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POOL II
Tax Account Number: _________________
EXHIBIT 10.21
PREPARED BY,
REQUESTED BY AND WHEN
RECORDED, RETURN TO:
Mitchell Kaplan, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
CROSS-COLLATERALIZATION ,CROSS-CONTRIBUTION
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AND CROSS-DEFAULT AGREEMENT
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THIS CROSS-COLLATERALIZATION, CROSS-CONTRIBUTION AND CROSS-DEFAULT AGREEMENT
(this "Agreement"), made as of July __, 2000, by HCP MEDICAL OFFICE BUILDINGS
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II, LLC, a Delaware limited liability company (including its successors and/or
assigns, the "CMT Borrower") having an address at 4675 MacArthur Court, Suite
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900, Newport Beach, California 92260, and TEXAS HCP MEDICAL OFFICE BUILDINGS,
L.P., a Delaware limited partnership (including its successors and/or assigns,
the "Texas Borrower"; the CMT Borrower and the Texas Borrower shall each be a
"Borrower" and collectively, the "Borrower" or the "Borrowers"), having an
address at 4675 MacArthur Court, Suite 900, Newport Beach, California 92660, for
the benefit of First Union National Bank, a national banking association and its
successors and assigns ("Lender"), having an address at One First Union Center
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DC-6, Charlotte, North Carolina 28288-0166.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently with the execution of this Agreement, CMT Borrower
has executed and delivered to Lender a Promissory Note in the original principal
amount EIGHT MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($8,500,000.00)
(the "First Note"), in evidence of a loan in such amount (the "First Loan");
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WHEREAS, concurrently with the execution of this Agreement, CMT Borrower
has also executed and delivered to Lender its Promissory Note in the original
principal amount of SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($6,500,000.00) (the "Second Note"), in evidence of a loan in such amount (the
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"Second Loan");
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WHEREAS, concurrently with the execution of this Agreement, CMT Borrower
has also executed and delivered to Lender its Promissory Note in the original
principal amount of THREE
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MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,900,000.00) (the "Third
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Note"), in evidence of a loan in such amount (the "Third Loan");
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WHEREAS, concurrently with the execution of this Agreement, CMT Borrower
has also executed and delivered to Lender its Promissory Note in the original
principal amount of EIGHT MILLION AND NO/100 DOLLARS ($8,000,000.00) (the
"Fourth Note"), in evidence of a loan in such amount (the "Fourth Loan"),
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WHEREAS, concurrently with the execution of this Agreement, Texas Borrower
has also executed and delivered to Lender its Promissory Note in the original
principal amount of TEN MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS
($10,600,000.00) (the "Fifth Note"), in evidence of a loan in such amount (the
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"Fifth Loan");
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WHEREAS, concurrently with the execution of this Agreement, Texas Borrower
has also executed and delivered to Lender its Promissory Note in the original
principal amount of FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($4,500,000.00) (the "Sixth Note"), in evidence of a loan in such amount (the
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"Sixth Loan"), (the First Loan, the Second Loan, the Third Loan, the Fourth
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Loan, the Fifth Loan and the Sixth Loan are collectively, the "Loans" and each
individually a "Loan");
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WHEREAS, the First Loan is secured by (i) a Mortgage, Assignment of Leases
and Rents, Security Agreement and Fixture Filing (the "First Mortgage"),
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encumbering the real property located in Minneapolis, Minnesota, described on
Exhibit A-1 attached hereto and made a part hereof and recorded in the real
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property records of Hennepin County, together with all improvements thereon and
certain other property described in the First Mortgage (collectively, the "First
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Property"), and (ii) certain other documents and instruments executed in
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connection therewith (the First Note, the First Mortgage and such other
documents and instruments executed in connection therewith, as the same from
time to time may be amended, consolidated, extended, renewed, modified, restated
or replaced, collectively, the "First Loan Documents");
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WHEREAS, the Second Loan is secured by (i) a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Second Mortgage"),
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encumbering the real property located in Murfreesboro, Tennessee, described on
Exhibit A-2 attached hereto and made a part hereof and recorded in the real
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property records of Rutherford County, together with all improvements thereon
and certain other property described in the Second Mortgage (collectively, the
"Second Property"), and (ii) certain other documents and instruments executed in
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connection therewith (the Second Note, the Second Mortgage and such other
documents and instruments executed in connection therewith, as the same from
time to time may be amended, consolidated, extended, renewed, modified, restated
or replaced, collectively, the "Second Loan Documents");
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WHEREAS, the Third Loan is secured by (i) a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Third Mortgage"),
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encumbering the real property located in San Diego, California, described on
Exhibit A-3 attached hereto and made a part hereof and recorded in the real
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property records of San Diego County, together with all improvements thereon and
certain other property described in the Third Mortgage (collectively,
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the "Third Property"), and (ii) certain other documents and instruments executed
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in connection therewith (the Third Note, the Third Mortgage and such other
documents and instruments executed in connection therewith, as the same from
time to time may be amended, consolidated, extended, renewed, modified, restated
or replaced, collectively, the "Third Loan Documents");
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WHEREAS, the Fourth Loan is secured by (i) a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Fourth Mortgage"),
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encumbering the real property located in San Diego, California, described on
Exhibit A-4 attached hereto and made a part hereof and recorded in the real
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property records of San Diego County, together with all improvements thereon and
certain other property described in the Fourth Mortgage (collectively, the
