<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20047
Corporate Office Properties Trust
(Exact name of registrant as specified in its charter)
Maryland 23-2947217
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
401 City Avenue, Suite 615, Bala Cynwyd, PA 19004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 538-1800
-------------------
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. [X] Yes [ ] No
On November 13, 1998, 16,471,640 shares of the Company's Common Shares of
Beneficial Interest, $0.01 par value, were outstanding.
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- --------------------------------------------------------------------------------
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Table of Contents
Form 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements:
Consolidated Balance Sheets as of September 30, 1998 (unaudited) and December 31, 3
1997
Consolidated Statements of Operations for the three and nine months ended September 4
30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 5
and 1997 (unaudited)
Notes to Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 14
PART II: OTHER INFORMATION
Item 1: Legal Proceedings 20
Item 2: Changes in Securities 20
Item 3: Defaults Upon Senior Securities 20
Item 4: Submission of Matters to a Vote of Security Holders 20
Item 5: Other Information 20
Item 6: Exhibits and Reports on Form 8-K 21
SIGNATURES 27
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Corporate Office Properties Trust
Consolidated Balance Sheet
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------------- ---------------------
(unaudited)
<S> <C> <C>
Assets
Land $ 88,504 $ 38,764
Buildings and improvements 352,981 152,945
Furniture, fixtures and equipment 332 140
Less accumulated depreciation (6,984) (3,224)
- ---------------------------------------------------------------------- -------------------- ---------------------
Net investments in real estate 434,833 188,625
Cash and cash equivalents 1,906 3,395
Restricted cash 143 --
Tenant accounts receivable 629 78
Investment in and advances to Corporate Office
Management, Inc. 2,313 --
Deferred rent receivable 1,562 479
Deferred financing costs, net 1,185 857
Deferred costs and other assets, net 5,413 100
- ---------------------------------------------------------------------- -------------------- ---------------------
Total assets $ 447,984 $ 193,534
- ---------------------------------------------------------------------- -------------------- ---------------------
Liabilities and shareholders' equity
Liabilities:
Mortgage loans payable $ 205,338 $ 114,375
Accounts payable and accrued expenses 4,567 932
Rents received in advance and security deposits 2,005 425
Dividends/distributions payable 3,087 1,276
- ---------------------------------------------------------------------- -------------------- ---------------------
Total liabilities 214,997 117,008
- ---------------------------------------------------------------------- -------------------- ---------------------
Minority interests:
Preferred Units 52,500 52,500
Common Units 23,186 12,362
- ---------------------------------------------------------------------- -------------------- ---------------------
Total minority interests 75,686 64,862
- ---------------------------------------------------------------------- -------------------- ---------------------
Commitments and contingencies -- --
Shareholders' equity:
Preferred Shares ($0.01 par value; 5,000,000
authorized); 1,025,000 designated as Series A
Convertible Preferred Shares of beneficial interest ($0.01
par value, 865,566 Shares issued and outstanding at
September 30, 1998) 9 --
Common Shares of beneficial interest ($0.01 par value; 45,000,000
authorized, 15,953,717 and 2,266,083 Shares issued and outstanding
at September 30, 1998 and December 31, 1997, respectively) 160 23
Additional paid-in capital 163,918 16,620
Accumulated deficit (6,786) (4,979)
- ---------------------------------------------------------------------- -------------------- ---------------------
Total shareholders' equity 157,301 11,664
- ---------------------------------------------------------------------- -------------------- ---------------------
Total liabilities and shareholders' equity $ 447,984 $ 193,534
- ---------------------------------------------------------------------- -------------------- ---------------------
</TABLE>
See accompanying notes to financial statements.
3
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Corporate Office Properties Trust
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
----------------------------- ----------------------------
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 8,562 $ 629 $ 20,539 $ 1,881
Tenant recoveries and other income 1,250 5 2,640 18
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Total revenues 9,812 634 23,179 1,899
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Expenses
Property operating 2,457 7 5,001 19
General and administrative 397 95 1,055 271
Interest expense 2,849 305 7,424 920
Amortization of deferred financing costs 119 3 266 9
Depreciation and other amortization 1,514 138 3,772 416
Reformation costs -- -- 637 --
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Total expenses 7,336 548 18,155 1,635
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Income from operations 2,476 86 5,024 264
Equity in net income from Corporate
Office Management, Inc. 17 -- 17 --
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Income before minority interests 2,493 86 5,041 264
Minority interests
Preferred Units (853) -- (2,559) --
Common Units (301) -- (713) --
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Net income 1,339 86 1,769 264
Preferred Share dividends (10) -- (10) --
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Net income available to Common Shareholders $ 1,329 $ 86 $ 1,759 $ 264
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Earnings per Share
Basic $ 0.13 $ 0.06 $ 0.26 $ 0.19
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
Diluted $ 0.12 $ 0.06 $ 0.26 $ 0.19
- --------------------------------------------------------------- -------------- -------------- -------------- -------------
</TABLE>
See accompanying notes to financial statements.
4
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Corporate Office Properties Trust
Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
----------------------------
1998 1997
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,769 $ 264
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests 3,272 --
Depreciation and amortization 3,772 416
Amortization of deferred financing costs 266 9
Amortization of marketable securities -- (8)
Equity in net income of Corporate Office Management, Inc. (17) --
Increase in deferred rent receivable (1,083) (50)
Increase in tenant accounts receivable and other assets (2,535) (104)
Increase (decrease) in accounts payable, accrued expenses, rents
received in advance and security deposits 2,173 (32)
- ---------------------------------------------------------------------- ------------- --------------
Net cash provided by operating activities 7,617 495
- ---------------------------------------------------------------------- ------------- --------------
Cash flows from investing activities:
Proceeds from maturity of marketable securities -- 487
Investment in and advances to Corporate Office
Management, Inc. 204 --
Increase in restricted cash (143) --
Purchases of and additions to investments in real estate (96,897) --
Leasing commissions paid (151) --
Deposits on real estate acquisitions (1,465) --
- ---------------------------------------------------------------------- ------------- --------------
Net cash (used in) provided by investing activities (98,452) 487
- ---------------------------------------------------------------------- ------------- --------------
Cash flows from financing activities:
Net proceeds from issuance of Common Shares 72,742 --
Costs attributable to Common Shares issued (505) --
Dividends paid (2,089) (533)
Distributions paid (3,475) --
Proceeds from mortgage loans payable 26,700 --
Repayments of mortgage loans payable (1,762) (210)
Deferred financing costs (565) --
Deposit on financing (1,700) --
- ---------------------------------------------------------------------- ------------- --------------
Net cash provided by (used in) financing activities 89,346 (743)
- ---------------------------------------------------------------------- ------------- --------------
Net (decrease) increase in cash and cash equivalents (1,489) 239
Cash and cash equivalents
Beginning of period 3,395 258
- ---------------------------------------------------------------------- ------------- --------------
End of period $ 1,906 $ 497
- ---------------------------------------------------------------------- ------------- --------------
</TABLE>
See accompanying notes to financial statements.
5
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Corporate Office Properties Trust
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
(unaudited)
1. Organization and Formation of Company
Corporate Office Properties Trust (formerly Royale Investments, Inc.)
(the "Company") is a fully-integrated, self-administered Real Estate Investment
Trust ("REIT") which focuses on the ownership, acquisition, management and
development of suburban office buildings. The Company was formed in 1988 as a
Minnesota corporation. The Company has qualified as a REIT as defined in the
Internal Revenue Code (the "Code"). As of September 30, 1998, the Company's
portfolio included 43 commercial real estate properties leased for office and
retail purposes.
The Company's operations are conducted primarily through Corporate
Office Properties, L.P. (the "Operating Partnership"), a partnership formed to
own real estate both directly and through subsidiary partnerships and limited
liability companies ("LLCs"). The Company is the sole general partner in the
Operating Partnership and as of September 30, 1998, owned 84.7% of the Operating
Partnership's common partnership units ("Common Units"). The general partner of
several of the subsidiary partnerships is Corporate Office Properties Holdings,
Inc. ("COPH"), a wholly owned subsidiary of the Company.
On January 1, 1998, the Company changed its name to Corporate Office
Properties Trust, Inc. On March 16, 1998, the Company was reformed as a Maryland
REIT and changed its name to Corporate Office Properties Trust (the
"Reformation"). In connection with the Reformation, 45,000,000 common shares and
5,000,000 preferred shares were authorized and each share of common stock was
exchanged for one common share of beneficial interest, par $0.01 ("Common
Share") in Corporate Office Properties Trust. All common stock references in the
financial statements have been restated as Common Shares. This restatement had
no effect on net operations or the amounts presented as shareholders' equity.
The Operating Partnership also owns 95% of the capital stock, including
1% of the voting common stock, in Corporate Office Management, Inc. ("COMI"), an
entity formed in September 1998. COMI and its subsidiaries provide asset
management, property management, construction, development and related services
to the Company and to third-party clients (see Note 4).
On September 28, 1998, the Company, through affiliates of the Operating
Partnership, completed a number of transactions (collectively, the
"Constellation Transaction") pursuant to agreements (the "Constellation
Agreements") with affiliates of Constellation Real Estate Group (collectively,
"Constellation") to acquire real estate properties and service businesses (see
Note 3). In connection with the Constellation Transaction, the Company issued
6,182,634 Common Shares and 865,566 Series A Convertible Preferred Shares of
Beneficial Interest ("Preferred Shares") to Constellation, which became the
owner of approximately 39% of the Company's Common Shares. The Company
contributed the assets it received in the Constellation Transaction to the
Operating Partnership in exchange for 6,182,634 Common Units and 865,566
preferred units ("Series A Preferred Units"). The Series A Preferred Units carry
terms which are identical to the Preferred Shares issued to Constellation.
2. Summary of Significant Accounting Policies
The financial statements have been prepared by the Company without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. In order to conform with
generally accepted accounting principles, management, in preparation of the
Company's financial statements, is required
6
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to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as of
September 30, 1998 and December 31, 1997, and the reported amounts of
revenues and expenses for the three and nine months ended September 30, 1998
and 1997. Actual results could differ from those estimates.
In the opinion of the Company, all adjustments (consisting solely of
normal recurring matters, except for $637 of costs associated with the
Reformation) necessary to fairly present the financial position of the Company
as of September 30, 1998, the results of its operations for the three and nine
months ended September 30, 1998 and 1997 and the cash flows for the nine months
ended September 30, 1998 and 1997 have been included. The results of operations
for such interim periods are not necessarily indicative of the results for a
full year. For further information, refer to the Company's consolidated
financial statements and footnotes thereto included in the Annual Report on Form
10-K for the year ended December 31, 1997.
Basis of Presentation
The consolidated financial statements of the Company at September 30,
1998 and December 31, 1997 include the accounts of the Company, the Operating
Partnership (and its subsidiary partnerships and LLCs), and COPH. All
intercompany transactions and balances have been eliminated in consolidation.
Certain amounts from prior periods have been reclassified to conform to current
year presentation. The reclassifications had no effect on net operations or
shareholders' equity.
The Company, as general partner, controls the Operating Partnership;
therefore consolidated financial reporting and accounting have been applied.
Minority interests represent the Common Units and Initial Preferred Units
("Initial Preferred Units") of the Operating Partnership not owned by the
Company, each of which include certain interests retained by the Chairman of the
Board of Trustees and the Chief Executive Officer of the Company ("Retained
Interests").
Earnings Per Share ("EPS")
Pursuant to SFAS No. 128, the Company has computed basic and diluted
EPS for the three and nine months ended September 30, 1998 and 1997. The
weighted average common shares outstanding for purposes of basic and diluted EPS
calculations are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares-basic 9,973 1,420 6,652 1,420
Assumed conversion of stock options 10 -- 86 --
Conversion of Preferred Shares -- -- -- --
Conversion of Initial Preferred Units 7,500 -- -- --
Conversion of Common Units 2,582 -- -- --
------ ------ ------ ------
Weighted average common shares-diluted 20,065 1,420 6,738 1,420
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The diluted EPS computation for the nine months ended September 30,
1998 does not assume conversion of Initial Preferred Units, Common Units or
Preferred Shares since such conversion would have an antidilutive effect on EPS.
