on behalf of Lenders under the
Loan Documents to a sale of any one or more of the Mortgaged Properties for the
collection of the related Debt without any prior or different resort for
collection, or the right of any Lender or Agent on behalf of Lenders or any deed
of trust trustee to the payment of the related Debt out of the net proceeds of
the Mortgaged Properties in preference to every other claimant whatsoever. In
addition, Borrower, for itself and its successors and assigns, waives in the
event of foreclosure of any or all of the Mortgage, any equitable right
otherwise available to the Borrower which would require the separate sale of
portions of a Mortgaged Property.
Section 11.18 WAIVER OF COUNTERCLAIM. To the fullest extent
permitted by law, each Borrower Party hereby waives the right to assert a
counterclaim, other than a compulsory or
<PAGE>
mandatory counterclaim, in any action or proceeding brought against it by any
Lender or Agent on behalf of Lenders.
Section 11.19 CONFLICT; CONSTRUCTION OF DOCUMENTS. In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by counsel in connection
with the negotiation and drafting of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.
Section 11.20 BROKERS AND FINANCIAL ADVISORS. Each Borrower
Party hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement other than Deutsche Bank Alex. Brown
Incorporated. Each Borrower Party hereby indemnifies each Lender and Agent and
holds each Lender and Agent harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person (other than Deutsche Bank Alex. Brown Incorporated)
that such Person acted on behalf of such Borrower Party in connection with the
transactions contemplated herein. The provisions of this SECTION 11.20 shall
survive the expiration and termination of this Agreement and the repayment of
the Debt.
Section 11.21 NO THIRD PARTY BENEFICIARIES. This Agreement and
the other Loan Documents are solely for the benefit of each Lender and Agent and
each Borrower Party, and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than each Lender and Agent
and the Borrower Parties any right to insist upon or to enforce the performance
or observance of any of the obligations contained herein or therein. All
conditions to the obligations of each Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of each Lender and Agent, and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that any Lender and Agent
will refuse to make the Loan in the absence of strict compliance with any or all
thereof and no other Person shall under any circumstances be deemed to be a
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by any Lender or Agent if, in such Lender's or Agent's sole
discretion, Lender or Agent deems it advisable or desirable to do so.
Section 11.22 PRIOR AGREEMENTS. This Agreement and the other
Loan Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, between
Borrower and any Lender or Agent are superseded by the terms of this Agreement
and the other Loan Documents.
Section 11.23 RIGHT OF SETOFF. In addition to any rights now
or hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the
<PAGE>
occurrence and during the continuance of an Event of Default, Agent on behalf of
Lenders is authorized at any time and from time to time, subject to and with the
prior approval of the Required Lenders, without presentment, demand, protest or
other notice of any kind (all of which rights being hereby expressly waived), to
set-off and to appropriate and apply any and all deposits (general or special)
and any other indebtedness at any time held or owing by Agent (including
branches, agencies or Affiliates of Agent wherever located) to or for the credit
or the account of any Borrower Party (to the extent such credit or account is
for the benefit of any Borrower Party), against the obligations and liabilities
of the Borrower Parties to the Lenders hereunder, under the Notes or under the
other Loan Documents, irrespective of whether Agent shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of Agent subsequent thereto. Each
Lender other than Agent hereby waives any right of setoff it may have against
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including branches, agencies or Affiliates of such
Lender wherever located) to or for the credit or the account of any Borrower
Party against the obligations and liabilities of the Borrower Parties under the
Loan Documents.
Section 11.24 LOAN ASSIGNABILITY.
(a) The Loan, and all of a Lender's rights, remedies and
privileges hereunder and the other Loan Documents, shall be assignable by a
Lender to an Eligible Assignee at any time and from time to time without the
consent of any Borrower Party. No Borrower Party may sell, assign or transfer
any interest in the Loan Documents or any portion thereof (including, without
limitation, Borrower's rights, title, interests, remedies, powers and duties
hereunder and thereunder).
(b) Subject to obtaining the prior consent of the Agent, which
may not be unreasonably withheld, each Lender may assign all or a portion of its
rights and obligations hereunder to any Eligible Assignee pursuant to an
assignment and acceptance agreement acceptable to the Agent (an "ASSIGNMENT AND
Acceptance") substantially in the form of EXHIBIT A executed by the assignor and
assignee and delivered to Agent for its acceptance and recording in the
Register; PROVIDED that (i) any such assignment shall be in a minimum aggregate
amount of $5,000,000 (or in the entire amount of such lesser amount as may then
be held by the assigning Lender), and that each such assignment shall be of a
constant, not varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement and (ii) after such assignment, the assignor
Lender shall retain a minimum aggregate amount of $5,000,000 hereunder. Any
assignment hereunder shall be effective upon satisfaction of the conditions set
forth in the preceding sentence and delivery to the Agent of the Assignment and
Acceptance. Upon the effectiveness of any such assignment, the assignee shall
become a "Lender" for all purposes of this Agreement and the other Loan
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the amount being
assigned. Borrower agrees that upon effectiveness of any such assignment and
surrender
<PAGE>
of the appropriate Notes, it will promptly provide to the assigning Lender and
to the assignee separate promissory Notes in the amount of their respective
interests substantially in the form of the Note delivered to the initial Lender
on the date hereof (but, if applicable, with notation thereon that it is given
in substitution for and replacement of the original Notes or any replacement
Notes thereof).