"Fourth Property"), and (ii) certain other documents and instruments executed in
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connection therewith (the Fourth Note, the Fourth Mortgage and such other
documents and instruments executed in connection therewith, as the same from
time to time may be amended, consolidated, extended, renewed, modified, restated
or replaced, collectively, the "Fourth Loan Documents");
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WHEREAS, the Fifth Loan is secured by (i) a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Fifth Mortgage"),
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encumbering the real property located in Houston, Texas, described on Exhibit A-
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5 attached hereto and made a part hereof and recorded in the real property
-
records of Harris County, together with all improvements thereon and certain
other property described in the Fifth Mortgage (collectively, the "Fifth
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Property"), and (ii) certain other documents and instruments executed in
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connection therewith (the Fifth Note, the Fifth Mortgage and such other
documents and instruments executed in connection therewith, as the same from
time to time may be amended, consolidated, extended, renewed, modified, restated
or replaced, collectively, the "Fifth Loan Documents");
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WHEREAS, the Sixth Loan is secured by (i) a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Sixth Mortgage"),
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encumbering the real property located in Plano, Texas, described on Exhibit A-6
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attached hereto and made a part hereof and recorded in the real property records
of Collin County, together with all improvements thereon and certain other
property described in the Sixth Mortgage (collectively, the "Sixth Property";
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the First Property, the Second Property, the Third Property, the Fourth
Property, the Fifth Property and the Sixth Property, collectively, the
"Properties" and each individually, a "Property"), and (ii) certain other
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documents and instruments executed in connection therewith (the Sixth Note, the
Sixth Mortgage and such other documents and instruments executed in connection
therewith, as the same from time to time may be amended, consolidated, extended,
renewed, modified, restated or replaced, collectively, the "Sixth Loan
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Documents"); the First Mortgage, the Second Mortgage, the Third Mortgage, the
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Fourth Mortgage, the Fifth Mortgage and the Sixth Mortgage are, collectively,
the "Mortgages" and each individually, a "Mortgage"; the First Loan Documents,
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the Second Loan Documents, the Third Loan Documents, the Fourth Loan Documents,
the Fifth Loan Documents and the Sixth Loan Documents are, collectively, the
"Loan Documents"; provided, however, that none of the six environmental
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indemnity agreements (collectively, the "Environmental Indemnities") executed as
of even date herewith by Borrower and Health Care Property Investors, Inc., a
Maryland corporation ("Indemnitor") in connection with the respective Loans nor
any of the six indemnity and guaranty agreements executed as of even date
herewith by Indemnitor in
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connection with the respective Loans (collectively, the "Indemnities") shall
constitute a First Loan Document, a Second Loan Document, a Third Loan Document,
a Fourth Loan Document, a Fifth Loan Document, or a Sixth Loan Document and
neither this Agreement, any Mortgage, nor any other Loan Document shall secure
the obligations under any Environmental Indemnity or any Indemnity; and
WHEREAS, Lender has required that this Agreement be executed and delivered
as a condition to making each of the Loans.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency which are hereby acknowledged, the party hereto, in its respective
capacities set forth herein, hereby agrees as follows:
1. Cross-Default and Cross-Collateralization. The First Loan Documents,
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the Second Loan Documents, the Third Loan Documents, the Fourth Loan Documents,
the Fifth Loan Documents and the Sixth Loan Documents are hereby amended and
modified (such amendment and modification, a "Cross-Collateralization") as
-----------------------
follows:
a) an Event of Default under the First Note, the First Mortgage or
any of the other First Loan Documents (as the term "Event of Default" is defined
therein) shall, at Lender's option, constitute an Event of Default under the
Second Note, the Second Mortgage, the other Second Loan Documents, the Third
Note, the Third Mortgage, the other Third Loan Documents, the Fourth Note, the
Fourth Mortgage, the other Fourth Loan Documents, the Fifth Note, the Fifth
Mortgage, the other Fifth Loan Documents, the Sixth Note, the Sixth Mortgage and
the other Sixth Loan Documents (as the term "Event of Default" is defined in
each of the foregoing);
b) an Event of Default under the Second Note, the Second Mortgage or
any of the other Second Loan Documents (as the term "Event of Default" is
defined therein) shall, at Lender's option, constitute an Event of Default under
the First Note, the First Mortgage, the other First Loan Documents, the Third
Note, the Third Mortgage and the other Third Loan Documents, the Fourth Note,
Fourth Mortgage, and the other Fourth Loan Documents, (as the term "Event of
Default" is defined in each of the foregoing);
c) an Event of Default under the Third Note, the Third Mortgage or
any of the other Third Loan Documents (as the term "Event of Default" is defined
therein) shall, at Lender's option, constitute an Event of Default under the
First Note, the First Mortgage, the other First Loan Documents, the Second Note,
the Second Mortgage, the other Second Loan Documents, the Fourth Note, the
Fourth Mortgage, and the other Fourth Loan Documents, the Fifth Note, the Fifth
Mortgage, the other Fifth Loan Documents, the Sixth Note, the Sixth Mortgage and
the other Sixth Loan Documents (as the term "Event of Default" is defined in
each of the foregoing);
d) an Event of Default under the Fourth Note, the Fourth Mortgage or
any of the other Fourth Loan Documents (as the term "Event of Default" is
defined therein) shall, at Lender's option, constitute an Event of Default under
the First Note, the First Mortgage, the other First Loan Documents, the Second
Note, the Second Mortgage, the other Second Loan
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Documents, the Third Note, the Third Mortgage, and the other Third Loan
Documents, the Fifth Note, the Fifth Mortgage, the other Fifth Loan Documents,
the Sixth Note, the Sixth Mortgage and the other Sixth Loan Documents (as the
term "Event of Default" is defined in each of the foregoing);
e) an Event of Default under the Fifth Note, the Fifth Mortgage or
any of the other Fifth Loan Documents (as the term "Event of Default" is defined
therein) shall, at Lender's option, constitute an Event of Default under the
First Note, the First Mortgage, the other First Loan Documents, the Second Note,
the Second Mortgage, the other Second Loan Documents, the Third Note, the Third
Mortgage and the other Third Loan Documents, the Fourth Note, the Fourth
Mortgage, and the other Fourth Loan Documents, the Sixth Note, the Sixth
Mortgage and the other Sixth Loan Documents (as the term "Event of Default" is
defined in each of the foregoing);