The conversion of convertible Initial Preferred Units, convertible Common Units
and Preferred Shares into Common Shares would increase the diluted weighted
average common shares denominator by 7,500,000, 2,581,818 and 17,833 Common
Shares, respectively, for the nine months ended September 30, 1998. Such
conversions could potentially dilute EPS in the future.
7
<PAGE>
The diluted EPS computation for the three months ended September 30,
1998 does not assume conversion of Preferred Shares since such conversion would
have an antidilutive effect on EPS. The conversion of Preferred Shares into
Common Shares would increase the diluted weighted average common shares
denominator by 52,916. Such conversions could potentially dilute EPS in the
future.
Recent Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information". This statement, effective for financial statements for
fiscal years beginning after December 15, 1997, requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. Generally, financial information is required to be reported
on the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. While this statement affects
only financial statement disclosures, the Company currently does not expect
adoption of this Statement to have a material effect on the preparation of its
financial statement presentation or related footnote disclosures. SFAS 131 is
not effective for interim financial statements in the initial year of its
application.
In March 1998, the FASB's Emerging Issues Task Force (the "Task Force")
reached consensus on Emerging Issues Task Force Issue No. 97-11, "Accounting for
Internal Costs Relating to Real Estate Property Acquisitions" ("EITF 97-11").
EITF 97-11, effective March 19, 1998, requires that internal costs of
preacquisition activities incurred in connection with the acquisition of an
operating property should be expensed as incurred. The Company does not incur
significant internal costs from preacquisition activities; therefore the
adoption of EITF 97-11 did not have a material effect on the Company's
consolidated statement of operations.
In May 1998, the Task Force reached consensus on Emerging Issues Task
Force Issue No. 98-9, "Accounting for Contingent Rent in Interim Periods" ("EITF
98-9"). EITF 98-9, effective May 22, 1998, states that lessors should not
recognize contingent rental revenue in interim periods until the lessee has met
the specified targets that trigger contingent rental income. The Company's
historical accounting for contingent rent is consistent with the Task Force's
consensus; therefore, the adoption of EITF 98-9 did not have a material effect
on the Company's consolidated statement of operations.
3. Acquisitions
On April 30, 1998, the Company, through affiliates of the Operating
Partnership, acquired nine multistory office buildings and three office/flex
buildings in the Baltimore/Washington Corridor in Linthicum, Anne Arundel
County, Maryland (the "Airport Square Properties"). The properties were acquired
for cash at an aggregate purchase price of $72,618, including $1,139 in
transaction costs.
On May 28, 1998, the Company, through affiliates of the Operating
Partnership, acquired two multistory office buildings located in Fairfield, New
Jersey (the "Fairfield Properties"). The properties were acquired at an
aggregate price of $29,405, including $605 in transaction costs, paid through
the assumption of debt of $6,465 and proceeds from the Credit Facility, as
defined below (Note 6).
On September 28, 1998, the Company, through affiliates of the Operating
Partnership, completed the Constellation Transaction. The Company acquired
interests in 10 office properties and 2 retail properties (collectively the
"Constellation Properties"). The Constellation Properties, located in the
Baltimore/Washington Corridor, were acquired at an aggregate price of $146,727,
including $3,136 in transaction costs.
The Company also acquired from Constellation a 75% interest in
Corporate Realty Management, LLC ("CRM"), a real estate management services
entity, and certain equipment, furniture and other assets related to
Constellation Real Estate, Inc. ("CRE") (collectively, the "Constellation
Service Companies"). The Constellation Service Companies were acquired at an
aggregate price of $2,500.
8
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The Constellation Transaction was financed as follows: (i) the issuance
of 6,182,634 Common Shares in the Company, valued at $64,918 ($10.50 per share),
(ii) the issuance of 865,566 Preferred Shares in the Company, valued at $21,639
($25 per share) (iii) $58,085 in debt of the Constellation Properties assumed by
the Company (see Note 6), (iv) $2,100 in proceeds from the Company's Credit
Facility (see Note 6) and (v) $2,485 in cash from the Company's cash reserves.
With the Constellation Transaction, the Company was granted certain
options and rights of first refusal to purchase undeveloped land in three
locations adjacent to certain of the Constellation Properties. In addition, a
significant number of those persons previously employed by CRE engaged in the
operation of the Constellation Properties became employees of affiliates of the
Company.
In connection with the Constellation Transaction, the Company's Board
of Trustees was expanded from a composition of seven to nine Trustees.
Constellation designated Edward A. Crooke and Steven D. Kesler as the two new
Trustees. Jay H. Shidler remained Chairman. Clay W. Hamlin remained Chief
Executive Officer and resigned as President of the Company, with Randall M.
Griffin appointed as President and Chief Operating Officer. In addition, Roger
A. Waesche, Jr., formerly Senior Vice President of Finance of CRE, and John H.
Gurley, formerly Senior Vice President and general counsel of CRE, as well as
certain other officers of CRE, assumed positions with the Company and its
affiliates similar to those held by them with CRE.
4. Investment in Corporate Office Management, Inc.
On September 28, 1998, the Company, through affiliates of the Operating
Partnership, acquired from Constellation a 75% interest in CRM and certain
equipment, furniture and other assets related to CRE (see Note 3). Upon
completion of the Constellation Transaction, the Company contributed these
assets into Corporate Office Management, Inc. ("COMI"), an entity which provides
asset management, managerial, financial and legal support to the Company and its
affiliates. In exchange for this contribution of assets, the Company received
95% of the capital stock in COMI, including 1% of the voting common stock, and a
$2,005 note receivable from COMI carrying an interest rate of 10%.
COMI contributed certain equipment, furniture and other assets into
Corporate Development Services, LLC ("CDS"), an entity which provides
construction and development services predominantly to the Company and its
affiliates. In exchange for this contribution of assets, COMI received 100% of
the membership interests in CDS.
The Company accounts for its investment in COMI and its subsidiaries,
CRM and CDS, using the equity method of accounting. The Company's investment in
COMI at September 30, 1998 was comprised of the following:
<TABLE>
<S> <C>
Note receivable $ 2,005
Equity investment in COMI 487
Advance payable (179)
---------
Total $ 2,313
---------
---------
</TABLE>
5. Issuance of Shares and Options
In January 1998, options to purchase 2,500 shares were exercised. In
March 1998, options to purchase an additional 2,500 shares were exercised.
In March 1998, options to purchase an aggregate of 45,000 shares were
granted to an officer and four independent Trustees at a grant price of $12.25
per share. Options relating to 20,000 Common Shares vest one year after the date
of grant and options relating to 25,000 Common Shares vest ratably over 3 years
following
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the date of grant. The options expire ten years after the date of grant. On
September 28, 1998, options to purchase an aggregate of 709,175 shares were
granted to employees of the Company and its affiliates at a grant price of
$9.25. These options vest ratably over 3 years following the date of grant.
The options expire ten years after the date of grant.
On April 27, 1998, the Company completed the sale of 7,500,000 Common
Shares to the public at a price of $10.50 per share (the "Offering"). The net
proceeds were contributed to the Operating Partnership in exchange for 7,500,000
Common Units. The Operating Partnership used the proceeds to fund acquisitions.
On September, 28, 1998, in connection with the Constellation
Transaction, the Company issued 6,182,634 Common Shares and 865,566 Preferred
Shares. The Preferred Shares are nonvoting and are convertible after 2 years of
issuance, subject to certain conditions, into Common Shares on the basis of
1.8748 Common Shares for each Preferred Share. Holders of Preferred Shares are
entitled to cumulative dividends, payable quarterly (as and if declared by the
Board of Trustees), accruing from the date of issue at the annual rate of $1.375
per share, which is equal to 5.5% of the $25.00 per share liquidation preference
of the Preferred Shares.
6. Mortgage Loans Payable
On May 28, 1998, the Company obtained a $100,000 secured revolving
credit facility (the "Credit Facility") initially collateralized by the Airport
Square Properties and one of the Fairfield Properties. The Credit Facility is a
variable rate loan bearing interest at LIBOR plus 175 basis points and provides
for monthly payments of interest only. A fee of 25 basis points per annum on the
unused amount of the Credit Facility will be payable quarterly, in arrears. The
Credit Facility matures on May 28, 2001, including a one year optional extension
period. As of September 30, 1998, $26,700 was borrowed under the Credit
Facility.
On May 28, 1998, the Company assumed $6,465 in debt collateralized by
one of the Fairfield Properties. The debt bears interest at a fixed rate of
8.29% per annum and provides for monthly payments of principal and interest
totaling $56. The debt matures on May 1, 2007. The balance at September 30, 1998
totaled $6,406.
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On September 28, 1998, the Company assumed $58,085 in debt
collateralized by certain of the Constellation Properties, net of $1,475 which
was repaid at settlement, material terms of which are as follows:
<TABLE>
<CAPTION>
Amount
Lender Assumed Interest Rate Terms Maturity Date
- ------------------------------------- --------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C>
First National Bank of Maryland $10,417 (1) LIBOR + 2% Monthly principal 4/01/99
of $83 plus interest
Security Life of Denver Insurance Co. 9,556 7.5% Monthly principal 10/31/05
and interest of $74
Bank of America 9,982 (2) LIBOR + 2% Monthly principal 1/15/99
of $37 plus interest
Mercantile-Safe Deposit and Trust Co. 8,438 Prime +1/2% Monthly principal 7/01/99
of $66 plus interest
First National Bank of Maryland 7,391 (1) LIBOR + 2% Monthly principal 3/22/03
of $16 plus interest
Provident Bank of Maryland 5,368 (1) LIBOR + 2.5% Monthly principal 11/14/01
of $11 plus interest
First National Bank of Maryland 4,005 (1) LIBOR + 2% Monthly principal 6/05/00
of $11 plus interest
Provident Bank of Maryland 2,928 (3) LIBOR + 1.75% Monthly principal 9/01/00
of $7 plus interest
-------
$58,085
-------
-------
</TABLE>
(1) Debt was repaid with proceeds from the TIAA Loan (see Note 10).
(2) Net of $1,000 which was repaid upon assumption.
(3) Net of $475 which was repaid upon assumption.
7. Dividends and Distributions
The Company declared a dividend on March 16, 1998 of $0.15 per Common
Share, which was paid on April 15, 1998 to shareholders of record as of March
31, 1998. The Company declared a dividend on June 2, 1998 of $0.15 per Common
Share which was paid on July 15, 1998 to shareholders of record as of June 30,
1998. The Company also declared a dividend on September 10, 1998 of $0.18 per
share which was paid on October 15, 1998 to shareholders of record as of
September 18, 1998.
The Company declared distributions to minority interests holding
Partnership Units and Initial Preferred Units of $388 and $853, respectively,
which were paid on April 15, 1998. The Company declared distributions to
minority interests holding Partnership Units and Initial Preferred Units of $387
and $853, respectively, which were paid on July 15, 1998. The Company also
declared distributions to minority interests holding Partnership Units and
Initial Preferred Units of $465 and $853, respectively, which were paid on
October 15, 1998.
The Company also accrued dividends of $10 to holders of Preferred
Shares as of September 30, 1998.