If, pursuant to this subsection, any interest in this
Agreement or any Notes is transferred to any transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Lender (for
the benefit of the transferor Lender, the Agent and the Borrower) that under
applicable law and treaties no income, franchise, corporate, capital, stamp or
other taxes, levies, duties, imports, deductions, charges or fees of any nature
will be required to be withheld by the Agent, the Borrower, or the transferor
Lender with respect to any payments to be made to such transferee in respect of
the Loan, (ii) to furnish to the transferor Lender and the Agent either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Lender, the Agent and the Borrower) to
provide the transferor Lender and the Agent a new Form 4224 or Form 1001 upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(c) Subject to obtaining the prior consent of the Agent, which
may not be unreasonably withheld, each Lender may sell, transfer, or assign
participations in all or any part of such Lender's interests and obligations
hereunder; PROVIDED that (i) such selling Lender shall remain a "Lender" for all
purposes under this Agreement (such selling Lender's obligations under the Loan
Documents remaining unchanged) and the participant shall not constitute a Lender
hereunder, (ii) sub-participations by the participant shall be prohibited unless
otherwise expressly approved by Agent and (iii) each participation must be in a
minimum amount of $5,000,000 (or in the entire amount of such lesser amount as
may then be held by the selling Lender). In the case of any such participation,
the participant shall not have any rights under this Agreement or the other Loan
Documents (the participant having rights against the selling Lender in respect
of such participation as set forth in the participation agreement with such
Lender creating such participation) and all amounts payable by a Borrower
hereunder shall be determined as if such Lender had not sold such participation.
The Borrower Parties agree that a Lender shall have the right to disclose all
information it has received from the Borrower Parties to potential assignees or
participants on a confidential basis pursuant to a confidentiality agreement
reasonably acceptable to Borrower.
(d) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Lender may assign all
or any portion of the Loan or
<PAGE>
Notes held by it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank; PROVIDED that any payment in respect of such assigned Loan or Notes made
by a Borrower to or for the account of the assigning and/or pledging Lenders in
accordance with the terms of this Agreement shall satisfy Borrower's obligations
hereunder in respect of such assigned Loan or Notes to the extent of such
payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
(e) Each Borrower Party agrees to assist Agent and each Lender
in its efforts to syndicate the Loan, including, but not necessarily limited to,
(a) providing and causing each Borrower Party's advisors to provide to Agent,
upon request, all information reasonably deemed necessary by Agent to complete
the syndication, including (without limitation) information and evaluations
prepared by each Borrower Party and its advisors, (b) to assist Agent, upon
request, in the preparation of memoranda or other written materials to be used
in connection with the syndication of the Loan, (c) making officers of each
Borrower Party available from time to time in New York to attend and make
presentations regarding the business and prospects of the Borrower Parties and
the Mortgaged Properties, or relating to the terms and conditions of the Loan or
the status of the Mortgaged Properties, as appropriate, at a meeting or meetings
of any Lenders or prospective purchasers of interests in the Loan, all at
Borrower's own expense.
Section 11.25 EXCULPATION OF LENDER; NO PETITION. Neither any
Lender nor Agent undertakes nor assumes any responsibility or duty to any
Borrower Party or any other party to select, review, inspect, examine,
supervise, pass judgment upon or inform Borrower Party or any third party of (a)
the existence, quality, adequacy or suitability of appraisals of any Mortgaged
Property or any other collateral, (b) any environmental report, or (c) any other
matters or items, including, but not limited to, engineering, soils and seismic
reports which are contemplated in the Loan Documents. Any such selection,
review, inspection, examination and the like, and any other due diligence
conducted by a Lender or Agent, is solely for the purpose of protecting Lender
or Agent's rights under the Loan Documents, and shall not render such Lender or
Agent liable to any Borrower Party or any third party for the existence,
sufficiency, accuracy, completeness or legality thereof; PROVIDED that Agent
shall deliver to Borrower any environmental or engineering reports obtained by
Agent, without any representation by, or recourse to, Agent.
Section 11.26 EXCULPATION OF BORROWER PARTIES. (a)
Notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, no Borrower Party nor any Related Party shall have any
personal liability for (i) the payment of all or any portion of the Note or the
Debt, or (ii) the performance or discharge of any covenants, obligations or
undertakings of any Borrower Party hereunder or under any other Loan Document
(other than (x) the Guaranty (in the case of Guarantor and, to the extent
provided in clause (b) below, Beacon) or (y) the Environmental Indemnity (in the
case of Borrower, Guarantor and, to the extent provided in clause (b) below,
Beacon)). Except as provided otherwise in this Section, in the event of any
Event of Default, Agent may proceed solely against the Mortgaged Properties and
<PAGE>
the other collateral granted by the Loan Documents, and Agent shall not seek or
claim recourse against any Borrower Party or any Related Party for payment of
any sum payable hereunder and for the performance or discharge of any covenants
or undertakings of any Borrower Party under this Agreement, the Note and under
the Loan Documents (other than (A) the Guaranty (in the case of Guarantor and,
to the extent provided in clause (b) below, Beacon) or (B) the Environmental
Indemnity (in the case of Borrower, Guarantor and, to the extent provided in
clause (b) below, Beacon)). Notwithstanding the foregoing, nothing contained
herein shall impair the validity of the Debt created under the Note, under this
Agreement or under any other Loan Document or in any way affect or impair the
right of Agent to enforce any and all rights and remedies under and by virtue of
the Loan Documents or limit Agent from pursuing or seeking to enforce the rights
of Agent against any third parties.