f) an Event of Default under the Sixth Note, the Sixth Mortgage or
any of the other Sixth Loan Documents (as the term "Event of Default" is defined
therein) shall, at Lender's option, constitute an Event of Default under the
First Note, the First Mortgage, the other First Loan Documents, the Second Note,
the Second Mortgage, the other Second Loan Documents, the Third Note, the Third
Mortgage, and the other Third Loan Documents, the Fourth Note, the Fourth
Mortgage, and the other Fourth Loan Documents, the Fifth Note, the Fifth
Mortgage and the other Fifth Loan Documents (as the term "Event of Default" is
defined in each of the foregoing);
g) the First Mortgage and all of the other First Loan Documents
securing or guaranteeing the First Note and the obligations of CMT Borrower
under the other First Loan Documents (collectively, the "First Borrower Security
-----------------------
Documents") also shall secure and guaranty the Second Note, the Second Mortgage,
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the other Second Loan Documents, the Third Note, the Third Mortgage, the other
Third Loan Documents, the Fourth Note, the Fourth Mortgage, the other Fourth
Loan Documents, the Fifth Note, the Fifth Mortgage, the other Fifth Loan
Documents, the Sixth Note, the Sixth Mortgage and the other Sixth Loan
Documents;
h) the Second Mortgage and all of the other Second Loan Documents
securing or guaranteeing the Second Note and the obligations of CMT Borrower
under the other Second Loan Documents (collectively, the "Second Borrower
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Security Documents") also shall secure and guaranty the First Note, the First
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Mortgage, the other First Loan Documents, the Third Note, the Third Mortgage,
the other Third Loan Documents, the Fourth Note, the Fourth Mortgage, the other
Fourth Loan Documents, the Fifth Note, the Fifth Mortgage, the other Fifth Loan
Documents, the Sixth Note, the Sixth Mortgage and the other Sixth Loan
Documents;
i) the Third Mortgage and all of the other Third Loan Documents
securing or guaranteeing the Third Note and the obligations of CMT Borrower
under the other Third Loan Documents (collectively, the "Third Borrower Security
-----------------------
Documents") also shall secure and guaranty the First Note, the First Mortgage,
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the other First Loan Documents, the Second Note, the Second Mortgage, the other
Second Loan Documents, the Fourth Note, the Fourth Mortgage,
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and the other Fourth Loan Documents, the Fifth Note, the Fifth Mortgage, the
other Fifth Loan Documents, the Sixth Note, the Sixth Mortgage and the other
Sixth Loan Documents;
j) the Fourth Mortgage and all of the other Fourth Loan Documents
securing or guaranteeing the Fourth Note and the obligations of CMT Borrower
under the other Fourth Loan Documents (collectively, the "Fourth Borrower
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Security Documents") also shall secure and guaranty the First Note, the First
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Mortgage, the other First Loan Documents, the Second Note, the Second Mortgage,
the other Second Loan Documents, the Third Note, the Third Mortgage, and the
other Third Loan Documents, the Fifth Note, the Fifth Mortgage, the other Fifth
Loan Documents, the Sixth Note, the Sixth Mortgage and the other Sixth Loan
Documents;
k) the Fifth Mortgage and all of the other Fifth Loan Documents
securing or guaranteeing the Fifth Note and the obligations of Texas Borrower
under the other Fifth Loan Documents (collectively, the "Fifth Borrower Security
-----------------------
Documents") also shall secure and guaranty, the First Note, the First Mortgage,
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the other First Loan Documents, Second Note, the Second Mortgage, the other
Second Loan Documents, the Third Note, the Third Mortgage, the other Third Loan
Documents, the Fourth Note, the Fourth Mortgage, the other Fourth Loan
Documents, the Sixth Note, the Sixth Mortgage and the other Sixth Loan
Documents;
l) the Sixth Mortgage and all of the other Sixth Loan Documents
securing or guaranteeing the Sixth Note and the obligations of Texas Borrower
under the other Sixth Loan Documents (collectively, the "Sixth Borrower Security
-----------------------
Documents") also shall secure and guaranty the First Note, the First Mortgage,
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the other First Loan Documents, the Second Note, the Second Mortgage, the other
Second Loan Documents, the Third Note, the Third Mortgage, the other Third Loan
Documents, the Fourth Note, the Fourth Mortgage, and the other Fourth Loan
Documents, the Fifth Note, the Fifth Mortgage and the other Fifth Loan
Documents;
m) the aggregate principal amount secured by each of the First
Mortgage and the other First Loan Documents, the Second Mortgage and the other
Second Loan Documents, the Third Mortgage and the other Third Loan Documents,
the Fourth Mortgage and the other Fourth Loan Documents, the Fifth Mortgage and
the other Fifth Loan Documents, the Sixth Mortgage and the other Sixth Loan
Documents shall be FORTY TWO MILLLION DOLLARS ($42,000,000.00); and
n) the Borrower acknowledges and agrees that the Mortgages evidence
commercial loans and that a trustee's sale with respect to one or more of the
Mortgages shall not preclude judicial or non-judicial foreclosure of any of the
remaining Mortgages.
2. Intentionally Deleted.
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3. Documents to be Delivered to Lender. In connection with any Cross-
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Collateralization, the Borrower shall cause to be delivered to Lender:
a) endorsements to the title insurance policies issued at the
closings of the Loans insuring the liens of the First Mortgage, the Second
Mortgage, the Third Mortgage, the
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Fourth Mortgage, the Fifth Mortgage and the Sixth Mortgage which endorsements
shall be in form and substance satisfactory to Lender and shall (i) provide for
"tie-in" coverage under such policies up to the aggregate outstanding principal
amount of the First Note, the Second Note, the Third Note, the Fourth Note, the
Fifth Note and the Sixth Note; and (ii) include "First Loss" and "Last Dollar"
endorsements, if available for title insurance policies issued in the states
where the properties are located; and
b) such other documents and instruments as Lender may require.
5. Costs and Expenses. Borrower shall be responsible for and shall pay
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all reasonable costs and expenses incurred by Lender in connection with a Cross-
Collateralization, including, without limitation, reasonably attorneys' fees and
expenses, title insurance search fees and premiums, filing and recording fees
and taxes, if any.
6. Default. Any default by Borrower in fulfilling any of its obligations
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hereunder shall, if such default is a monetary default, after ten calendar days,
and, for any other default hereunder, after fifteen calendar days from receipt
of written notice from Lender to Borrower of such default, constitute an Event
of Default under each of the First Loan Documents, the Second Loan Documents,
the Third Loan Documents, the Fourth Loan Documents, the Fifth Loan Documents
and the Sixth Loan Documents (as the term "Event of Default" is defined
therein). The foregoing notice and cure periods shall not affect, in any
manner, Borrower's agreement that an Event of Default under any Loan Document
shall be an immediate Event of Default (at Lender's option) under all other Loan
Documents and no additional notice or cure periods are provided herein.