11
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8. Supplemental Information to Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months ended
September 30,
---------------------------
1998 1997
--------------- -----------
<S> <C> <C>
Supplemental schedule of non-cash investing and financing activities:
In conjunction with certain acquisitions, the following
assets and liabilities were assumed and equity issued:
Purchase of real estate $150,029 $ --
Purchase of Constellation Service Companies 2,500 --
Deferred financing costs 29 --
Other assets 25 --
Mortgage loans (66,025) --
Minority interest (11,351) --
Common Shares (62) --
Preferred Shares (9) --
Additional paid-in capital (75,136) --
---------- ------
Net cash from acquisitions of properties $ -- $ --
---------- ------
---------- ------
</TABLE>
9. Commitments and Contingencies
On May 14, 1998, the Company entered into a series of agreements
through affiliates of the Operating Partnership with Constellation to acquire
real estate properties and service businesses. The following property
acquisitions covered under these agreements were not completed on September 28,
1998 with the Constellation Transaction: (i) acquisition of two
newly-constructed office buildings, (ii) acquisition of a retail building on
which construction is nearing completion and (iii) acquisition of two office
buildings currently under construction. One of the office buildings included in
Item (i) above was acquired on October 22, 1998 (see Note 10).
10. Subsequent Events
On October 13, 1998, the Company, through an affiliate of the Operating
Partnership, acquired an office building located in Columbia, Maryland
("Riverwood"). The purchase price of Riverwood totaled approximately $20.4
million, including approximately $400 in transaction costs. The Company paid
$18.8 million of the purchase price and acquisition costs using borrowings under
the Credit Facility. The balance of the purchase price and acquisition costs was
paid in the form of 148,381 Common Units (valued at $10.50 per unit).
On October 22, 1998, the Company, through affiliates of the Operating
Partnership, and pursuant to the Constellation Agreements, completed the
acquisition of a newly-constructed office building located in Columbia, Maryland
("Woodlands One"). Woodlands One was acquired at an aggregate price of $17,928,
including $328 in transaction costs, which was financed as follows: (i) the
issuance of 517,923 Common Shares, valued at $5,438 ($10.50 per share), (ii) the
issuance of 72,509 Preferred Shares, valued at $1,813 ($25 per share) (iii)
$9,815 using proceeds from the TIAA Loan (see below) and (iv) $862 using the
Company's cash reserves.
On October 22, 1998, the Company obtained a nonrecourse loan from
Teachers Insurance and Annuity Association of America (the "TIAA Loan"). The
total commitment under the TIAA Loan is $85,000, of which $76,200 was advanced
on October 22, 1998 (the "First Disbursement"). The proceeds of the First
Disbursement
12
<PAGE>
were used as follows: (i) $27,181 was used to pay off certain of the assumed
debt associated with the Constellation Transaction, (ii) $9,815 was used to
pay off debt and closing costs associated with the acquisition of Woodlands
One, (iii) $38,500 was used to pay down the Credit Facility (iv) $441 was
used to pay closing costs associated with the TIAA Loan and Woodlands One
acquisition and (v) $263 was applied to the Company's cash reserves. The
remaining $8,800 of the loan commitment (the "Second Disbursement") will be
advanced upon the Company's acquisition of an additional office building from
Constellation. The TIAA Loan bears interest at a fixed rate of 6.89% per
annum and provides for monthly payments of principal and interest of $533
prior to the Second Disbursement and $595 thereafter. The TIAA Loan matures
on November 1, 2008 and may not be prepaid prior to November 30, 2003.
On October 30, 1998, the Company, through affiliates of the Operating
Partnership, acquired 8 office buildings located in Middlesex County, New Jersey
(the "Centerpoint Office Properties"). The purchase price of the Centerpoint
Office Properties totaled approximately $31.7 million, including approximately
$400 in costs. The Company paid $31.0 million of the purchase price and
acquisition costs using borrowings under the Credit Facility and the balance
using the Company's cash reserves.
11. Pro Forma Financial Information (Unaudited)
The acquisitions by the Company during 1998 and 1997 were accounted for
by the purchase method. The results of operations for the acquisitions have been
included in the accompanying consolidated statements of operations from their
respective purchase dates through September 30, 1998.
The following pro forma condensed consolidated financial information of
the Company has been prepared as if all acquisitions occurring during 1998 and
1997 had occurred as of the beginning of the period, and therefore include pro
forma adjustments as deemed necessary by management. The pro forma financial
information is unaudited and is not necessarily indicative of the results which
actually would have occurred if the acquisitions had occurred on January 1, 1998
and 1997, nor does it purport to represent the results of operations for future
periods.
<TABLE>
<CAPTION>
For the nine months ended September 30,
--------------------------------------------
1998 1997
--------------------- ----------------------
<S> <C> <C>
Pro forma total revenue $ 41,775 $ 37,108
Pro forma net income available to Common Shareholders $ 5,346 $ 2,224
Pro forma earnings per share - Basic and Diluted $ 0.34 $ 0.14
</TABLE>
13
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(Dollars in thousands, except share and per share data)
This Form 10-Q contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1993 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. The Company's 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 need to renew leases or release space
upon the expiration of current leases, and the ability of a property to generate
revenues sufficient to meet debt service payments and other operating expenses;
and risks associated with borrowings, such as the possibility that the Company
will not have sufficient funds available to make principal payments on
outstanding debt or outstanding debt may be refinanced at higher interest rates
or otherwise on terms less favorable to the Company.
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with the accompanying
financial statements and notes thereto. Certain capitalized terms are defined in
the notes to consolidated financial statements set forth in response to Item 1.
Overview
The Company's results of operations reflect its growth resulting from
the acquisitions of 10 office properties in October 1997, 12 office properties
in April 1998, 2 office properties in May 1998 and 10 office properties and 2
retail properties in September 1998. The 1998 acquisitions were financed with
the proceeds from the Offering in April 1998, the proceeds of the Credit
Facility, the assumption of debt in connection with the acquisitions of the
Fairfield Properties and the Constellation Transaction and the issuance of
Common Shares and Preferred Shares in connection with the Constellation
Transaction.
Results of Operations
Comparison of the Nine Months Ended September 30, 1998 and 1997: Total
revenues, which include rental income, recoveries from tenants and other income,
increased by $21,280 for the nine months ended September 30, 1998 as compared to
the corresponding prior year period. Of this increase, $18,658 results from an
increase in base rents, the majority of which is attributable to the effects of
the property acquisitions. Tenant recoveries and other income increased $2,622
due predominantly to tenant recoveries from newly acquired properties.
Property operating expenses and depreciation and amortization increased
by $8,338 primarily as a result of the effects of the property acquisitions.
Interest expense and amortization of deferred financing costs increased by
$6,761 as a result of debt obtained or assumed in connection with certain of the
Company's acquisitions. General and administrative expenses increased by $784
due to the addition of certain management and other staffing functions resulting
from the Company's property acquisitions and its conversion from an
externally-advised REIT to a self-administered REIT. The operations for the nine
months ended September 30, 1998 also included $637 in costs associated with the
Reformation on March 16, 1998.
The operations for the nine months ended September 30, 1998 include the
equity in net income from Corporate Office Management, Inc. which originated in
September 1998.
As a result of the above factors, income before minority interests
increased by $4,777. Minority interests represent the portion of the Operating
Partnership which is not owned by the Company. The Company did not have minority
interests in the corresponding prior year period. Diluted earnings per share
increased by $0.07 per share due to the factors discussed above partially offset
by the effects of the issuance of Common
14
<PAGE>
Shares in October 1997, the Offering of April, 1998 and the issuance of
Common Shares and Preferred Shares to Constellation.
Comparison of the Three Months Ended September 30, 1998 and 1997: Total
revenues, which include rental income, recoveries from tenants and other income,
increased by $9,178 for the three months ended September 30, 1998 as compared to
the corresponding prior year period. Of this increase, $7,933 results from an
increase in base rents, substantially all of which is attributable to the
effects of the property acquisitions. Tenant recoveries and other income
increased $1,245 due predominantly to tenant recoveries from newly acquired
properties.
Property operating expenses and depreciation and amortization increased
by $3,826 primarily as a result of the effects of the property acquisitions.
Interest expense and amortization of deferred financing costs increased by
$2,660 as a result of debt obtained or assumed in connection with certain of the
Company's acquisitions. General and administrative expenses increased by $302
due to the addition of certain management and other staffing functions resulting
from the Company's property acquisitions and its conversion from an
externally-advised REIT to a self-administered REIT.
The operations for the three months ended September 30, 1998 include
the equity in net income from Corporate Office Management, Inc. which originated
in September 1998.
As a result of the above factors, income before minority interests
increased by $2,407. Minority interests represent the portion of the Operating
Partnership which is not owned by the Company. The Company did not have minority
interests in the corresponding period in 1997. Diluted earnings per share
increased by $0.06 per share due to the factors discussed above partially offset
by the effects of the issuance of Common Shares in October, 1997, the Offering
of April 1998 and the issuance of Common Shares and Preferred Shares to
Constellation.
Liquidity and Capital Resources
Historically, cash provided from operations represented the primary
source of liquidity to fund distributions, pay debt service and fund working
capital requirements. The Company expects to continue to meet its short-term
capital needs from property cash flow, including all property expenses, general
and administrative expenses, dividend and distribution requirements and
recurring capital improvements and leasing commissions. The Company does not
anticipate borrowing to meet these requirements.
In January 1998, the Company paid dividends of $0.125 per Common Share,
amounting to $282, and distributions to minority interests holding Common Units
and Initial Preferred Units totaling $274 and $720, respectively. In April 1998,
the Company paid dividends of $0.15 per Common Share, amounting to $341, and
distributions to minority interests holding Common Units and Initial Preferred
Units totaling $388 and $853, respectively. In July 1998, the Company paid
dividends totaling $0.15 per Common Share, amounting to $1,466, and
distributions to minority interests holding Common Units and Initial Preferred
Units amounted to $387 and $853, respectively. In October 1998, the Company paid
dividends totaling $0.18 per Common Share, amounting to $1,759, and
distributions to minority interests holding Common Units and Initial Preferred
Units totaling $465 and $853, respectively. In September 1998, the Company also
accrued dividends on Preferred Shares which are expected to be paid in January
1999.
On April 27, 1998, the Company completed the sale of 7,500,000 Common
Shares to the public at a price of $10.50 per share. The Company used the
proceeds to acquire 7,500,000 Partnership Units and increase its percentage
interest in the Operating Partnership to approximately 75.8%. Net proceeds from
the Offering were $72,742, which were used principally by the Operating
Partnership on April 30, 1998, to acquire the Airport Square Properties,
consisting of twelve office properties in the Baltimore/Washington corridor
totaling approximately 815,000 net rentable square feet. In connection with the
Offering, the Company's Shares were listed on the New York Stock exchange under
the symbol "OFC".
15
<PAGE>
On May 28, 1998, the Company, through the Operating Partnership,
acquired the Fairfield Properties, two multistory office buildings located in
Fairfield, New Jersey totaling approximately 262,000 net rentable square feet.
On May 28, 1998, the Company obtained a $100,000 senior secured
revolving Credit Facility. The Credit Facility is a variable rate loan bearing
interest at LIBOR plus 175 basis points and provides for monthly payments of
interest only. A fee of 25 basis points per annum on the unused amount of the
Credit Facility is payable quarterly, in arrears. On May 28, 1998, the Company
borrowed $23,750 under the Credit Facility to fund a portion of the Fairfield
Properties' acquisition. The Company intends to utilize the remaining balance of
the Credit Facility for acquisitions, renovations, tenant improvements and
leasing commissions. The Credit Facility is collateralized by the Airport Square
Properties and one of the Fairfield Properties.
On May 28, 1998, also in connection with the Fairfield Properties
acquisition, the Company assumed $6,465 in mortgage debt collateralized by one
of the Fairfield Properties. The loan bears interest at a fixed rate of 8.29%
per annum and provides for monthly payments of principal and interest totaling
$56.
On September 28, 1998, the Company, through affiliates of the Operating
Partnership, completed the acquisition of the Constellation Properties, which
include ten office properties totaling approximately 1,000,000 square feet and
two retail properties totaling approximately 250,000 square feet. The
Constellation Properties, located in the Baltimore/Washington corridor, were
acquired at an aggregate price of $146,727, including $3,136 in transaction
costs.