(b) LIMITATION ON BEACON'S LIABILITY. Notwithstanding anything
to the contrary contained in this Agreement, in the Notes or in any of the other
Loan Documents, provided that, and for so long as, Beacon holds all or
substantially all of its assets through Guarantor, any liability of Beacon,
whether in its own capacity or in its capacity as the general partner of
Guarantor, shall be limited to its interest in Guarantor, and Agent and Lenders
shall have no recourse to any other assets of Beacon. In the event that Beacon
shall cease to hold all or substantially all of its assets through Guarantor,
the preceding sentence shall be of no further force and effect, and Beacon shall
(i) in its capacity as a general partner of Guarantor, be fully liable for the
obligations of Guarantor under the Guaranty and under the Environmental
Indemnity, and (ii) in its own capacity, be jointly and severally liable,
together with Guarantor, for the obligations of Guarantor under the Guaranty and
under the Environmental Indemnity.
Section 11.27 JOINT AND SEVERAL LIABILITY. The liabilities and
obligations of each Borrower hereunder and under any and all other Loan
Documents shall be joint and several.
ARTICLE XII
GUARANTY
Section 12.1 THE GUARANTY.
(a) Guarantor hereby unconditionally guarantees to each Lender
the payment in full by Borrower when due of all interest on the Notes which
shall become due from time to time. Notwithstanding anything to the contrary
contained in this Agreement, the aggregate liability of Guarantor under this
SECTION 12.1(a) shall not exceed the sum of (x) Eight Million Dollars
($8,000,000) plus (y) all of Agent's and the Lenders' costs of enforcing
Guarantor's obligations under this SECTION 12.1(a). The obligation of Guarantor
contained in this SECTION 12.1(a) shall terminate (subject to SECTION 12.4) (i)
at such time as the Minimum Debt Yield equals or exceeds 0.14 to 1.00 (as
demonstrated to Agent's reasonable satisfaction in financial statements
delivered pursuant to SECTION 5.1(j)) for two consecutive calendar quarters
after June 30, 1999 or (ii) at such earlier time as Guarantor shall have
expended $8,000,000 under the
<PAGE>
Interest Guaranty (exclusive of reimbursement of Lenders' and Agent's costs of
enforcement in respect thereof) and shall have reimbursed Agent and Lenders for
any such enforcement costs; PROVIDED that if any Mortgaged Property is released
from the Mortgage in accordance with Section 2.5.2 and, after giving effect to
such release, the Minimum Debt Yield for all remaining Mortgaged Properties
(calculated based on the most recently ended calendar quarter prior to such
release), is less than 0.14 to 1.00, then, unless the condition set forth in the
preceding clause (ii) shall have been satisfied, the Interest Guaranty shall
automatically be reinstated, subject to the other terms of this SECTION 12.1(A)
(including said clause (ii)). The guaranty contained in this Section 12.1(a)
(the "INTEREST GUARANTY") is a guaranty of payment and not of collection.
(b) (i) Guarantor hereby unconditionally guarantees to each
Lender the payment by Borrower to such Lender of any loss, cost, liability,
claims or damage suffered by such Lender by reason of or in connection with:
(w) Borrower's failure to apply any proceeds of insurance or
awards of condemnation in accordance with the terms and provisions of
this Agreement, to the extent of such misapplication; or
(x) Borrower's misappropriation of, or failure to apply,
security deposits, Rents (advance, prepaid or otherwise), proceeds of
Rents and other income of the Mortgaged Properties, working capital
reserves, or any other reserve or escrow towards the cost of
maintenance and operation of the Mortgaged Properties and to payment of
Taxes, lien claims, insurance premiums or Debt Service to Lenders which
are then (at the time of such misappropriation or misapplication) due
and payable, to the extent of such misappropriation or misapplication;
or
(y) any fraud or intentional misrepresentations of material
facts of any Borrower Party (including, without limitation, those
related to the environmental condition of the Mortgaged Properties); or
(z) any waste (ordinary wear and tear excepted) intentionally
committed by Borrower with respect to the Mortgaged Properties.
(ii) In the event either Borrower shall file or have filed
against it, or any of the Mortgaged Properties shall become an asset in, (1) a
voluntary bankruptcy or insolvency proceeding; or (2) an involuntary bankruptcy
proceeding brought against either Borrower which is not dismissed within ninety
(90) days of filing, but only in the event that in connection with such
involuntary bankruptcy or insolvency filing: (A) it is commenced by an Affiliate
of Borrower or any other Borrower Party or any creditors of Borrower (other than
Agent or Lenders) with the collusion of any Borrower Party, or (B) except if
required by Legal Requirements, any Borrower Party either (i) objects to a
motion by Agent for relief from the automatic stay or injunction from the
foreclosure of the Mortgage or any other remedial action which (but for such
automatic stay) Agent or Lenders would be entitled to take under the terms
<PAGE>
of the Loan Documents, or (ii) seeks or solicits creditors to vote for
confirmation of a plan to which Agent objects, then Guarantor shall be
personally liable on a full recourse basis for the full and punctual payment and
performance when due of all of the obligations of Borrower under the Note, this
Agreement and the other Loan Documents, whether such obligations would have
arisen at maturity or earlier by reason of acceleration or otherwise and whether
denominated as losses, damages, principal, interest, fees or otherwise, together
with all pre- and post-maturity interest thereon (including, without limitation,
amounts that, but for the initiation of any proceeding under any insolvency or
bankruptcy law, would become due), and Guarantor shall be personally liable for
all costs and expenses of any nature, including, without limitation, reasonable
attorneys' fees and disbursements paid or incurred by Lender in connection with
or arising out of any such bankruptcy or insolvency petition or proceeding.