7. Further Assurances. Borrower agrees to execute and deliver any
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further documents and instruments as Lender may require to effectuate the Cross-
Collateralization contemplated hereby. Borrower further acknowledges and agrees
that Lender may unilaterally terminate this Agreement, sever this Agreement in
order to cover any one or more of the Properties or amend this Agreement at any
time and from time to time to remove any of the Properties from the Cross
Default and Cross-Collateralization provisions of this Agreement and Borrower
hereby agrees to cooperate with Lender and execute any documents reasonably
requested by Lender in connection therewith, to pay the reasonable expenses
incurred by Lender in connection therewith and, in connection therewith to
transfer one or more of the Properties to a new entity that will assume the
applicable Loan Documents, such entity to be a single purpose, bankruptcy remote
entity reasonably acceptable to Lender with the same beneficial ownership as
Borrower.
8. Release of Property. Borrower may not obtain the release of any
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individual Property from the lien of any of the Mortgages in connection with any
refinancing of the indebtedness secured thereby or otherwise except: (i)
pursuant to a defeasance in strict accordance with the terms of each of the Loan
Documents for each respective Loan, which Loan Documents require, inter alia,
that Borrower deposit with Lender the Additional Defeasance Deposit (as defined
in the respective Loan Documents); (ii) in connection with a prepayment in full
permitted under the respective Loan Documents, which prepayment is caused by a
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condemnation or casualty, and provided that no Event of Default has occurred and
is continuing with any of the Loan Documents; or (iii) upon a refinancing of a
Loan within three months prior to the Maturity Date of such Loan and upon such
conditions as are set forth in the respective Loan Documents including, without
limitation, to the extent required therein, the requirement of an additional
deposit to be delivered by Borrower to Lender as additional collateral and
security for the remaining Loans then subject to this Agreement.
Notwithstanding the terms of clause (iii) of this Section 8 or the terms of any
of the Loan Documents to the contrary, Borrower shall not obtain the release of
any of the Properties from the lien of the Mortgages or from the terms of this
Agreement within three months prior to the Maturity Date, if, after such
release, the Second Loan would remain subject to the lien of the Second Mortgage
and the terms of this Agreement and there would then be fewer than three (3)
other Loans (in addition to the Second Loan) subject to this Agreement.
9. Assumption of a Loan or the Loans. Subject to the terms and
---------------------------------
conditions of the respective Loan Documents as supplemented, but not limited,
hereby, Lender shall consent to one or more Sales (as defined in the Loan
Documents) of a particular Property subject, at Borrower's option, to either (i)
the provisions in the respective Loan Documents relating to a defeasance (as
opposed to a Sale and assumption of the respective Loan) or (ii) the conditions
set forth below in this section 9 and, in connection with such Sale, Lender
shall release the Property that is the subject of such Sale from the terms and
conditions of this Agreement:
(i) all conditions for such Sale under the respective Loan Documents have
been satisfied;
(ii) after such Sale, the Debt Service Coverage Ratio (as defined on
schedule 1 attached hereto) for the Properties remaining subject to this
agreement shall be no less than 1.40:1;
(iii) after such Sale, the Loan to Value Ratio (as defined on schedule 1
attached hereto) for the Properties remaining subject to this agreement shall be
no greater than 60%. In the event Borrower fails to satisfy the Debt Service
Coverage Ratio in clause 9 (ii) hereof, or fails to satisfy the Loan-to-Value
Ratio in this clause 9(iii), Borrower shall have the right to satisfy such
requirements by providing Lender with a cash deposit (the "Remaining Crossed
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Properties Deposit") to be held by Payee as additional collateral for the loans
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and property that will remain subject to this agreement and shall be held in an
interest bearing account, or at the election of Borrower, in direct non-callable
obligations of the United States of America, provided that Lender shall select
the actual direct, non-callable obligations of the United States of America.
The Remaining Crossed Properties Deposit shall be equal to the greater of (x) an
amount such that, when the interest that will be earned on the Remaining Crossed
Properties Deposit (as determined by Lender in its reasonable discretion) is
added to Operating Revenues (as defined on Schedule 1), the Debt Service
Coverage Ratio in clause 9(ii) hereof will be satisfied and (y) an amount, such
that, when included in determining "value" in calculating the Loan to Value
Ratio in this clause 9(iii), such Loan to Value Ratio will be satisfied;
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(iv) the Debt Service Coverage Ratio (as defined on schedule 2 attached
hereto) for the Property subject to such Sale shall be no less than as set forth
for the applicable Property in Schedule 4 attached hereto. In the event
Borrower fails to satisfy the Debt Service Coverage Ratio in this clause (iv),
Borrower shall have the right to cause the transferee of the Property subject
to such sale to increase the amount of the Release Deposit Amount (as
hereinafter defined) such that, when the interest that will be earned on such
increase in the Release Deposit Amount (as determined by Lender in its
reasonable discretion) is added to Operating Revenues (as defined in Schedule
2), the foregoing Debt Service Coverage Ratio will be satisfied;
(v) the Loan to Value Ratio (as defined on Schedule 2 attached hereto) for
the Property subject to such Sale shall be no greater than as set forth for the
applicable Property in Schedule 4 attached hereto. In the event Borrower fails
to satisfy the Loan to Value Ratio in this clause (v), Borrower shall have the
right to cause the transferee of the Property subject to such Sale to increase
the amount of the Release Deposit Amount such that, when such increase is
including in calculating the Loan to Value Ratio (as defined in Schedule 2), the
foregoing Loan to Value Ratio will be satisfied;
(vi) the transferee of the Property subject to such Sale makes a cash
deposit with Lender in like amount (the "Release Deposit Amount") as the face
----------------------
value of the Additional Defeasance Deposit (as defined in the Loan Documents)
which would be required if the Loan applicable to the Property that is subject
to the proposed Sale were being defeased, which cash deposit shall be held by
Lender as additional collateral and security for the Loan being assumed, shall
be subject to a pledge and security agreement provided by Lender and shall be
held in an interest bearing account, or at the election of Borrower, in direct
non-callable obligations of the United States of America, provided that Lender
shall select the actual direct, non-callable obligations of the United States of
America. Provided that the Debt Service Coverage Ratio and the Loan to Value
Ratio referred to in clauses 9(iv) and 9(v) hereof, respectively, are satisfied
without including the entire Release Deposit Amount in calculating Operating
Revenues or Loan-to-Value Ratio in Schedule 2 hereto, then the Release Deposit
Amount (or the portion thereof which is not needed in order to satisfy the
requirements in clause 9(iv) and 9(v) hereof) may be deposited by Borrower with
Lender as additional collateral and security for the Loans relating to the
Properties remaining subject to this agreement and such Release Deposit Amount
(or such portion thereof which is not needed in order to satisfy the
requirements in clause 9(iv) and 9(v) hereof) shall be included in the
calculation of Operating Revenues and Loan-to-Value Ratio in Schedule 1 hereto
in a similar manner as Remaining Crossed Properties Deposits are utilized in
making such calculations. In all events, however, Borrower shall be required to
make a deposit with Lender in the full amount of the Release Deposit Amount,
which amount may be divided and held as collateral for the Loan being assumed
and/or the Loans relating to the Properties remaining subject to this agreement
in accordance with this clause (vi). In lieu of the foregoing cash deposit, the
transferee of the Property subject to such Sale shall have the right to provide
to Lender a letter of credit in the amount of the Release Deposit Amount for the
benefit of Lender, in form and substance, and from a bank, approved by Lender in
its reasonable discretion; and
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(vii) Borrower shall, at Borrower's expense, provide such documents,
certificates, requests and agreements as reasonably requested by Lender
including, without limitation a new appraisal for each Property (unless an
appraisal for such Property has been approved by Lender and is dated within six
months of the prospective Sale) and updated rent rolls for each Property.