On September 28, 1998, the Company, through affiliates of the Operating
Partnership, also acquired the Constellation Service Companies at an aggregate
price of $2,500.
The total cost of the Constellation Transaction was financed as
follows: (i) the issuance of 6,182,634 Common Shares in the Company, valued at
$64,918, (ii) the issuance of 865,566 Preferred Shares in the Company, valued at
$21,639 (iii) $58,085 in debt of the Constellation Properties assumed by the
Company (net of $1,475 in debt paydowns), (iv) $2,100 in proceeds from the
Company's Credit Facility and (v) $2,485 using the Company's cash reserves. The
Series A Preferred Units carry terms which are identical to the Preferred Shares
issued to Constellation.
On October 13, 1998, the Company, through an affiliate of the Operating
Partnership, acquired Riverwood, an office building located in Columbia,
Maryland totaling approximately 160,000 square feet. The purchase price of
Riverwood totaled approximately $20.4 million, including approximately $400 in
transaction costs. The Company paid $18.8 million of the purchase price and
acquisition costs using borrowings under the Credit Facility. The balance of the
purchase price and acquisition costs was paid in the form of 148,381 Common
Units (valued at $10.50 per unit).
On October 22, 1998, the Company, through affiliates of the Operating
Partnership, acquired Woodlands One, a newly-constructed office building located
in Columbia, Maryland totaling approximately 108,000 square feet. The purchase
price of Woodlands One totaled $17,928, including $328 in transaction costs,
which was financed as follows: (i) the issuance of 517,923 Common Shares in the
Company, valued at $5,438 ($10.50 per share), (ii) the issuance of 72,509
Preferred Shares in the Company, valued at $1,813 ($25.00 per share) (iii)
$9,815 using proceeds from the TIAA Loan and (iv) $862 using the Company's cash
reserves.
On October 22, 1998, the Company obtained the TIAA Loan. The total
commitment under the TIAA Loan is $85,000, of which $76,200 was advanced on
October 22, 1998. The proceeds of the First Disbursement were used as follows:
(i) $27,181 was used to pay off certain of the assumed debt associated with the
Constellation Transaction, (ii) $9,533 was used to pay off debt associated with
the acquisition of Woodlands One, (iii) $38,500 was used to pay down the Credit
Facility (iv) $723 was used to pay closing costs associated with the TIAA Loan
and Woodlands One acquisition and (v) $263 was applied to the Company's cash
reserves. The remaining $8,800 of the loan commitment will be advanced upon the
Company's acquisition of a
16
<PAGE>
commercial office building from Constellation. The TIAA Loan bears interest
at a fixed rate of 6.89% per annum and provides for monthly payments of
principal and interest of $533 prior to the Second Disbursement and $595
thereafter. The TIAA Loan matures on November 1, 2008 and may not be prepaid
prior to November 30, 2003.
On October 30, 1998, the Company, through affiliates of the Operating
Partnership, acquired the Centerpoint Office Properties, 8 office buildings
located in Middlesex County, New Jersey totaling approximately 270,000 square
feet. The purchase price of the Centerpoint Office Properties totaled
approximately $31.7 million, including approximately $400 in costs. The Company
paid $31.0 million of the purchase price and acquisition costs using borrowings
under the Credit Facility and the balance using the Company's cash reserves.
The Company expects to meet its long term liquidity requirements, such
as property acquisitions and development, scheduled debt maturities, major
renovations, expansions, and other non-recurring capital improvements through
long-term collateralized indebtedness and the issuance of additional equity
securities.
Statement of Cash Flows
During the nine months ended September 30, 1998, the Company generated
$7,617 in cash flow from operating activities (net of nonrecurring Reformation
costs of $637), an increase of $7,122 compared to the corresponding prior year
period. This increase is due primarily to the effects of the Company's
acquisition of operating properties. Other sources of cash flow consisted of (i)
$72,742 in net proceeds from the Offering and (ii) $26,700 in additional
borrowings under the Company's Credit Facility. During the nine months ended
September 30, 1998, the Company's major uses of cash included (i) $97,048 to
fund property acquisitions, tenant improvements, and leasing commissions, (ii)
$5,564 to pay dividends to shareholders and distributions to minority interests
holding Partnership Units and Initial Preferred Units and (iii) $1,762 to pay
principal payments on mortgages loan payable.
Funds From Operations
The Company considers Funds From Operation ("FFO") to be helpful to
investors as a measure of the financial performance of an equity REIT. In
accordance with NAREIT's definition, FFO is defined as net income (loss)
computed in accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures and extraordinary and nonrecurring items. FFO does not represent cash
generated from operating activities determined in accordance with GAAP and
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of the Company's financial performance or
to cash flow from operating activities (determined in accordance with GAAP) as a
measure of the Company's liquidity, nor is it indicative of funds available to
fund the Company's cash needs, including its ability to make cash distributions.
Other REITs may not define FFO in accordance with the current NAREIT definition
or may interpret the current NAREIT definition differently from the Company. FFO
for the nine months ended September 30, 1998 and 1997, as calculated in
accordance with the NAREIT definition published in March 1995, are summarized in
the following table (in thousands).
17
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before minority interests....... $ 2,493 $ 86 $ 5,041 $ 264
Add: Nonrecurring charge
Reformation costs................... -- -- 637 --
Add: Real estate related depreciation and
amortization.......................... 1,502 138 3,743 415
Less: Initial Preferred Unit
distributions............................ (853) -- (2,559) --
Less: Preferred Share dividends......... (10) -- (10) --
------- ----- -------- ------
Funds from operations.................... 3,132 224 6,852 679
Add: Initial Preferred Unit distributions 853 -- 2,559 --
Add: Preferred Share dividends ......... 10 -- 10 --
------- ----- -------- ------
Funds from operations assuming
conversion of Preferred Units
And Preferred Shares $ 3,995 $ 224 $ 9,421 $ 679
------- ----- -------- ------
------- ----- -------- ------
Weighted average Common Shares/Units
outstanding (1)....................... 12,555 1,420 9,233 1,420
------- ----- -------- ------
------- ----- -------- ------
Weighted average Common Shares/Units
outstanding diluted (2)............... 20,118 1,420 16,837 1,420
------- ----- -------- ------
------- ----- -------- ------
</TABLE>
- ---------------
(1) Assumes redemption of all Common Units, calculated on a weighted
average basis for Common Shares. Includes 282,508 Common Shares
issuable upon redemption of Common Units issuable upon the conversion
of the Retained Interests. Excludes the weighted average effect of the
conversion of 186,455 Retained Interests into 186,455 Initial Preferred
Units and 1,913,545 Initial Preferred Units, both convertible into an
aggregate of 7,499,940 Common Units which are, in turn, redeemable for
7,499,940 Common Shares. Excludes the weighted average effect of the
conversion of 865,566 Preferred Shares convertible into an aggregate of
1,622,763 Common Shares.
(2) Assumes redemption of all Common Units, calculated on a weighted
average basis for Common Shares. Includes 282,508 Common Shares
issuable upon redemption of Common Units issuable upon the conversion
of the Retained Interests. Includes the weighted average effect of the
conversion of 186,455 Retained Interests into 186,455 Initial Preferred
Units and 1,913,545 Initial Preferred Units, both convertible into an
aggregate of 7,499,940 Common Units which are, in turn, redeemable for
7,499,940 Common Shares. Includes the weighted average effect of
824,175 Common Shares for the assumed conversion of stock options
(using the Treasury stock method). Conversion of convertible Initial
Preferred Units and Common Units is assumed in computing the diluted
weighted average Common Shares denominator since such conversion has a
dilutive effect on FFO. Includes the weighted average effect of the
conversion of 865,566 Preferred Shares convertible into an aggregate of
1,622,763 Common Shares.
18
<PAGE>
Impact of the Year 2000 Issue
Many older computer software programs refer to years in terms of their
final two digits only. Such programs may interpret the year 2000 to mean the
year 1900 instead. If not corrected, this could result in a system failure or
miscalculations causing disruption of operations, including a temporary
inability to process transactions, prepare financial statements, send invoices
or engage in similar normal business activity.
The Company's accounting software package is certified as Year 2000
compliant. Accordingly, the Company does not anticipate adverse consequences in
processing the billing and collection of revenue, the payment of expenditures,
the recording of financial transactions, the preparation of financial statements
and maintaining and generating system driven managerial information. The
Company's information technology and accounting groups are conducting internal
tests to ensure compliance. This testing process is estimated to be completed by
the first quarter of 1999.
The Company's property management team has been continually evaluating
the impact of the Year 2000 Issue on the various facets of property operating
systems since the beginning of 1998. This evaluation process will continue
through the first quarter of 1999. Based on the current status of this
evaluation process, the Company does not anticipate any material consequences on
property operations.
The Company relies on third party suppliers for a number of key
services. Interruption of supplier operations due to the Year 2000 Issue could
affect Company operations. The Company also is dependent upon its tenants for
revenue and cash flow. Interruptions in tenant operations due to the Year 2000
Issue could result in reduced revenue, increased receivable levels and cash flow
reductions. The Company's property management team is in the process of
contacting significant tenants and suppliers to discuss Year 2000 readiness.
Management is being continually updated on the status of this process, which is
estimated to be completed by the first quarter of 1999.
Based on information currently available from the Company's internal
assessment, management does not expect there to be significant incremental costs
associated with its Year 2000 activities over the next 15 months. The Company
will also consider Year 2000 issues for all future property acquisitions and
development.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not currently involved in any material litigation nor,
to the Company's knowledge, is any material litigation currently threatened
against the Company (other than routine litigation arising in the ordinary
course of business, substantially all of which is expected to be covered by
liability insurance).
ITEM 2. Changes In Securities
a. None
b. None
c. On September 28, 1998, the Company, through affiliates of the Operating
Partnership, completed the Constellation Transaction pursuant to
agreements with affiliates of Constellation Real Estate Group to
acquire real estate properties and service businesses (see Note 3 to
the Consolidated Financial Statements). In connection with the
Constellation Transaction, the Company issued 6,182,634 Common Shares
and 865,566 Series A Convertible Preferred Shares of Beneficial
Interest to Constellation. These shares were issued in a private
placement reliant upon the exemption from registration provided by
Section 4 (2) of the Securities Act of 1933, as amended. The Preferred
Shares are nonvoting and are convertible after 2 years of issuance,
subject to certain conditions, into Common Shares on the basis of
1.8748 Common Shares for each Preferred Share.
d. None
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission Of Matters To A Vote Of Security Holders
The following matters were submitted to a vote of security holders
during the Company's third quarter.
(a) Meeting type and date Special Meeting of
Shareholders held on
August 21, 1998
(b) Directors elected at meeting Not applicable
(c) Description of each matter voted
on at meeting
<TABLE>
<S> <C> <C>
Resolution to approve the proposal for Results of votes
the Company to enter into and perform For 5,571,814.002
the Constellation Transaction to Against or withheld 44,000.661
acquire interests in up to 18 Abstentions and broker non-votes 37,259.887
properties, various entity interests,
assume certain debt, and issue Common
Shares and Preferred Shares
</TABLE>
ITEM 5. Other Information
None.
20
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------------ ------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of
January 31, 1998, among the Registrant, the Maryland
Company and the Company (filed with the Trust's
Registration Statement on Form S-4 (Commission File
No. 333-45649) and incorporated herein by reference).
2.2 Formation/Contribution Agreement dated September 7, 1997,
as amended, by and among the Company and certain
subsidiary corporations and partnerships regarding the
Transactions (filed with the Company's Current Report on
Form 8-K on October 29, 1997 and incorporated herein by
reference).
2.3 Agreement and Plan of Reorganization between the Company
and Crown Advisors, Inc. (filed with the Company's
Current Report on Form 8-K on October 29, 1997 and
incorporated herein by reference).