(iii) Guarantor hereby guarantees Borrower's obligations under
SECTION 5.1(cc), and such guaranty shall remain in effect notwithstanding any
sale or transfer by Borrower of the Other Property.
(iv) The guaranties contained in this SECTION 12.1(b),
together with the Interest Guaranty, are referred to herein as the "GUARANTY".
Section 12.2 OBLIGATIONS INDEPENDENT. The obligations of
Guarantor hereunder are independent of the obligations of Borrower or any other
Borrower Party, and a separate action or actions may be brought and prosecuted
against Guarantor, regardless of whether action is brought against Borrower (or
any other Borrower Party) or whether Borrower (or any other Borrower Party) is
joined in any such action or actions.
Section 12.3 OBLIGATIONS UNCONDITIONAL. Guarantor agrees that
its obligations hereunder are absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of any of the Loan
Documents, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guaranty of or security for the
Debt, and, to the fullest extent permitted by applicable law, irrespective of
any other circumstance whatsoever (including, without limitation, personal
defenses of the Borrower or any other Borrower Party) which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this SECTION 12.3 that the obligations of
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not alter or
impair the liability of Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice to
Guarantor, the time for any performance of or compliance with any
obligations of Borrower under the Loan Documents may be extended, or
such performance or compliance may be waived;
(b) any of the acts required or contemplated in any of
the provisions of any of
<PAGE>
the Loan Documents or any other agreement or instrument referred to
therein may be done or omitted other than a default by Agent or Lenders
thereunder;
(c) the maturity of any of the Debt may be accelerated, or the
maturity date of the Notes may be extended, or any obligations of
Borrower under the Loan Documents may be modified, supplemented or
amended in any respect, or any right under any of the Loan Documents or
any other agreement or instrument referred to therein may be waived or
extended or any other guaranty of the Debt or any security therefor may
be released or exchanged in whole or in part or otherwise dealt with;
(d) any Lender receives and holds security for the payment of
the Borrower Obligations or any other indebtedness of any Borrower
Party to such Lender and exchanges, enforces, waives, releases, fails
to perfect, sells, or otherwise disposes of any such security;
(e) Agent on behalf of Lenders applies such security and
directs the order or manner of sale thereof as Agent in its discretion
may determine;
(f) Agent releases or substitutes any one or more of any
endorsers or guarantors of the Debt or any other indebtedness of any
Borrower Party to the Lenders;
(g) any Lien granted to, or in favor of, Agent as security for
the Debt (or as security for the guaranty thereof by Guarantor) shall
fail to attach or be perfected;
(h) any of Borrower's obligations under the Loan Documents or
any Lien granted or purported to be granted in respect thereof shall be
determined to be void or voidable or shall be subordinated to the
claims of any Person; or
(i) there shall occur any insolvency, bankruptcy,
reorganization or dissolution of any other Borrower Party.
With respect to its obligations hereunder, Guarantor hereby expressly waives
diligence, presentment, demand of payment, protest and all notices whatsoever,
except as otherwise expressly provided herein or in any other Loan Document, and
any requirement that any Lender or Agent exhaust any right, power or remedy or
proceed against any Person under any of the Loan Documents or any other
agreement or instrument referred to therein, or against any other Person under
any other guaranty of, or security for, or obligation relating to, any
obligations of Borrower under the Loan Documents.
Section 12.4 REINSTATEMENT. The obligations of Guarantor
hereunder shall be automatically reinstated if and to the extent that for any
reason any payment or performance by or on behalf of any Person in respect of
any obligations of Borrower under the Loan Documents which is guaranteed by
Guarantor pursuant to the Guaranty is rescinded or must be otherwise restored by
any holder of any obligations of Borrower under the Loan Documents, whether as a
<PAGE>
result of any proceedings in bankruptcy or reorganization or otherwise, and
Guarantor agrees that it will pay to each Lender and Agent on demand all
reasonable out-of-pocket costs and expenses (including, without limitation, fees
of counsel) incurred by such Lender and/or Agent in enforcing Guarantor's
obligations hereunder in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that any payment by Guarantor constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law;
PROVIDED that nothing contained in this SECTION 12.4 shall result in Guarantor
being obligated to make payments to Lender on account of the Interest Guaranty
in excess of the limitations set forth in SECTION 12.1(a).
Section 12.5 CERTAIN ADDITIONAL WAIVERS.