Furthermore, notwithstanding anything contained in this Agreement or in the
Second Loan Documents to the contrary, Lender shall have no obligation to
consent to any Sale of the Second Property and Borrower shall have no right to
effectuate the Sale of the Second Property without Lender's prior written
consent, which consent shall be given or withheld in Lender's sole and absolute
discretion; provided, however, that Borrower shall have the right to effectuate
a Defeasance (as defined in the Second Loan Documents) with respect to the
Second Property in accordance with the terms and conditions for a Defeasance set
forth in the Second Loan Documents.
In addition, notwithstanding anything contained in this Agreement or in any
of the Loan Documents to the contrary, Lender shall have no obligation to
consent to any Sale of any of the Properties and Borrower shall have no right to
effectuate the Sale of any of the Properties without Lender's prior written
consent (which consent shall be given or withheld in Lender's sole and absolute
discretion) if, after such Sale, the Second Loan would remain subject to the
terms and conditions of this Agreement and there would then be fewer than two
(2) other Loans (in addition to the Second Loan) subject to this Agreement;
provided, however, if after such Sale there would only be two (2) other Loans
(in addition to the Second Loan) subject to this Agreement and such other two
(2) Loans that would be subject to this Agreement are the First Loan and the
Sixth Loan, then Lender's prior written consent (which consent shall be given or
withheld in Lender's sole and absolute discretion) would be required in
connection with any such proposed Sale.
Notwithstanding the foregoing, Lender shall consent to a simultaneous Sale
of all of the Properties to one new borrower provided that all of the conditions
for a Sale in all of the Loan Documents are satisfied and each Loan then subject
to the terms of this Agreement shall remain, after the Sale, subject to the
terms and conditions of this Agreement.
10. Election of Remedies. Upon the occurrence of an Event of Default under
--------------------
any of the Loan Documents, all or any one or more of the rights, powers,
privileges and other remedies available to Lender against Borrower under any
Mortgage or any of the other Loan Documents relating to any Loan at law or in
equity may be exercised by Lender at any time and from time to time, whether or
not all or any of the Loans shall be declared due and payable, and whether or
not Lender 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 of the Properties secured by the Mortgages. Any such
actions taken by Lender shall be cumulative and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its sole discretion, to the fullest extent permitted by
law, without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Without limiting the generality of the foregoing,
Borrower agrees that if an Event
10
<PAGE>
of Default is continuing (i) Borrower hereby waives any "one action" or
"election of remedies" law or rule to the fullest extent permitted by law, and
(ii) all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against all or any of the Properties secured by the Mortgages and each Mortgage
has been foreclosed, sold and/or otherwise realized upon in satisfaction of the
Loans or the Loans has been paid in full; and
Nothing contained herein or in any other Loan Document shall be construed
as requiring Lender to resort to any particular Property for the satisfaction of
any of the Loans in preference or priority to any other Property secured by any
of the Mortgages, and Lender may seek satisfaction out of each and every
Property or any part thereof, in its absolute discretion in respect of the
Loans. In addition, Lender shall have the right from time to time to partially
foreclose one or more of the Mortgages in any manner and for any amounts of the
Loans secured by the Mortgages then due and payable as determined by Lender in
its sole discretion, including the following circumstances: (i) in the event of
any Event of Default by Borrower caused by a failure to make one or more
scheduled payments of principal and interest, Lender may foreclose one or more
of the Mortgages to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loans, Lender may foreclose one or more of the Mortgages to recover so
much of the principal balance of the Loans as Lender may elect to accelerate,
and to recover such other sums secured by one or more of the Mortgages as Lender
may elect. Notwithstanding one or more foreclosures or partial foreclosures,
each and every Property or part thereof, not subjected to said foreclosure shall
remain subject to the Mortgages to secure payment of the Loans not previously
recovered.
11. Construction with other Documents. Any requirements imposed on
---------------------------------
Borrower pursuant to the terms hereof are in addition to, and not in lieu of,
any requirements imposed on Borrower pursuant to the terms of any Loan Document.
To the extent of any inconsistency between the terms of any Loan Document and
the terms hereof, the terms of this Agreement shall govern.
12. Definitions. To the extent a Loan is released from the terms and
-----------
conditions hereof, the terms "Property", "Properties", "Loans" and "Loan
Documents" shall, from that time forth, no longer include such released
Property, such Loan, and the Loan Documents executed solely in connection with
such Loan.
13. Further Assurance. The Borrower agrees to execute and deliver
-----------------
any further documents and instruments as Lender may require to effectuate the
intent of this Agreement. The Borrowers further acknowledges and agrees that
Lender may require that this Agreement be amended at any time and from time to
time to remove any of the Properties from this Agreement, and, in accordance
with the terms set forth herein, the Borrower agrees to execute and deliver such
documents as Lender may require in connection therewith.
14. Notices. All notices, demands, requests or other
-------
communications to be sent by one party to the other hereunder or required by law
shall be effectuated in the manner set forth in the Mortgages.