2.4 Assignment of Partnership Interests dated as of April 30,
1998 between Airport Square Limited Partnership, Airport
Square Corporation, Camp Meade Corporation and COPT
Airport Square One LLC and COPT Airport Square Two LLC.
(filed with the Company's Current Report on Form 8-K on
May 14, 1998 and incorporated herein by reference).
2.5 Assignment of Purchase and Sale Agreement dated as of
April 30, 1998 between Aetna Life Insurance Company and
the Operating Partnership. (filed with the Company's
Current Report on Form 8-K on May 14, 1998 and
incorporated herein by reference).
2.6 Assignment of Loan Purchase and Sale Agreement dated as of
April 30, 1998 between Constellation Real Estate, Inc. and
the Operating Partnership. (filed with the Company's
Current Report on Form 8-K on May 14, 1998 and
incorporated herein by reference).
2.7 Purchase and Sale Agreement dated as of April 1, 1998
between Aetna Life Insurance Company and Airport Square
Limited Partnership (filed with the Company's Current
Report on Form 8-K on May 14, 1998 and incorporated
herein by reference).
2.8.1 Loan Purchase and Sale Agreement dated as of March 13,
1998 between Aetna Life Insurance Company and
Constellation Real Estate, Inc. (filed with the Company's
Current Report on Form 8-K on May 14, 1998 and
incorporated herein by reference).
2.8.2 Amendment to Loan Purchase and Sale Agreement dated as of
April 16, 1998 between Aetna Life Insurance Company and
Constellation Real Estate, Inc. (filed with the Company's
Current Report on Form 8-K on May 14, 1998 and
incorporated herein by reference).
2.9.1 Purchase and Sale Agreement dated as of March 4, 1998
between 695 Rt. 46 Realty, LLC, 710 Rt. 46 Realty, LLC and
COPT Acquisitions, Inc. (filed with the Company's Current
Report on Form 8-K on June 10, 1998 and incorporated
herein by reference).
2.9.2 Letter Amendment to Purchase and Sale Agreement dated as
of March 26, 1998 between 695 Rt. 46 Realty, LLC, 710 Rt.
46 Realty, LLC and COPT Acquisitions, Inc. (filed with the
Company's Current Report on Form 8-K on June 10, 1998 and
incorporated herein by reference).
21
<PAGE>
2.10.1 Contribution Agreement between the Company and the
Operating Partnership and certain Constellation affiliates
(filed as Exhibit A of the Company's Schedule 14A
Information on June 26, 1998 and incorporated herein by
reference).
2.10.2 First Amendment to Contribution Agreement, dated July 16,
1998, between Constellation Properties, Inc. and certain
entities controlled by Constellation Properties, Inc.
(filed with the Company's Current Report on Form 8-K on
October 13, 1998 and incorporated herein by reference).
2.10.3 Second Amendment to Contribution Agreement, dated
September 28, 1998, between Constellation Properties, Inc.
and certain entities controlled by Constellation
Properties, Inc. (filed with the Company's Current Report
on Form 8-K on October 13, 1998 and incorporated herein by
reference).
2.11 Service Company Asset Contribution Agreement between the
Company and the Operating Partnership and certain
Constellation affiliates (filed as Exhibit B of the
Company's Schedule 14A Information on June 26, 1998 and
incorporated herein by reference).
2.12.1 Option Agreement, dated May 14, 1998, between the
Operating Partnership and NBP-III, LLC (a Constellation
affiliate) (filed as Exhibit C of the Company's Schedule
14A Information on June 26, 1998 and incorporated herein
by reference).
2.12.2 First Amendment to Option Agreement, dated June 22, 1998,
between the Operating Partnership and NBP-III, LLC (a
Constellation affiliate) (filed as Exhibit E of the
Company's Schedule 14A Information on June 26, 1998 and
incorporated herein by reference).
2.13.1 Option Agreement, dated May 14, 1998, between the
Operating Partnership and Constellation Gatespring II, LLC
(a Constellation affiliate) (filed as Exhibit D of the
Company's Schedule 14A Information on June 26, 1998 and
incorporated herein by reference).
2.13.2 First Amendment to Option Agreement, dated June 22, 1998,
between the Operating Partnership and Constellation
Gatespring II, LLC (a Constellation affiliate) (filed as
Exhibit F of the Company's Schedule 14A Information on
June 26, 1998 and incorporated herein by reference).
2.14 Option Agreement, dated September 28, 1998, between Jolly
Acres Limited Partnership, Arbitrage Land Limited
Partnership and the Operating Partnership (filed with the
Company's Current Report on Form 8-K on October 13, 1998
and incorporated herein by reference).
2.15 Right of First Refusal Agreement, dated September 28,
1998, between Constellation Properties, Inc. and the
Operating Partnership (filed with the Company's Current
Report on Form 8-K on October 13, 1998 and incorporated
herein by reference).
2.16 Right of First Refusal Agreement, dated September 28,
1998, between 257 Oxon, LLC and the Operating Partnership
(filed with the Company's Current Report on Form 8-K on
October 13, 1998 and incorporated herein by reference).
22
<PAGE>
2.17 Development Property Acquisition Agreement, dated May 14,
1998, between the Operating Partnership and CPI Piney
Orchard Village Center, Inc. (a Constellation affiliate)
(filed as Exhibit H of the Company's Schedule 14A
Information on June 26, 1998 and incorporated herein by
reference).
2.18 Contribution Agreement, dated as of September 30, 1998,
between COPT Acquisitions, Inc. and M.O.R. XXIX Associates
Limited Partnership (filed with the Company's Current
Report on Form 8-K on October 28, 1998 and incorporated
herein by reference).
2.19 Purchase and Sale Agreement, dated as of September 30,
1998, between New England Life Pension Properties II: A
Real Estate Limited Partnership and COPT Acquisitions,
Inc. (filed with the Company's Current Report on Form 8-K
on October 28, 1998 and incorporated herein by reference).
3.1 Amended and Restated Declaration of Trust of Registrant
(filed with the Registrant's Registration Statement on
Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
3.2 Bylaws of Registrant (filed with the Registrant's
Registration Statement on Form S-4 (Commission File
No. 333-45649) and incorporated herein by reference).
4.1 Form of certificate for the Registrant's Common Shares
of Beneficial Interest, $0.01 par value per share
(filed with the Registrant's Registration Statement
on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
4.2.1 Registration Rights Agreement dated October 14, 1997, as
amended, for the benefit of certain shareholders of the
Registrant (filed with the Company's Current Report on
Form 8-K on October 29, 1997, and incorporated herein by
reference).
4.2.2 Amended and Restated Registration Rights Agreement dated
March 16, 1998 for the benefit of certain shareholders of
the Company (filed with the Company's Quarterly Report on
Form 10-Q on August 12, 1998 and incorporated herein by
reference).
4.3 Articles Supplementary of Corporate Office Properties
Trust Series A Convertible Preferred Shares, dated
September 28, 1998 (filed with the Company's Current
Report on Form 8-K on October 13, 1998 and incorporated
herein by reference).
4.4.1 Limited Partnership Agreement of the Operating Partnership
dated October 14, 1997 (filed with the Company's Current
Report on Form 8-K on October 29, 1997 and incorporated
herein by reference).
4.4.2 Amended and Restated Limited Partnership Agreement of the
Operating Partnership dated March 16, 1998 (filed with the
Company's Quarterly Report on Form 10-Q on August 12, 1998
and incorporated herein by reference).
4.4.3 First Amendment to Amended and Restated Limited
Partnership Agreement of the Operating Partnership, dated
September 28, 1998 (filed with the Company's Current
Report on Form 8-K on October 13, 1998 and incorporated
herein by reference).
4.4.4 Second Amendment to Amended and Restated Limited
Partnership Agreement of the Operating Partnership, dated
as of October 13, 1998 (filed with the Company's Current
Report on Form 8-K on October 28, 1998 and incorporated
herein by reference).
23
<PAGE>
10.1 Amended and Restated Partnership Agreement of Blue Bell
Investment Company, L.P. (filed with the Company's Current
Report on Form 8-K on October 29, 1997 and incorporated
herein by reference).
10.2 Amended and Restated Partnership Agreement of South
Brunswick Investors, L.P. (filed with the Company's
Current Report on Form 8-K on October 29, 1997 and
incorporated herein by reference).
10.3 Amended and Restated Partnership Agreement of Comcourt
Investors, L.P. (filed with the Company's Current Report
on Form 8-K on October 29, 1997 and incorporated herein by
reference).
10.4 Amended and Restated Partnership Agreement of 6385 Flank,
L.P. (filed with the Company's Current Report on Form 8-K
on October 29, 1997 and incorporated herein by reference).
10.5 Clay W. Hamlin III Employment Agreement dated October 14,
1997 with the Operating Partnership (filed with the
Company's Current Report on Form 8-K on October 29, 1997,
and incorporated herein by reference).
10.6 Management Agreement between Registrant and Glacier
Realty, LLC (filed with the Company's Current Report on
Form 8-K on October 29, 1997, and incorporated herein by
reference).
10.7 Senior Secured Credit Agreement dated October 13, 1997
(filed with the Company's Current Report on Form 8-K on
October 29, 1997, and incorporated herein by reference).
10.8 Corporate Office Properties Trust 1998 Long Term Incentive
Plan (filed with the Registrant's Registration Statement
on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
10.9 Stock Option Plan for Directors (filed with Royale
Investments, Inc.'s Form 10-KSB for the year ended
December 31, 1993 (Commission File No. 0-20047) and
incorporated herein by reference).
10.10 Lease Agreement between Blue Bell Investment Company, L.P.
and Unisys Corporation dated March 12, 1997 with respect
to lot A (filed with the Registrant's Registration
Statement on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
10.11 Lease Agreement between Blue Bell Investment Company, L.P.
and Unisys Corporation dated March 12, 1997 with respect
to lot B (filed with the Registrant's Registration
Statement on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
10.12 Lease Agreement between Blue Bell Investment Company, L.P.
and Unisys Corporation dated March 12, 1997 with respect
to lot C (filed with the Registrant's Registration
Statement on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
10.13 Amended and Restated Lease between South Brunswick
Investors L.P. and International Business Machines
Corporation dated August 11, 1995, as amended
(filed with the Registrant's Registration Statement
on Form S-4 (Commission File No. 333-45649) and
incorporated herein by reference).
24
<PAGE>
10.14 Agreement of Lease between South Brunswick Investors
L.P. and Teleport Communications Group, Inc. dated
February 20, 1996, as amended (filed with the
Registrant's Registration Statement on Form S-4
(Commission File No. 333-45649) and incorporated
herein by reference).
10.15 Agreement of Lease between South Brunswick Investors
L.P. and Teleport Communications Group, Inc. dated
August 19, 1996 (filed with the Registrant's
Registration Statement on Form S-4 (Commission File
No. 333-45649) and incorporated herein by reference).
10.16 Thomas D. Cassel Employment Agreement dated as of
October 20, 1997 with the Operating Partnership (filed
with the Company's Annual Report on Form 10-K on March 25,
1998 and incorporated herein by reference).
10.17 Senior Secured Revolving Credit Agreement dated as of May
28, 1998 between the Company, the Operating Partnership,
Any Mortgaged Property Subsidiary and Bankers Trust
Company (filed with the Company's Current Report on Form
8-K on June 10, 1998 and incorporated herein by
reference).
10.18 Secured Promissory Note dated as of April 29, 1997 between
710 Rt. 46 Realty, LLC and Life Investors Insurance
Company of America (filed with the Company's Current
Report on Form 8-K on June 10, 1998 and incorporated
herein by reference).
10.19 Mortgage and Security Agreement dated as of April 29, 1997
between 710 Rt. 46 Realty, LLC and Life Investors
Insurance Company of America (filed with the Company's
Current Report on Form 8-K on June 10, 1998 and
incorporated herein by reference).