(a) GENERAL. Without limiting the generality of the provisions
of any other provision of this Guaranty, Guarantor hereby specifically waives,
to the fullest extent permitted by law, (a) promptness, diligence, notice of
acceptance and any other notice with respect to any of Borrower=s obligations
under the Loan Documents or this Guaranty except as otherwise expressly provided
herein or in any other Loan Document, (b) any requirement that any Lender or
Agent or any other Person protect, secure or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Borrower
Party or any other Person or any collateral or undertake any marshaling of
assets, (c) any right to direct the order of enforcement of remedies, (d) any
defense arising by reason of any claim or defense based upon an election of
remedies by any Lender or Agent which in any manner impairs, reduces, releases
or otherwise adversely affects its subrogation, contribution or reimbursement
rights or other rights to proceed against any Borrower Party or any other Person
or any collateral, (e) any duty on the part of any Lender or Agent to disclose
to Guarantor any matter, fact or thing relating to the business, operation or
condition of the Borrower or any other party to any of the Loan Documents and
their assets now known or hereafter known by such Lender or Agent, and (f) all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of the
guaranty provided for in this Guaranty, except for notices expressly provided
herein or in any other Loan Document, and of the existence, creation, or
incurrence of new or additional Indebtedness.
(b) ADDITIONAL WAIVERS. In addition, to the fullest extent
permitted by law, Guarantor hereby waives and agrees not to assert or take
advantage of any defense based upon:
(i) the incapacity, lack of authority, death or disability of
any Borrower Party or any other person or entity;
(ii) the failure of Agent on behalf of the Lenders to commence
an action against any Borrower Party, to proceed against or exhaust any
security held by Agent for the benefit of the Lenders at any time or to
pursue any other remedy whatsoever at any time;
<PAGE>
(iii) any duty on the part of Agent to disclose to Guarantor
any facts Agent may now or hereafter know regarding any Borrower Party
regardless of whether Agent has reason to believe (A) that any such
facts materially increase the risk beyond that which Guarantor intends
to assume or (B) that such facts are unknown to Guarantor, each
Guarantor acknowledging that it is fully responsible for being and
keeping informed of the financial condition and affairs of each
Borrower Party;
(iv) lack of notice of default, demand of performance or
notice of acceleration to any Borrower Party or any other party with
respect to the Loan, this Guaranty or any other Loan Document;
(v) the consideration for this Guaranty;
(vi) any acts or omissions of Lender which vary, increase or
decrease the risk on Guarantor;
(vii) the application by Borrower of the proceeds of the Loan
for purposes other than the purposes represented by Borrower to Agent
on behalf of the Lenders or intended or understood by Agent on behalf
of the Lenders, Lender or Guarantor;
(viii) an election of remedies by Agent for the benefit of the
Lenders, including any election to proceed against any collateral by
judicial or nonjudicial foreclosure, whether real property or personal
property, or by deed in lieu thereof, and whether or not every aspect
of any foreclosure sale is commercially reasonable, and whether or not
any such election of remedies destroys or otherwise impairs the
subrogation rights of Guarantor or the rights of Guarantor to proceed
against any Borrower Party by way of subrogation, for reimbursement or
contribution, or all such rights;
(ix) any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any
other aspects more burdensome than that of the principal obligor; and
(x) any other suretyship defense that may be available to
Guarantor.
Section 12.6 SUBORDINATION. Any obligations of Borrower to
Guarantor, now or hereafter existing, are hereby subordinated to the obligations
of Borrower under the Loan Documents. Such obligations of Borrower to Guarantor
shall, after the occurrence and during the continuation of any Event of Default,
be enforced and performance received by Guarantor as trustee for the Lenders or
Agent and the proceeds thereof shall be paid over to the Agent on behalf of
Lenders on account of the obligations of Borrower under the Loan Documents. In
addition, Guarantor hereby agrees not to exercise any rights it may have for
subrogation, indemnity, reimbursement or contribution against the Borrower for
amounts paid by Guarantor pursuant to this Guaranty until such time as all
obligations of Borrower under the Loan
<PAGE>
Documents have been paid and performed in full.
ARTICLE XIII
INTENTIONALLY OMITTED.
ARTICLE XIV
AGENCY DECISIONS
Section 14.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby
irrevocably appoints, designates and authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duties or responsibilities except those
expressly set forth herein. Agent shall not agree to any amendment, modification
or waiver which would reduce the Loan Amount or the Applicable Interest Rate,
postpone the Maturity Date or release any security for the Loan or release any
Guaranty without the consent of all Lenders. Agent (and any successor Agent)
shall at all times administer the Loan through an office located in the United
States and at all times shall hold not less than twenty percent (20%) of the
outstanding principal of the Loan.
Section 14.2 DELEGATION OF DUTIES. Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
to any Lender for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care, but the foregoing shall not waive any
claims the Borrower may have in respect thereof.
Section 14.3 LIABILITY OF AGENT. Agent, its respective
Affiliates, or their respective officers, directors, employees, agents, or
attorneys-in-fact (all of the foregoing being collectively referred to as the
"AGENT-RELATED PERSONS") shall not (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Agreement or any
other Loan Document (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any Lender for any recital, statement,
representation or warranty made by any Borrower Party or any Subsidiary or any
Affiliate of any such Person, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or for
the validity, effectiveness,
<PAGE>
genuineness, enforceability or sufficiency of this Agreement, any other Loan
Document, or for any failure of any Borrower Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Borrower Party or any Subsidiary
or Affiliates thereof. The Agent agrees to promptly furnish to each Lender
copies of all financial statements and other certificates, reports, papers,
documents or notices received by it hereunder in its capacity as Agent.
Section 14.4 RELIANCE BY AGENT.
(a) GENERALLY. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any
Borrower Party), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) CONDITIONS PRECEDENT. For purposes of determining
compliance with the conditions specified in SECTION 3.1, each Lender that has
executed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender, unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lenders
prior to the initial borrowing specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Agent to that effect or
such Lenders shall not have made available to the Agent the Lender's ratable
portion of such borrowing.