11
<PAGE>
15. No Waiver; Time of Essence; Business Day. The failure of any
----------------------------------------
party hereto to enforce any right or remedy hereunder, or to promptly enforce
any such right or remedy, shall not constitute a waiver thereof nor give rise to
any estoppel against such party nor excuse any of the parties hereto from their
respective obligations hereunder. Any waiver of such right or remedy must be in
writing and signed by the party to be bound. This Agreement is subject to
enforcement at law or in equity, including actions for damages or specific
performance. Time is of the essence hereof. The term "business day" as used
herein shall mean a weekday, Monday through Friday, except a legal holiday or a
day on which banking institutions in the State in which any Property is located
are authorized by law to be closed.
16. Captions for Convenience. The captions and headings of the
------------------------
sections and paragraphs of this Agreement are for convenience of reference only
and shall not be construed in interpreting the provisions hereof.
17. Attorneys' Fees. In the event it is necessary for Lender to
---------------
retain the services of an attorney or any other consultants for any purpose
related to this Agreement, including, without limitation, the enforcement of
this Agreement, or any portion thereof, Borrower agrees to pay to Lender any and
all costs and expenses, including, without limitation, reasonable attorneys'
fees, incurred by Lender as a result thereof.
18. Reliance. Lender would not make any Loan to Borrower without this
--------
Agreement. Accordingly, Borrower intentionally and unconditionally enter into
the covenants and agreements as set forth above and understands that, in
reliance upon and in consideration of such covenants and agreements, the Loans
shall be made and, as part and parcel thereof, specific monetary and other
obligations have been, are being and shall be entered into which would not be
made or entered into but for such reliance.
19. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
------------------------------------------------
(1) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE COUNTY AND STATE WHERE EACH
PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING
FROM OR RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION OVER SUCH COUNTY AND STATE, (C) SUBMITS TO THE JURISDICTION OF SUCH
COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AGREES THAT IT
WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM. BORROWER
FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN
THE MORTGAGES, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN
EVERY RESPECT VALID
12
<PAGE>
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(2) LENDER AND BORROWER, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR
BORROWERS, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES,
AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, IN
EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
21. Survival. This Agreement shall be deemed to be continuing in
--------
nature and shall remain in full force and effect and shall survive the exercise
of any remedy by Lender under any one or more of the Mortgages or any of the
other Loan Documents, including, without limitation, any foreclosure or deed in
lieu thereof, even if, as a part of such remedy, any Loan is paid or satisfied
in full.
22. Entire Agreement; Amendment; Severability. This Agreement
-----------------------------------------
contains the entire agreement between the parties respecting the matters herein
set forth and supersedes all prior agreements, whether written or oral, between
the parties respecting such matters. Any amendments or modifications hereto, in
order to be effective, shall be in writing and executed by the parties hereto. A
determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.
23. Contribution.
------------
a) Each of the Borrowers hereby acknowledges and agrees that,
due to the fact that the Loans will be cross-defaulted as of the date hereof,
each of the Borrowers has a direct and material interest in preventing the
occurrence of an Event of Default under any of the Loan Documents (as the term
"Event of Default" is defined therein). Accordingly, from and after the date
hereof, each of the Borrowers is willing to commit to make or receive loans
(each an "Intra-Borrower Loan", and collectively, the "Intra-Borrower Loans") in
------------------- --------------------
order to provide for the payment of all amounts due under the Loan Documents
and, in so doing, to avoid an Event of Default thereunder. The Borrowers each
acknowledge and agree that the Lender is an intended third party beneficiary of
the Borrowers' obligations hereunder. In the event and to the extent that the
proceeds from the Mortgaged Property (as defined in the Mortgages) of any
Borrower
13
<PAGE>
(the "Creditor") are applied with respect of any payments due with respect
--------
to the Allocated Loan Amount (as set forth on Exhibit B annexed hereto)
--------------------- ---------
for the Mortgaged Property owned by another Borrower (the "Debtor") from and
------
after the date hereof, then the Creditor shall be deemed to have made an Intra-
Borrower Loan to Debtor in the amount of such proceeds so applied (the "Intra-
-----
Borrower Loan Amount"). Such Intra-Borrower Loan shall be deemed to be made on
--------------------
a non-recourse basis and shall be repaid out of the future proceeds of the
Mortgaged Property owned by the Debtor, together with interest thereon at a rate
to be agreed upon from time to time among the Borrowers.
b) All Intra-Borrower Loans deemed to be made under this
Agreement shall be evidenced by this Agreement, shall be an obligation of the
Debtor which owes such Intra-Borrower Loan solely by its execution of this
Agreement and shall not be evidenced by any separate instrument. Each Borrower
hereby waives presentment, notice of dishonor, protest and notice of non-payment
or non-performance with respect to each Intra-Borrower Loan for which it is
liable under this Agreement. Interest and principal on Intra-Borrower Loans
shall be paid solely out of net proceeds from the Mortgaged Property owned by
the Debtor and shall be subject in all cases to the terms and conditions of the
Loan Documents, and the payments from such sources shall be the sole and
exclusive remedy available to any Creditor. A Debtor shall not make any payment
with respect to an Intra-Borrower Loan after the occurrence of an Event of
Default with respect to the Mortgage to which the Debtor is a party. Each such
payment of principal or interest on Intra-Borrower Loans shall be subordinate
and subject to the prior payment of all amounts payable under the Loan
Documents. To the extent such sources of payment are insufficient to pay
interest and principal on any Intra-Borrower Loan, the Creditor owed such Intra-
Borrower Loan shall not have any claim against the Debtor which owes such Intra-
Borrower Loan for such amounts or any lien on or security interest in any of the
assets of such Debtor and no further or additional recourse shall be available
against the Debtor. All payments pursuant to Intra-Borrower Loans shall be made
on a net basis. All payments received on account of any Intra-Borrower Loan
under this Agreement shall be credited first to interest, then to principal.
Accrued but unpaid interest shall not be compounded.