10.20 Amended and Restated Deed of Trust Note, dated October 6,
1995, between Cranberry-140 Limited Partnership and
Security Life of Denver Insurance Company (filed with the
Company's Current Report on Form 8-K on October 13, 1998
and incorporated herein by reference).
10.21.1 Promissory Note, dated September 15, 1995, between Tred
Lightly Limited Liability Company and Provident Bank of
Maryland (filed with the Company's Current Report on Form
8-K on October 13, 1998 and incorporated herein by
reference).
10.21.2 Allonge to Promissory Note, dated September 28, 1998,
between Tred Lightly Limited Liability Company and
Provident Bank of Maryland (filed with the Company's
Current Report on Form 8-K on October 13, 1998 and
incorporated herein by reference).
10.22.1 Third Loan Modification and Extension Agreeement, dated
November 12, 1997, between St. Barnabus Limited
Partnership, Constellation Properties, Inc. and
NationsBank, N.A. (filed with the Company's Current
Report on Form 8-K on October 13, 1998 and incorporated
herein by reference).
10.22.2 Fourth Loan Modification Agreement dated
September 28, 1998 between St. Barnabus Limited
Partnership, Constellation Properties, Inc. and
NationsBank, N.A. (filed with the Company's Current
Report on Form 8-K on October 13, 1998 and
incorporated herein by reference).
10.23.1 Deed of Trust Note, dated September 20, 1988, between
Brown's Wharf Limited Partnership and Mercantile-Safe
Deposit and Trust Company (filed with the Company's
Current Report on Form 8-K on October 13, 1998 and
incorporated herein by reference).
25
<PAGE>
10.23.2 Extension Agreement and Allonge to Deed of Trust Note,
dated July 1, 1994, between Brown's Wharf Limited
Partnership and Mercantile-Safe Deposit and Trust Company
(filed with the Company's Current Report on Form 8-K on
October 13, 1998 and incorporated herein by reference).
10.24 Employment Agreement, dated September 28, 1998 between
Corporate Office Management, Inc. and Randall M. Griffin
(filed with the Company's Current Report on Form 8-K on
October 13, 1998 and incorporated herein by reference).
10.25 Employment Agreement, dated September 28, 1998 between
Corporate Office Management, Inc. and Roger A. Waesche,
Jr. (filed with the Company's Current Report on Form 8-K
on October 13, 1998 and incorporated herein by reference).
10.26 Employment Agreement, dated September 28, 1998 between
Corporate Realty Management, LLC and Michael D. Kaiser
(filed with the Company's Current Report on Form 8-K on
October 13, 1998 and incorporated herein by reference).
10.27 Consulting Services Agreement, dated April 28, 1998
between the Company and Net Lease Finance Corp., doing
business as Corporate Office Services (filed with the
Company's Current Report on Form 8-K on October 13, 1998
and incorporated herein by reference).
10.28 Project Consulting and Management Agreement, dated
September 28, 1998, between Constellation Properties, Inc.
and COMI (filed with the Company's Current Report on Form
8-K on October 13, 1998 and incorporated herein by
reference).
10.29 Promissory Note, dated October 22, 1998, between Teachers
Insurance and Annuity Association of America and the
Operating Partnership.
10.30 Indemnity Deed of Trust, Assignment of Leases and Rents
and Security Agreement, dated October 22, 1998, by
affiliates of the Operating Partnership for the benefit of
Teachers Insurance and Annuity Association of America.
27. Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
During the three months ended September 30, 1998 and through November 13, 1998
the Company filed the following:
i. a Current Report of Form 8-K filed October 13, 1998 (Reporting under
Items 1, 2, 5 and 7) regarding the Company's completion of the
Constellation Transaction, resulting in the acquisition, through
affiliates of the Operating Partnership, of real estate properties and
service businesses.
ii.a Current Report of Form 8-K filed October 28, 1998 (Reporting under
Items 2 and 7) regarding the Company's acquisition through affiliates of
the Operating Partnership of an office building located in Columbia,
Maryland.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORPORATE OFFICE PROPERTIES TRUST
Date November 13, 1998 By: /s/ Clay W. Hamlin, III
-----------------------
Clay W. Hamlin, III
Chief Executive Officer
Date November 13, 1998 By: /s/ Roger A. Waesche, Jr.
-------------------------
Roger A. Waesche, Jr.
Senior Vice President
of Finance
27
<PAGE>
Exhibit 10.29
TIAA Appl. #MD-534
M - 0004 54100
PROMISSORY NOTE
---------------
$85,000,000 Columbia, Maryland
Dated: Oct. 22, 1998
FOR VALUE RECEIVED, CORPORATE OFFICE PROPERTIES, L.P. ("Borrower"), a
Delaware limited partnership, having its principal place of business at 8815
Centre Park Drive, Suite 400, Columbia. Maryland 21045, promises to pay to
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Lender"), a New York
corporation, or order, at Lender's offices at 730 Third Avenue, New York, New
York 10017 or at such other place as Lender designates in writing, the principal
sum of EIGHTY-FIVE MILLION DOLLARS ($85,000,000) (the principal sum or so much
of the principal sum as may be advanced and outstanding from time to time, the
"Principal"), in lawful money of the United States of America, with interest on
the Principal from the date of this Promissory Note (this "Note") through and
including the date of repayment in full of the Principal at the fixed rate of
six and 89/100ths percent (6.89%) per annum (the "Fixed Interest Rate").
This Note is guaranteed by, inter alia, a Conditional Payment Guaranty
(the "Conditional Guaranty") from NBP One, LLC, NBP-131-133-141, LLC, Three
Centre Park, LLC, Lakeview at Greens, LLC and Corporate Gatespring LLC, jointly
and severally (collectively, the "Conditional Guarantors") dated of even date
herewith. The Conditional Guaranty is secured by, among other things, the
Indemnity Deed of Trust, Assignment of Leases and Rents and Security Agreement
(the "Deed of Trust") also dated as of the date of this Note, but made by the
Conditional Guarantors for the benefit of the Lender as security for the
Conditional Guaranty. All capitalized terms not expressly defined in this note
will have the definitions set forth in the Deed of Trust.
Section 1. Payments of Principal and Fixed Interest.
(a) "Advances of Principal" shall mean the advances of Principal funded
by the Lender under this Note in the following order:
(i) $76,200,000 ("First Disbursement"); and
(ii) $8,800,000 ("Second Disbursement").
"Principal," when used herein, shall be the total amount advanced under both the
First Disbursement and the Second Disbursement.
(b) Borrower will make monthly installment payments ("Debt Service
Payments") as follows:
(i) On November 1, 1998, a payment of accrued interest on the
Advance of Principal made hereunder as the First Disbursement at the
Fixed Interest Rate;
1
<PAGE>
(ii) On December 1, 1998, a payment in the amount of Five
Hundred Thirty Three Thousand Two Hundred Thirty and 47/100 Dollars
($533,230.47), which will be applied first to interest on the First
Disbursement at the Fixed Interest Rate; and then to the Advance of
Principal under the First Disbursement
(iii) On January 1, 1999, payments:
(A) in the amount of Five Hundred Thirty Three
Thousand Two Hundred Thirty and 47/100 Dollars ($533,230.47),
which will be applied first to interest on the First
Disbursement, and then to the Advance of Principal under the
First Disbursement; plus
(B) a payment of accrued interest on the Advance of
Principal made hereunder as the Second Disbursement, which is
expected to be funded in December 1998, at the Fixed Interest
Rate;
(iv) On February 1, 1999, and on the first day of each
succeeding calendar month through and including October 1, 2008,
payments in the amount of Five Hundred Ninety Four Thousand Nine
Hundred Sixty Six and 42/100 Dollars ($594,966.42), each of which will
be applied first to interest on the Principal at the Fixed Interest
Rate and then to the Principal.
(c) On November 1, 2008 (the "Maturity Date"), Borrower will pay the
Principal in full together with accrued interest at the Fixed Interest Rate and
all other amounts due under the Loan Documents.
Borrower acknowledges that the monthly payment provided for in
clause(b)(vi), above, will not fully repay the Principal and that a balloon
payment of the entire unpaid, Principal balance, together with accrued interest
and other amounts due, will be due on the Maturity Date.
Section 2. Prepayment Provisions.
(a) The following definitions apply:
"Discount Rate" means the yield on a U.S. Treasury issue selected by Lender, as
published in The Wall Street Journal, two weeks prior to prepayment, having a
maturity date corresponding (or most closely corresponding, if not identical) to
the Maturity Date, and, if applicable, a coupon rate corresponding (or most
closely corresponding, if not identical) to the Fixed Interest Rate.
"Default Discount Rate" means the Discount Rate less 300 basis points until
December 1, 2003, and thereafter the Discount Rate.
2
<PAGE>
"Discounted Value" means the Discounted Value of a Note Payment based on the
following formula:
NP
-----------
(1 + R/12)n = Discounted Value
NP = Amount of Note Payment
R = Discount Rate or Default Discount Rate as the case may be.
n = The number of months between the date of prepayment
and the scheduled date of the Note Payment being
discounted rounded to the nearest integer.
"Evasion Percentage" = four percent (4%), until December 1, 2003, and thereafter
one percent (1%).
"Note Payments" means (i) the scheduled Debt Service Payments for the period
from the date of prepayment through the Maturity Date and (ii) the scheduled
repayment of Principal, if any, on the Maturity Date.
"Prepayment Date Principal" means the Principal on the date of prepayment.
(b) This Note may not be prepaid in full or in part before November 30,
2003. Commencing on December 1, 2003, provided there is no Event of Default,
Borrower may prepay this Note in full, but not in part (except pursuant to
Section 12.4(b) of the Deed of Trust), on the first day of any calendar month,
upon 60 days prior notice to Lender and upon payment in full of the Debt which
will include a payment (the "Prepayment Premium") equal to the greater of (i) an
amount equal to the product of one percent (1%) times the Prepayment Date
Principal and (ii) the amount by which the sum of the Discounted Values of Note
Payments, calculated at the Discount Rate, exceeds the Prepayment Date
Principal. Provided there is no Event of Default, this Note may be prepaid in
full without payment of the Prepayment Premium during the last 90 days of the
Term.
(c) After an Acceleration or upon any other prepayment not permitted by
the Loan Documents, any tender of payment of the amount necessary to satisfy the
Debt accelerated, any decree of foreclosure, any statement of the amount due at
the time of foreclosure (including foreclosure by power of sale) and any tender
of payment made during any redemption period after foreclosure, will include, in
lieu of the Prepayment Premium, a payment (the "Evasion Premium") equal to the
greater of (i) an amount equal to the product of the Evasion Percentage times
the Prepayment Date Principal, and (ii) the amount by which the sum of the
Discounted Values of the Note Payments, calculated at the Default Discount Rate,
exceeds the Prepayment Date Principal.
(d) Borrower acknowledges that:
(i) a prepayment will cause damage to Lender;
3
<PAGE>
(ii) the Evasion Premium is intended to compensate Lender for the loss
of its investment and the expense incurred and time and effort
associated with making the Loan, which will not be fully repaid if the
Loan is prepaid;
(iii) it will be extremely difficult and impractical to ascertain the
extent of Lender's damages caused by a prepayment after an Event of
Default or any other prepayment not permitted by the Loan Documents;
and
(iv) the Evasion Premium represents Lender and Borrower's reasonable
estimate of Lender's damages for the prepayment and is not a penalty.
Section 3. Guaranty; Security for Guaranty. Borrower's obligations
under this Note and the other Loan Documents (the "Borrower's Obligations") are
guaranteed pursuant to the Conditional Guaranty by the Conditional Guarantors.