Section 14.5 NOTICE OF DEFAULT. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees paid to the Agent for the account of Lenders, unless the Agent shall
have received written notice from a Lender or any Borrower Party referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent
<PAGE>
shall give prompt notice thereof to the Lenders. Except where the consent of all
Lenders is required pursuant to SECTION 14.1, the Agent shall take such action
with respect to any Default or Event of Default as shall be requested by the
Required Lenders; PROVIDED, HOWEVER, unless and until the Agent shall have
received any such request, it may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of the
Lenders.
Section 14.6 CREDIT DECISION. Each Lender expressly
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to such Lender and that no act by the Agent hereinafter taken,
including any review of the affairs of the Borrower, the Guarantor, any asset
manager, or any Subsidiary or Affiliate thereof, shall be deemed to constitute
any representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that such Lender has, independently and without reliance
upon the Agent and based on such documents and information as such Lender has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, properties, financial and other condition and
creditworthiness of the Borrower Parties and all applicable bank regulatory laws
relating to the transactions contemplated thereby, and made its own decision to
enter into this Agreement and extend credit to the Borrower hereunder. Each
Lender also represents that it will, independently and without reliance upon the
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, properties, financial and
other condition and creditworthiness of the Borrower Parties. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by the Agent, Agent shall have no duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, properties, financial and other condition or
creditworthiness of the Borrower Parties, any asset manager or any Subsidiary or
Affiliate thereof which may come into the possession of any of the Agent-Related
Persons.
Section 14.7 INDEMNIFICATION. The Lenders shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of the Borrower Parties and without limiting the obligation of the Borrower
Parties to do so) ratably from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expense and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loan) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
any such Person under or in connection with any of the foregoing; PROVIDED,
HOWEVER, no Lender shall be liable for the payment to the Agent-Related Persons
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon
<PAGE>
demand (to the extent the Agent is not reimbursed upon demand by the Borrower
Parties, unless the Agent is legally restricted from making such demand upon the
Borrower Parties, in which case demand need not be made upon the Borrower
Parties) for its ratable share of any costs or out-of-pocket expenses (including
attorneys' fees and expenses, including the allocated fees of in-house counsel)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower Parties.
Without limiting the generality of the foregoing, if the Internal Revenue
Service or any authority of the United States or other jurisdiction asserts a
claim that the Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered or was
not properly executed, or because such Lender failed to notify the Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by the
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Agent under this
Section, together with all costs, expenses and attorneys' fees (including
allocated costs for in-house legal services). The obligation of the Lenders in
this Section shall survive the payment and satisfaction of all Borrower
Obligations.
Section 14.8 AGENT IN INDIVIDUAL CAPACITY. The Agent named
herein (and any other Lender that may hereafter serve as Agent) and each of
their respective Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory or other business with,
the Borrower Parties, any asset manager and their respective Subsidiaries and
Affiliates as though the Agent named herein (or any other such Lender) were not
the agent hereunder and without notice to or consent of the Lenders. Lenders
acknowledge that pursuant to such activities, the Agent named herein or its
Affiliates may receive information regarding the Borrower Parties and their
respective Subsidiaries and Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower Parties and such
Subsidiaries and Affiliates), and acknowledge that the Agent named herein and
its Affiliates shall be under no obligation to provide such information to the
Lenders.
Section 14.9 SUCCESSOR AGENTS. The Agent may resign as Agent
upon 30 days' notice to the Lenders and the Borrower. Agent may be removed at
any time with cause by an instrument or concurrent instruments in writing
delivered to Borrower and Agent and signed by the Required Lenders. If an Agent
shall resign or be removed under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor Agent for the Lenders, which
successor Agent shall, if no monetary Default and no Event of Default exists
hereunder and is continuing, be approved by the Borrower, which approval shall
not be unreasonably withheld or delayed. If no successor Agent is appointed
prior to the effective date of the resignation or removal of the retiring Agent,
the retiring Agent shall appoint, after consulting
<PAGE>
with the Lenders and the Borrower, a successor Agent, PROVIDED such successor is
a Lender hereunder. Upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent, and the term "Agent" shall mean such successor
Agent, and the retiring Agent's rights, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent's notice of resignation or
removal of an Agent, the retiring Agent's resignation or removal shall
nevertheless be effective and the Lenders shall perform all of the duties of the
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor Agent as provided for above.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
AGENT:
BANKERS TRUST COMPANY,
a New York banking corporation,
By:
Name:
Title:
GUARANTOR'S GENERAL PARTNER:
BEACON CAPITAL PARTNERS, INC., a
Maryland corporation
By:
Nancy J. Broderick
Vice President and Treasurer
GUARANTOR:
BEACON CAPITAL PARTNERS, L.P., a
Delaware limited partnership
By: Beacon Capital Partners, Inc., its
general partner
By:
Nancy J. Broderick
Vice President and Treasurer
<PAGE>
BORROWER:
DALLAS OFFICE PORTFOLIO, L.P., a
Delaware limited partnership
By: Suburban Dallas Office Portfolio,
LLC, its general partner
By: Beacon Capital Partners, L.P.,
its sole member
By:Beacon Capital Partners,
Inc., its general partner
By:
Nancy J. Broderick
Vice President and
Treasurer
BORROWER:
TECHNOLOGY SQUARE LLC, a Delaware
limited liability company
By: Beacon Capital Partners, L.P., its
sole member
By:Beacon Capital Partners, Inc.,
its general partner
By:
Name:
Title:
<PAGE>
LENDER:
BANKERS TRUST COMPANY,
a New York banking corporation
By:
Name:
Title:
<PAGE>
CREDIT AGREEMENT
Dated as of June 28, 1999
among
TECHNOLOGY SQUARE LLC
and
DALLAS OFFICE PORTFOLIO, L.P.