24. Waivers. To the extent permitted by law, CMT Borrower and Texas
-------
Borrower hereby waive and agree not to assert or take advantage of:
(a) Any right to require Lender to proceed against either Borrower or
any other person or to proceed against or exhaust any security held by Lender at
any time or to pursue any other remedy in Lender's power or under any other
agreement before proceeding against either Borrower hereunder;
(b) Any defense based upon an election of remedies by Lender; and
(c) Any right or claim or right to cause a marshalling of the assets
of either Borrower.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HCP MEDICAL OFFICE BUILDINGS II, LLC,
a Delaware limited liability company
By: ________________________________
Name: Edward J. Henning
Title: Senior Vice President
TEXAS HCP MEDICAL OFFICE BUILDINGS, L.P.,
a Delaware limited partnership
By: Texas HCP Medical G.P., Inc.,
a Delaware corporation
its general partner
By: ___________________________________
Name: Edward J. Henning
Title: Senior Vice President
15
<PAGE>
[Add Acknowledgement]
[Add Exhibit A-1 through A-6
16
<PAGE>
EXHIBIT B
---------
Allocated loan Amounts
1. The First Property $ 8,500,000
2. The Second Property $ 6,500,000
3. The Third Property $ 3,900,000
4. The Fourth Property $ 8,000,000
5. The Fifth Property $10,600,000
6. The Sixth Property $ 4,500,000
17
<PAGE>
SCHEDULE 1
"Debt Service" shall mean an amount equal to the principal and interest payments
due under all of the Loans (except the Loan related to the Property subject to
the proposed Sale).
"Debt Service Coverage Ratio" shall mean the ratio obtained by dividing the
then-current Net Operating Income for all of the Properties (except the Property
subject to the proposed Sale) by the total annualized Debt Service.
"Net Operating Income" shall mean the amount by which Operating Revenues for all
of the Properties (except the Property subject to the proposed Sale) exceeds
Operating Expenses for all of the Properties (except the Property subject to the
proposed Sale), calculated as of the twelve month period ending as of the date
of the most recent financial statements delivered or required to be delivered to
Lender pursuant to the Loan Documents and in all cases calculated and reasonably
determined by Lender and based on Lender's then reasonable current underwriting
standards; if requested by Borrower in connection with a potential defeasance or
sale which may be permitted under this Agreement, Lender shall provide Borrower
with its then current underwriting standards in determining Net Operating Income
for the Properties.
"Operating Expenses" shall mean all reasonable and necessary expenses of
operating the Properties (except the Property subject to the proposed Sale) in
the ordinary course of business which are paid by Borrower and which are
directly associated with and fairly allocable to the Properties (except the
Property subject to the proposed Sale) for the applicable period, on an accrual
basis, including ad valorem real estate taxes and assessments, insurance
premiums, regularly scheduled tax impounds paid to Lender in connection with any
of the Loans (excluding the Loan attributable to the Property subject to the
proposed Sale), if any, maintenance costs, a minimum management fee equal to 4%
of base and percentage rent, and costs, accounting, legal, and other
professional fees, fees relating to environmental and financial audits, and
other expenses incurred by Lender and reimbursed by Borrower under the Loan
Documents (excluding the Loan Documents applicable to the Property that is the
subject of the proposed Sale), deposits to any capital replacement reserves, if
any, required by Lender pursuant to the Loan Documents (excluding the Loan
Documents applicable to the Property that is the subject of the proposed Sale),
wages, salaries, and personnel expenses and tenant improvement and leasing
commissions cost equal to the amount set forth on Schedule 3 annexed hereto and
made a part hereof per square foot on an annualized basis for each of the
Properties (except the Property subject to the proposed Sale), but excluding
Debt Service, capital expenditures, any of the foregoing expenses which are paid
from deposits to cash reserves previously included as Operating Expenses, any
payment or expense for which Borrower was or is to be reimbursed from proceeds
of the Loans (excluding the proceeds from the Loan applicable to the Property
that is the subject of the proposed Sale), or insurance or by any third party,
and any non-cash charges such as depreciation and amortization, in all cases
calculated and determined on a trailing twelve month basis. Operating Expenses
shall not include federal, state or local income taxes or legal and other
professional fees or expenses unrelated to the operation of the Properties.
18
<PAGE>
To the extent that the original Borrower (or any affiliate of the original
Borrower) has not owned a particular Property for at least twelve months from
the date of the calculation of Operating Expenses, Operating Expenses
attributable to such Property shall be determined on an annualized basis.
"Operating Revenues" shall mean all receipts of Borrower from operation of the
Properties (except the Property subject to the proposed Sale) or otherwise
arising in respect of the Properties (except the Property subject to the
proposed Sale) after the date hereof which are paid and properly allocable to
the Properties (except the Property subject to the proposed Sale) for the
applicable period, on an accrual basis, including receipts from leases and
parking agreements, concession fees and charges, interest, if any, being earned
on (x) any Additional Defeasance Deposit (as defined in the Loan Documents)
previously paid in connection with any other loan which was once subject to this
Agreement and which Additional Defeasance Deposit secures the remaining Loans;
(y) any Additional Cash Deposit (as defined in the Loan Documents) previously
paid in connection with any other loan which was once subject to this Agreement
and which Additional Cash Deposit secures the remaining Loans; and (z) any
Remaining Crossed Properties Deposits or Release Deposit Amounts previously paid
in connection with any other loan which was once subject to this Agreement and
which Remaining Crossed Properties Deposits or Release Deposit Amounts secures
the remaining Loans, and other miscellaneous operating revenues, proceeds from
rental or business interruption insurance, withdrawals from cash reserves
(except to the extent any operating expenses paid therewith are excluded from
Operating Expenses), but excluding security deposits and earnest money deposits
until they are forfeited by the depositor, advance rentals until they are
earned, and proceeds from a sale or other disposition, in all cases calculated
and determined on a trailing twelve month basis. To the extent that the original
Borrower hereof (or any affiliate of original Borrower) has not owned a
particular Property for at least twelve months from the date of the calculation
of Operating Revenue, Operating Revenue attributable to such Property shall be
determined on an annualized basis.
In addition, operating revenues may, in accordance with Lender's then current
underwriting standards, be reduced by the following:
1. a 5% vacancy/credit loss factor; and
2. all or a portion of rents attributable to tenants that are either on
month-to-month leases, not in occupancy, or in bankruptcy.
"Loan-to-Value Ratio" shall mean the ratio of the outstanding principal
amount of the indebtedness for all of the remaining Loans (excluding the Loan
applicable to the Property that is the subject of the proposed Sale), to the
value of the sum of: (i) all of the remaining Properties (except the Property
that is the subject of the proposed Sale), such value being determined by Lender
in its reasonable discretion, and (ii) any Additional Defeasance Deposit,
Additional Cash Deposit, Release Deposit Amount or Remaining Crossed Properties
Deposits previously paid in connection with any other loan which was once
subject to this Agreement and which Additional
19
<PAGE>
Defeasance Deposit, Additional Cash Deposit, Release Deposit Amount or Remaining
Crossed Properties Deposits secures the remaining Loans.