The obligations of the Conditional Guarantors under the Guaranty are secured by
the Deed of Trust by the Conditional Guarantor to William H. Goebel and Matthew
T. Murphy, as trustees, for the benefit of the Lender encumbering certain real
properties located in Anne Arundel County, Howard County and Prince George's
County, Maryland, and other property of the Conditional Guarantors as more
particularly described therein (the "Property"), and by an Indemnity Assignment
of Leases and Rents (the "Assignment") of even date herewith by the Conditional
Guarantors for the benefit of the Lender. The Deed of Trust and the Assignment
contain terms and provisions which provide grounds for acceleration of the Debt
together with additional remedies in the event of default thereunder. Failure on
the part of Lender to exercise any right granted herein or in the aforesaid Deed
of Trust or Assignment shall not constitute a waiver of such right or preclude
the subsequent exercise and enforcement thereof. This Note, the Conditional
Guaranty, the Deed of Trust and all documents now or hereafter executed by
Borrower or Conditional Guarantors or held by Lender or Trustees relating to the
Loan, including all amendments, are herein collectively referred to as the "Loan
Documents".
Section 4. Events of Default.
(a) It is an "Event of Default" under this Note:
(i) if Borrower fails to pay any amount due, as and when required,
under this Note or any other Loan Document and the failure continues
for a period of 5 days; or
(ii) if an Event of Default occurs under any other Loan Document.
(b) If an Event of Default occurs, Lender may declare all or any
portion of the Debt immediately due and payable ("Acceleration") and exercise
any of the other Remedies.
Section 5. Default Rate. Interest on the Principal will accrue at the
Default Interest Rate from the date an Event of Default occurs.
4
<PAGE>
Section 6. Late Charges.
(a) If Borrower fails to pay any Debt Service Payment when due and the
failure continues for a period of 5 days or more or fails to pay any amount due
under the Loan Documents on the Maturity Date, Borrower agrees to pay to Lender
an amount (a "Late Charge") equal to five cents ($.05) for each one dollar
($1.00) of the delinquent payment.
(b) Borrower acknowledges that:
(i) a delinquent payment will cause damage to Lender;
(ii) the Late Charge is intended to compensate Lender for loss of use
of the delinquent payment and the expense incurred and time and effort
associated with recovering the delinquent payment;
(iii) it will be extremely difficult and impractical to ascertain the
extent of Lender's damages caused by the delinquency; and
(iv) the Late Charge represents Lender and Borrower's reasonable
estimate of Lender's damages from the delinquency and is not a penalty.
Section 7. Limitation of Liability. (a) Notwithstanding any provision
in this Note to the contrary, except as set forth in subsections (b) through (e)
below, if Lender seeks to enforce the collection of the Principal, the Interest,
the Late Charges, the Prepayment Premiums, the Expenses, any additional advances
made by Lender in connection with the Loan and all other amounts payable under
the Loan Documents (the "Debt"), Lender will first declare a default under this
Note and exercise its remedies under the Conditional Guaranty and under the Deed
of Trust instead of instituting suit on this Note. If following a sale of all of
the parcels comprising the Property under the Deed of Trust a lesser sum is
realized therefrom than that due under the then outstanding Debt, Lender will
not institute any Proceeding against Borrower or Borrower's general partners or
principals, if any, for or on account of the deficiency, and Lender shall not
have recourse against Borrower or Borrower's general partner for any portion of
the Debt, except in each instance as set forth in subsections (b) through (e)
below.
(b) The limitation of liability in subsection (a) will not affect or
impair (i) Lender's rights and remedies under the other Loan Documents,
including Lender's right as mortgagee or secured party to commence an action
to foreclose any lien or security interest Lender has under the Loan
Documents against any parcel remaining encumbered thereby or any additional
collateral held; (ii) the validity of the Loan Documents, the Borrower's
Obligations, the obligations of the Conditional Guarantors under the Loan
Documents to which they are a party (the "Guarantors' Obligations"); or (iii)
Lender's right to present and collect on any letter of credit or other credit
enhancement document held by Lender in connection with the Borrower's
Obligations.
(c) The following are excluded and excepted from the
limitation of liability in subsection (a) and Lender may recover personally
against Borrower and its general partners, for the following:
5
<PAGE>
(i) all losses suffered and liabilities and expenses incurred
by Lender relating to any fraud or intentional
misrepresentation or omission by Borrower or Conditional
Guarantors or any of their partners, members, officers,
directors, shareholders or principals in connection with (A)
the performance of any of the conditions to Lender making the
loan evidenced hereby (the "Loan"); (B) any inducements to
Lender to make the Loan; (C) the execution and delivery of the
Loan Documents; (D) any certificates, representations or
warranties given in connection with the Loan; or (E)
Borrower's performance of the Borrower's Obligations or
Guarantors' performance of the Guarantors' Obligations;
(ii) all Rents derived from the Property after a default under
the Loan Documents which default is a basis of a Proceeding by
Lender to enforce collection of the Debt and all moneys that,
on the date such a default occurs, are on deposit in one or
more accounts used by or on behalf of Conditional Guarantors
(or any of them) relating to the operation of the Property,
except to the extent properly applied to payment of Debt
Service Payments, Impositions, Insurance Premiums and any
reasonable and customary expenses incurred by Conditional
Guarantors in the operation, maintenance and leasing of the
Property or delivered to Lender;
(iii) the cost of remediation of any Environmental Activity
affecting the Property and any other losses suffered and
liabilities and expenses incurred by Lender relating to a
default under the Article of the Deed of Trust entitled
"Environmental";
(iv) all security deposits collected by Conditional Guarantors
or any of Conditional Guarantors' predecessors and not
refunded to Tenants in accordance with their respective
Leases, applied in accordance with the Leases or Law or
delivered to Lender, and all advance rents (more than thirty
(30) days in advance) collected by Conditional Guarantors or
any of Conditional Guarantors' predecessors and not applied in
accordance with the Leases or delivered to Lender;
(v) the replacement cost of any Fixtures or Personal Property
removed from the Property after an Event of Default occurs;
(vi) all losses suffered and liabilities and expenses incurred
by Lender relating to any acts or omissions by Conditional
Guarantors that result in waste (including economic and
non-physical waste) on the Property;
(vii) all losses suffered and expenses incurred by Lender by
virtue of a failure of Conditional Guarantors (or any one or
more of them) to comply with the requirements of Section
5.6(b) and (c) of the Deed of Trust;
(viii) all protective advances and other payments made by
Lender pursuant to express provisions of the Loan Documents to
protect Lender's security interest in the Property or to
protect the assignment of the property described in and
effected
6
<PAGE>
by the Assignment, but only to the extent that the Rents would
have been sufficient to permit Conditional Guarantors to make
the payment and Conditional Guarantors failed to do so;
(ix) any misappropriation of the proceeds of the Loan, to the
extent the proceeds of the Loan are not used to repay prior
liens, including mechanics' liens affecting the Property as of
the date hereof, and all mechanics' or similar liens relating
to work performed on or materials delivered to the Property
prior to Lender exercising its Remedies, but only to the
extent Lender had advanced funds to pay for the work or
materials;
(x) all Proceeds that are not applied in accordance with the
Deed of Trust or not paid to Lender as required under the Deed
of Trust; and
(xi) all losses suffered and liabilities and expenses incurred
by Lender or Trustees in connection with the imposition or
collection by any Government or any person, at any time, of
any recordation tax, transfer tax or any other charge relating
to or on account of the recordation of the Deed of Trust or
Lender's lien thereunder.
(d) Nothing under subparagraph (a) above will be deemed to be a
waiver of any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code or under any other Law
relating to bankruptcy or insolvency to file a claim for the full amount of
the Debt or to require that any collateral securing any or all of the
Borrower's Obligations and the Guarantors' Obligations will continue to
secure such obligations in accordance with the Loan Documents.
(e) Notwithstanding the foregoing, it is expressly understood and
agreed that the aforesaid limitation of liability will in no way affect or
apply to Borrower, and Borrower will be liable for the Debt, if Borrower or
any of Conditional Guarantors, or any of their general partners, members or
officers, as the case may be, or any person, seeks to set aside the Guaranty
as a preference in any bankruptcy or similar proceeding.
Section 8. WAIVERS. BORROWER WAIVES PRESENTMENT FOR PAYMENT, DEMAND,
DISHONOR AND NOTICE OF ANY OF THE FOREGOING. BORROWER FURTHER WAIVES ANY
PROTEST, LACK OF DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF
THE LOAN DOCUMENTS. BORROWER AND ALL ENDORSERS, SURETIES AND GUARANTORS OF THE
BORROWER'S OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME, RENEWALS, WAIVERS AND
MODIFICATIONS THAT LENDER MAY GRANT WITH RESPECT TO THE BORROWER'S OBLIGATIONS
AND TO THE RELEASE OF ANY SECURITY FOR THE CONDITIONAL GUARANTY AND AGREE THAT
ADDITIONAL MAKERS MAY BECOME PARTIES TO THIS NOTE AND ADDITIONAL ENDORSERS,
GUARANTORS OR SURETIES MAY BE ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE
LIABILITY OF THE ORIGINAL MAKER OR ANY ORIGINAL ENDORSER, SURETY OR GUARANTOR.
BORROWER, BY ITS EXECUTION OF THIS NOTE, AND LENDER, BY ITS ACCEPTANCE HEREOF,
7
<PAGE>
EACH HEREBY VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EACH MAY HAVE TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE. IN ADDITION:
SECTION 8.1. WAIVER OF STATUTE OF LIMITATIONS. BORROWER WAIVES THE
RIGHT TO CLAIM ANY STATUTE OF LIMITATIONS AS A DEFENSE TO BORROWER'S PAYMENT
AND PERFORMANCE OF THE BORROWER'S OBLIGATIONS.
SECTION 8.2. WAIVER OF NOTICE. BORROWER WAIVES THE RIGHT TO RECEIVE
ANY NOTICE FROM LENDER WITH RESPECT TO THE LOAN DOCUMENTS EXCEPT FOR THOSE
NOTICES THAT LENDER IS EXPRESSLY REQUIRED TO DELIVER PURSUANT TO THE LOAN
DOCUMENTS.
SECTION 8.3. [INTENTIONALLY DELETED]
SECTION 8.4. GENERAL WAIVER. BORROWER ACKNOWLEDGES THAT (A) BORROWER
AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS THE CASE MAY BE, ARE
KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS AND EXPERIENCED REAL ESTATE
DEVELOPERS OR INVESTORS WHO UNDERSTAND FULLY THE EFFECT OF THE ABOVE
PROVISIONS; (B) LENDER WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF THIS
SECTION; (C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF THE
STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED NEGOTIATED BY LENDER AND
BORROWER AND THEIR RESPECTIVE ATTORNEYS AT ARMS LENGTH; AND (D) ALL WAIVERS
BY BORROWER IN THIS SECTION HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY, AFTER BORROWER FIRST HAS BEEN INFORMED BY COUNSEL OF BORROWER'S
OWN CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAS BEEN MADE AS AN
INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN RIGHT AND PRIVILEGE.
THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE INTENT THAT LENDER AND ANY
SUBSEQUENT HOLDER OF THE NOTE WILL RELY ON THE ACKNOWLEDGMENT.
Section 9. Commercial Loan. Borrower warrants that the Loan is a
commercial loan within the meanings of Section 12-101 et seq. of the Commercial
Law Article of the Annotated Code of Maryland (1990 Repl. Vol., as amended).
Section 10. Usury Limitations. Borrower and Lender intend to comply
with all Laws with respect to the charging and receiving of interest. Any
amounts charged or received by Lender for the use or forbearance of the
Principal to the extent permitted by Law, will be amortized and spread
throughout the Term until payment in full so that the rate or amount of interest
charged or received by Lender on account the Principal does not exceed the
Maximum Interest Rate. If any amount charged or received under the Loan
Documents that is deemed to be interest is determined to be in excess of the
amount permitted to be charged or received at the
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Maximum Interest Rate, the excess will be deemed to be a prepayment of Principal
when paid, without premium, and any portion of the excess not capable of being
so applied will be refunded to Borrower. If during the Term the Maximum Interest
Rate, if any, is eliminated, then for purposes of the Loan, there will be no
Maximum Interest Rate.