as Borrower,
BEACON CAPITAL PARTNERS, L.P.,
as Guarantor,
BEACON CAPITAL PARTNERS, INC.,
Guarantor's general partner
and
BANKERS TRUST COMPANY,
as Lender and Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS, PRINCIPLES OF CONSTRUCTION
<TABLE>
<S> <C> <C>
Section 1.1 Definitions............................................................................1
Section 1.2 Principles of Construction............................................................28
ARTICLE II GENERAL
Section 2.1 The Loan..............................................................................29
2.1.1 Commitment............................................................................29
2.1.2 No Re-advances........................................................................29
2.1.3 The Notes.............................................................................29
Section 2.2 Interest..............................................................................30
2.2.1 Generally.............................................................................30
2.2.2 Determination of Interest Rate........................................................30
2.2.3 Default Rate..........................................................................34
Section 2.3 Loan Payment..........................................................................34
2.3.1 Monthly Debt Service Payments.........................................................34
2.3.2 Payment on Maturity Date..............................................................34
2.3.3 Making of Payments....................................................................35
2.3.4 Application of Payments...............................................................35
2.3.5 No Setoffs............................................................................35
2.3.6 Loan Account..........................................................................35
Section 2.4 Prepayment............................................................................36
2.4.1 Mandatory Prepayment..................................................................36
2.4.2 Permitted Prepayment..................................................................36
2.4.3 Repayment upon Default................................................................36
Section 2.5 Release of Mortgaged Properties.......................................................36
2.5.1 Release on Payment in Full............................................................36
2.5.2 Releases..............................................................................37
2.5.3 Further Assurances....................................................................38
2.5.4 Application...........................................................................38
2.5.5 Partial Releases......................................................................38
Section 2.6 Intentionally Omitted.................................................................40
Section 2.7 Pro Rata Treatment....................................................................40
Section 2.8 Sharing of Payments...................................................................40
Section 2.9 Extension of Initial Maturity Date....................................................40
Section 2.10 Administration Fee....................................................................42
Section 2.11 Facility Fee..........................................................................42
ARTICLE III CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Loan......................................................42
Section 3.2 Conditions of Advances Subsequent to the Closing Date.................................47
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OFBORROWER AND GUARANTOR
Section 4.1 Representations and Warranties of Borrower............................................48
Section 4.2 Representations of Guarantor and Beacon...............................................59
Section 4.3 Survival of Representations...........................................................61
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.1 Affirmative Covenants with respect to Borrower........................................61
ARTICLE VI NEGATIVE COVENANTS
Section 6.1 Negative Covenants....................................................................73
Section 7.1 Alterations and Expansions............................................................77
ARTICLE VIII CASUALTY AND CONDEMNATION
Section 8.1 Insurance, Casualty and Condemnation..................................................78
8.1.1 Insurance.............................................................................78
8.1.2 Casualty; Application of Proceeds.....................................................82
8.1.3 Condemnation..........................................................................84
ARTICLE IX DEFAULTS
Section 9.1 Event of Default......................................................................85
Section 9.2 Remedies..............................................................................88
Section 9.3 Remedies Cumulative...................................................................89
ARTICLE X PROPERTY MANAGEMENT
Section 10.1 Termination of Property Manager.......................................................89
ARTICLE XI MISCELLANEOUS
Section 11.1 Survival..............................................................................90
Section 11.2 Governing Law; Consent to Jurisdiction................................................90
Section 11.3 Modification, Waiver in Writing.......................................................91
Section 11.4 Delay Not a Waiver....................................................................92
Section 11.5 Notices...............................................................................92
Section 11.6 Trial by Jury.........................................................................93
Section 11.7 Headings..............................................................................93
Section 11.8 Severability..........................................................................93
Section 11.9 Preferences...........................................................................94
Section 11.10 Waiver of Notice......................................................................94
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.11 Remedies of Borrower..................................................................94
Section 11.12 Expenses; Indemnity...................................................................94
Section 11.13 Exhibits and Schedules Incorporated...................................................95
Section 11.14 Offsets, Counterclaims and Defenses...................................................95
Section 11.15 No Joint Venture or Partnership.......................................................96
Section 11.16 Publicity.............................................................................96
Section 11.17 Waiver of Marshaling of Assets........................................................96
Section 11.18 Waiver of Counterclaim................................................................96
Section 11.19 Conflict; Construction of Documents...................................................96
Section 11.20 Brokers and Financial Advisors........................................................96
Section 11.21 No Third Party Beneficiaries..........................................................97
Section 11.22 Prior Agreements......................................................................97
Section 11.23 Right of Setoff.......................................................................97
Section 11.24 Loan Assignability....................................................................98
Section 11.25 Exculpation of Lender; No Petition...................................................100
Section 11.26 Exculpation of Borrower Parties......................................................100
Section 11.27 Joint and Several Liability..............................................................101
ARTICLE XII GUARANTY
Section 12.1 The Guaranty.........................................................................101
Section 12.2 Obligations Independent..............................................................103
Section 12.3 Obligations Unconditional............................................................103
Section 12.4 Reinstatement........................................................................104
Section 12.5 Certain Additional Waivers...........................................................104
Section 12.6 Subordination........................................................................106
ARTICLE XIII Intentionally Omitted.