To the extent a term is defined in this schedule 1 and is also defined in
schedule 2, the term defined herein shall be for use only in connection with
this schedule 1 and where this Agreement specifically refers to this schedule 1.
20
<PAGE>
SCHEDULE 2
"Debt Service" shall mean an amount equal to the principal and interest payments
due under the Loan related to the Property subject to the proposed Sale.
"Debt Service Coverage Ratio" shall mean the ratio obtained by dividing the
then-current Net Operating Income for the Property subject to the proposed Sale
by the total annualized Debt Service (as defined in this schedule 2).
"Net Operating Income" shall mean the amount by which Operating Revenues for the
Property subject to the proposed Sale exceeds Operating Expenses for the
Property subject to the proposed Sale, calculated as of the twelve month period
ending as of the date of the most recent financial statements delivered or
required to be delivered to Lender pursuant to the applicable Loan Documents and
in all cases calculated and reasonably determined by Lender and based on
Lender's then reasonable current underwriting standards; if requested by
Borrower in connection with a potential defeasance or sale which may be
permitted under this Agreement, Lender shall provide Borrower with its then
current underwriting standards in determining Net Operating Income for the
Property.
"Operating Expenses" shall mean all reasonable and necessary expenses of
operating the Property subject to the proposed Sale in the ordinary course of
business which are paid by Borrower and which are directly associated with and
fairly allocable to the Property subject to the proposed Sale for the applicable
period, on an accrual basis, including ad valorem real estate taxes and
assessments, insurance premiums, regularly scheduled tax impounds paid to Lender
in connection with the Loan attributable to the Property subject to the proposed
Sale, if any, maintenance costs, a minimum management fee equal to 4% of base
and percentage rent, and costs, accounting, legal, and other professional fees,
fees relating to environmental and financial audits, and other expenses incurred
by Lender and reimbursed by Borrower under the Loan Documents applicable to the
Property that is the subject of the proposed Sale, deposits to any capital
replacement reserves, if any, required by Lender pursuant to the Loan Documents
applicable to the Property that is the subject of the proposed Sale, wages,
salaries, and personnel expenses and tenant improvement and leasing commissions
cost equal to the amount set forth on Schedule 3 per square foot on an
annualized basis for the Property subject to the proposed Sale, but excluding
Debt Service, capital expenditures, any of the foregoing expenses which are paid
from deposits to cash reserves previously included as Operating Expenses, any
payment or expense for which Borrower was or is to be reimbursed from proceeds
of the Loan applicable to the Property that is the subject of the proposed Sale,
or insurance or by any third party, and any non-cash charges such as
depreciation and amortization, in all cases calculated and determined on a
trailing twelve month basis. Operating Expenses shall not include federal, state
or local income taxes or legal and other professional fees or expenses unrelated
to the operation of the Property subject to the proposed Sale. To the extent
that the original Borrower (or any affiliate of the original Borrower) has not
owned the particular Property for at least twelve months from the date of the
calculation of Operating Expenses, Operating Expenses attributable to such
Property shall be determined on an annualized basis.
21
<PAGE>
"Operating Revenues" shall mean all receipts of Borrower from operation of the
Property subject to the proposed Sale or otherwise arising in respect of the
Property subject to the proposed Sale after the date hereof which are paid and
properly allocable to the Property subject to the proposed Sale for the
applicable period, on an accrual basis, including receipts from leases and
parking agreements, concession fees and charges, interest, if any, that will be
earned on the Release Deposit Amount (as determined by Lender in its reasonable
discretion) only if such Release Deposit Amount is to be held by Lender as
additional collateral for the Loan being assumed under Section 9 of this
Agreement and other miscellaneous operating revenues, proceeds from rental or
business interruption insurance, withdrawals from cash reserves (except to the
extent any operating expenses paid therewith are excluded from Operating
Expenses), but excluding security deposits and earnest money deposits until they
are forfeited by the depositor, advance rentals until they are earned, and
proceeds from a sale or other disposition, in all cases calculated and
determined on a trailing twelve month basis. To the extent that the original
Borrower hereof (or any affiliate of original Borrower) has not owned the
Property subject to the proposed Sale for at least twelve months from the date
of the calculation of Operating Revenue, Operating Revenue attributable to such
Property shall be determined on an annualized basis.
In addition, operating revenues may, in accordance with Lender's then current
underwriting standards, be reduced by the following:
1. a 5% vacancy/credit loss factor; and
2. all or a portion of rents attributable to tenants that are either on
month-to-month leases, not in occupancy, or in bankruptcy.
"Loan-to-Value Ratio" shall mean the ratio of the outstanding principal
amount of the indebtedness for the Loan applicable to the Property that is the
subject of the proposed Sale, to the value of the sum of: (i) the Property that
is the subject of the proposed Sale, such value being determined by Lender in
its reasonable discretion, and (ii) the Release Deposit Amount for the Loan
applicable to the Property that is subject to the proposed Sale only if such
Release Deposit Amount is to be held by Lender as additional collateral for such
Loan.
To the extent a term is defined in this schedule 2 and is also defined in
schedule 1, the term defined herein shall be for use only in connection with
this schedule 2 and where this Agreement specifically refers to this schedule 2.
22
<PAGE>
SCHEDULE 3
Tenant Improvement and Leasing Commission Costs for use in calculating
Operating Expenses
Property Cost Per Square Foot
1. The First Property $1.44
2. The Second Property $1.00
3. The Third Property $1.00
4. The Fourth Property $2.00
5. The Fifth Property $1.34
6. The Sixth Property $1.04
23
<PAGE>
SCHEDULE 4
Minimum Debt Service Coverage Ratio for
Property Subject to Sale
1. The First Property 1.50:1
2. The Second Property N/A - No Sale Permitted
3. The Third Property 1.40:1
4. The Fourth Property 1.40:1
5. The Fifth Property 1.40:1
6. The Sixth Property 1.45:1
Maximum Loan to Value Ratio for
Property Subject to Sale
1. The First Property 50%
2. The Second Property N/A - No Sale Permitted
3. The Third Property 60%
4. The Fourth Property 60%
5. The Fifth Property 60%
6. The Sixth Property 50%
24