ARTICLE XIV AGENCY DECISIONS
Section 14.1 Appointment and Authorization........................................................106
Section 14.2 Delegation of Duties.................................................................107
Section 14.3 Liability of Agent...................................................................107
Section 14.4 Reliance by Agent....................................................................107
Section 14.5 Notice of Default....................................................................108
Section 14.6 Credit Decision......................................................................108
Section 14.7 Indemnification......................................................................109
Section 14.8 Agent in Individual Capacity.........................................................109
Section 14.9 Successor Agents.....................................................................110
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SCHEDULES
Schedule 1.1(a) - Allocated Loan Amount(s)
Schedule 1.1(b)-1
through 1.1(b)-10 - Mortgaged Properties
Schedule 4.1(y)(iii) - Tenant Security Deposits and Letters of Credit
Schedule 4.1(y)(v) - Delinquency Reports for Leases
Schedule 4.1(y)(vii) - Rent Rolls
Schedule 4.1(ff) - Ownership Structure
Exhibit A - Assignment and Acceptance
</TABLE>
<PAGE>
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement
dated as of June __, 1999 (as amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT") among TECHNOLOGY SQUARE LLC, as borrower,
DALLAS OFFICE PORTFOLIO, L.P., as borrower (collectively with Technology Square
LLC, the "BORROWER"), BEACON CAPITAL PARTNERS, INC., as guarantor's general
partner, BEACON CAPITAL PARTNERS, L.P., as guarantor, and BANKERS TRUST COMPANY,
a New York banking corporation, as agent and a lender (the "AGENT"). Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
with the same meaning.
The "ASSIGNOR" and the "ASSIGNEE" referred
to on SCHEDULE 1 hereto agree as follows:
1. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor=s rights and obligations under the Credit
Agreement as of the date hereof equal to the percentage interest specified on
SCHEDULE 1 hereto of all outstanding rights and obligations under the Credit
Agreement. After giving effect to such sale and assignment, the amount of the
Loan and the Note owing to the Assignee will be as set forth on SCHEDULE 1
hereto.
2. The Assignor (i) represents and warrants
that it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note or Notes held by the Assignor and requests that the
Lender exchange such Note or Notes for a new Note or Notes payable to the order
of the Assignee in an amount equal to the principal amount of the Loan assumed
by the Assignee pursuant hereto or new Notes payable to the order of the
Assignee in an amount equal to the principal amount of the Loan assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the principal
amount Loan retained by the Assignor under the Credit Agreement, respectively,
as specified on SCHEDULE 1 hereto.
<PAGE>
3. The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with such financial statements
and other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Lender by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; and (iv) agrees that it will perform in
accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender.
4. Following the execution of this
Assignment and Acceptance, it will be delivered to the Lender for acceptance and
recording by the Lender. The effective date for this Assignment and Acceptance
(the "EFFECTIVE DATE") shall be the date of acceptance hereof by the Agent,
unless otherwise specified on SCHEDULE 1 hereto.
5. Upon such acceptance and recording by
the Agent, as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations thereafter accruing under the Credit
Agreement.
6. Upon such acceptance and recording by
the Agent, from and after the Effective Date, the Agent shall make all payments
under the Credit Agreement and the Note or Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Note or Notes for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be
governed by, and construed in accordance with, the laws of the State of New
York.
8. This Assignment and Acceptance may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of SCHEDULE 1 to this Assignment
and Acceptance by telecopier shall be effective as delivery of a manually
executed counterpart of this Assignment and Acceptance.
<PAGE>
IN WITNESS WHEREOF, the Assignor and the
Assignee have caused SCHEDULE 1 to this Assignment and Acceptance to be executed
by their officers thereunto duly authorized as of the date specified thereon.
<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
As to the Loan in respect of which an interest is being assigned:
<TABLE>
<S> <C>
Percentage interest assigned: __________%
Assignee=s Commitment: $__________
Aggregate outstanding principal amount of the Loan assigned: $__________
Principal amount of Note payable to Assignee: $__________
Principal amount of Note payable to Assignor: $__________
</TABLE>
Effective Date (if other than date of acceptance by the Agent):
- -------- --, -----
[NAME OF ASSIGNOR], as Assignor
By
Title:
Dated: _________ __, _____
[NAME OF ASSIGNEE], as Assignee
By
Title:
Dated: _________ __, _____
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 40,369<F1>
<SECURITIES> 0
<RECEIVABLES> 2,249<F2>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 442,601
<CURRENT-LIABILITIES> 0
<BONDS> 88,877
0
0
<COMMON> 210
<OTHER-SE> 346,728
<TOTAL-LIABILITY-AND-EQUITY> 442,601
<SALES> 0
<TOTAL-REVENUES> 9,611
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 3,031
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,031
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,031
<EPS-BASIC> .14
<EPS-DILUTED> .14
<FN>
<F1>INCLUDES RESTRICTED CASH OF $493
<F2>INCLUDES ACCRUED RENT RECEIVABLE OF $397
</FN>
</TABLE>