Section 11. Applicable Law. This Note is governed by and will be
construed in accordance with the Laws of the State of Maryland.
Section 12. Time of the Essence. Time is of the essence with respect to
the payment and performance of the Borrower's Obligations.
Section 13. Cross-Default. A default under any other note now or
hereafter secured by the Loan Documents or under any loan document related to
such other note constitutes a default under this Note and under the other Loan
Documents. When the default under the other note constitutes an Event of Default
under that note or the related loan document, an Event of Default also will
exist under this Note and the other Loan Documents.
Section 14. [INTENTIONALLY DELETED]
Section 15. Construction. Unless expressly provided otherwise in this
Note, this Note will be construed in accordance with the Exhibit attached to
this Note entitled "Rules of Construction".
Section 16. Miscellaneous Provisions.
(a) Payment of Expenses. Borrower is obligated to pay all fees and
expenses (the "Expenses") incurred by Lender that are otherwise payable in
connection with the Loan or Borrower, including reasonable attorneys' fees and
expenses and any fees and expenses relating to the (i) the preparation,
execution, acknowledgment, delivery and recording or filing the Loan Documents;
(ii) any Proceeding or other claim asserted against Lender; (iii) any
inspection, assessment, survey and tests permitted under the Loan Documents;
(iv) any destruction event under the Deed of Trust; (v) the preservation of
Lender's security and exercise of any rights or Remedies available at Law, in
equity or otherwise; and (vi) the Leases and the Property Documents. Borrower
will pay the Expenses immediately on demand, together with any applicable
interest, Premiums or penalties. If Lender pays any of the Expenses, Borrower
will reimburse Lender the amount paid by Lender immediately upon demand,
together with interest on such amount at the Default Interest Rate from the date
which is five (5) days after the date of which Lender demanded payment through
and including the date Borrower reimburses Lender. The Expenses together with
any applicable interest, Premiums or penalties constitute a portion of the Debt.
(b) Duty to Defend. If Lender or any of its trustees, officers,
participants, employees or affiliates is a party in any Proceeding relating to
the Borrower or the Loan, Borrower will indemnify and hold harmless the party
and will defend the party and attorneys and other professionals retained by
Borrower and approved by Lender. Lender may elect to engage its own attorneys
and other professionals, at Borrower's expense, to defend or to assist in the
defense of the party. In all events, case strategy will be determined by Lender
if Lender so elects and no Proceeding will be settled without Lender's prior
approval which may be withheld in its
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<PAGE>
sole discretion.
(c) Notices. Notices shall be given as provided in the Deed of Trust,
except that any notice made to Borrower shall be made at the address set forth
above.
(d) Lender's Discretion. Whenever under this Note any matter is
required to be satisfactory to Lender, Lender's approval, determination or
election will be made in Lender's reasonable discretion unless expressly
provided to the contrary.
(e) Unenforceable Provisions. If any provision of this Note is found to
be illegal or unenforceable or would operate to invalidate any other part of
this Note, then the provision will be deemed expunged and this Note will be
construed as though the provision was not contained herein, and the remainder of
the Note shall remain in full force and effect.
(f) Relationship between Borrower and Lender.
(i) Lender is not a partner of or joint venturer with Borrower
or any other entity as a result of the Loan; the relationship between Lender
and Borrower is strictly that of creditor and debtor. Each Loan Document is
an agreement between the parties to that Loan Document for the mutual benefit
of those parties, and no entities other than the parties to that Loan
Document will be a third party beneficiary or will have any claim against
Lender or Borrower by virtue of the Loan Document. As between Lender and
Borrower, any actions taken by Lender under the Loan Documents will be taken
for Lender's protection only, and Lender has not and will not be deemed to
have assumed any responsibility to Borrower or to any other entity by virtue
of Lender's actions.
(ii) All conditions to Borrower's performance of its Obligations
under the Loan Documents are imposed solely for the benefit of Lender. No
entity other than Lender will have standing to require satisfaction of the
conditions in accordance with the provisions or will be entitled to assume
that Borrower will refuse to perform its Obligations in the absence of strict
compliance with any of the conditions.
(g) Service of Process. Borrower irrevocably consents to service of
process by registered or certified mail, postage prepaid, return receipt
requested, to Borrower at its address set forth above.
(h) Entire Agreement. Oral agreements or commitments between Borrower
and Lender to lend money, to extend credit or to forbear from enforcing
repayment of the Debt, including promises to extend or renew the Debt, are not
enforceable. Any agreements between Borrower and Lender relating to the Loan are
contained in the Loan Documents, which contain the complete and exclusive
statement of the agreements between Borrower and Lender, and except as Borrower
and Lender may later agree in writing to amend the Loan Documents. The language
of each Loan Document will be construed as a whole according to its fair meaning
and will not be construed against the draftsman.
(i) No Oral Amendment. The Loan Documents may not be amended, waived or
terminated orally or by any act or omission made individually by Borrower or
Lender but may be amended, waived or terminated only by a written document
signed by a party against which enforcement of the amendment, waiver or
termination is sought.
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<PAGE>
(j) Time of the Essence. Time is of the essence with respect to
Borrower's payment and performance of the Obligations.
(k) Successors and Assigns. This Note binds the parties hereto and
their respective successors, assigns, heirs, administrators, executors, agents
and representatives and inure to the benefit of Lender and its successors,
assigns, heirs, administrators, executors, agents and representatives.
Section 17. Joint and Several Liability; Successors and Assigns. If
Borrower consists of more than one entity, the obligations and liabilities of
each such entity will be joint and several. This Note binds Borrower and its
successors, assigns, heirs, administrators, executors, agents and
representatives and inures to the benefit of Lender and its successors, assigns,
heirs, administrators, executors, agents and representatives.
Section 18. Absolute Obligation. Except for the Section of this Note
entitled "Limitation of Liability", no reference in this Note to the other Loan
Documents and no other provision of this Note or of the other Loan Documents
will impair or alter the obligation of Borrower, which is absolute and
unconditional, to pay the Principal, interest at the Fixed Interest Rate and any
other amounts due and payable under this Note, as and when required.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date first set forth above.
WITNESS/ATTEST: CORPORATE OFFICE PROPERTIES, L.P.
By: Corporate Office Properties Trust,
its general partner
Karen M Singer by: Roger A. Waesche Jr. (SEAL)
- ------------------------- ------------------------------------
Name: Roger A. Waesche, Jr.
------------------------------------
Title: Senior Vice President
------------------------------------
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<PAGE>
Exhibit A
---------
RULES OF CONSTRUCTION
(a) References in any Loan Document to numbered Articles or Sections
are references to the Articles and Sections of that Loan Document. References in
any Loan Document to lettered Exhibits are references to the Exhibits attached
to that Loan Document, all of which are incorporated in and constitute a part of
that Loan Document. Article, Section and Exhibit captions used in any Loan
Document are for reference only and do not describe or limit the substance,
scope or intent of that Loan Document or the individual Articles, Sections or
Exhibits of that Loan Document.
(b) The terms "include", "including" and similar terms are construed as
if followed by the phrase "without limitation".
(c) The terms "Land", "Improvements", "Fixtures and Personal Property",
"Condemnation Awards", "Insurance Proceeds" and "Property" are construed as if
followed by the phrase "or any part thereof".
(d) Any agreement by or duty imposed on Borrower or a Conditional
Guarantor in any Loan Document to perform any obligation or to refrain from any
act or omission constitutes a covenant running with the ownership or occupancy
of the Land and the Improvements, which will bind all parties hereto and their
respective successors and assigns, and all lessees, subtenants and assigns of
same, and all occupants and subsequent owners of the Property, and will inure to
the benefit of Lender and all subsequent holders of the Note and the Deed of
Trust and includes a covenant by Borrower and the Conditional Guarantors to
cause their respective partners, members, principals, agents, representatives
and employees to perform the obligation or to refrain from the act or omission
in accordance with the Loan Documents. Any statement or disclosure contained in
any Loan Document about facts or circumstances relating to the Property,
Borrower, Conditional Guarantors, or the Loan constitutes a representation and
warranty by Borrower and the Conditional Guarantors made as of the date of the
Loan Document in which the statement or disclosure is contained.
(e) The term "to Borrower's knowledge" is construed as meaning to the
best of Borrower's knowledge after diligent inquiry.
(f) The singular of any word includes the plural and the plural
includes the singular. The use of any gender includes all genders.
(g) The terms "person", "party" and "entity" include natural persons,
firms, partnerships, limited liability companies and partnerships, corporations
and any other public or private legal entity.
(h) The term "provisions" includes terms, covenants, conditions,
agreements and requirements.
(i) The term "amend" includes modify, supplement, extend, replace or
substitute and the term "amendment" includes modification, supplement,
extension, replacement and substitution.
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<PAGE>
(j) Reference to any specific Law or to any document or agreement,
including the Note, the Conditional Guaranty, the Deed of Trust, any of the
other Loan Documents, and any Property Documents includes any future amendments
to the same, as the case may be.
(k) No inference in favor of or against a party with respect to any
provision in any Loan Document may be drawn from the fact that the party drafted
the Loan Document.
(l) The term "certificate" means the sworn, notarized statement of the
entity giving the certificate, made by a duly authorized person satisfactory to
Lender affirming the truth and accuracy of every statement in the certificate.
Any document that is "certified" means the document has been appended to a
certificate of the entity certifying the document that affirms the truth and
accuracy of everything in the document being certified. In all instances the
entity issuing a certificate must be satisfactory to Lender.
(m) Any appointment of Lender as Borrower's attorney-in-fact is
irrevocable and coupled with an interest. Lender may appoint a substitute
attorney-in-fact. Borrower ratifies all actions taken by the attorney-in-fact
but, nevertheless, if Lender requests, Borrower will specifically ratify any
action taken by the attorney-in-fact by executing and delivering to the
attorney-in-fact or to any entity designated by the attorney-in-fact all
documents necessary to effect the ratification.
(n) Any document, instrument or agreement to be delivered by Borrower
will be in form and content satisfactory to Lender.
(o) All obligations, rights, remedies and waivers contained in the Loan
Documents will be construed as being limited only to the extent required to be
enforceable under the Law.
(p) The unmodified word "days" means calendar days.
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<PAGE>
Exhibit 10.30
INDEMNITY DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT
by and between
NBP ONE, LLC
NBP 131-133-141, LLC
THREE CENTRE PARK, LLC
LAKEVIEW AT GREENS, LLC, and
CORPORATE GATESPRING, LLC,
as Grantor
and
WILLIAM H. GOEBEL and MATTHEW T. MURPHY,
as Trustees
for the benefit of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA,
As Lender
Property Known As
One National Business Park
131 National Business Park
133 National Business Park
141 National Business Park
Lakeview - Greens I
Lakeview - Greens II
Three Centre Park
Woodlands One
This Indemnity Deed of Trust Was Prepared By
And After Recordation This Indemnity Deed of Trust Should be Returned To:
William H. Goebel, Esquire
c/o Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
<PAGE>
INDEMNITY DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT
THIS INDEMNITY DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT (this "Deed of Trust") made this 22 day of October,
l998, by NBP ONE, LLC, NBP 131-133-141, LLC, THREE CENTRE PARK, LLC, LAKEVIEW AT
GREENS, LLC and CORPORATE GATESPRING, LLC (collectively, "Grantor"), each, a
Maryland limited liability company, having their principal place of business at
8815 Centre Park Drive, Suite 400, Columbia, Maryland 21045 to WILLIAM H. GOEBEL
and MATTHEW T. MURPHY having an office at c/o Third Avenue, New York, New York
1007 ("Trustees"), for the benefit of TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA ("Lender"), a New York corporation, having an address at 730 Third
Avenue, New York, New York l0017.
RECITALS:
A. Lender agreed to make a loan to Corporate Office
Properties, L.P. a Delaware limited partnership (the "Borrower") and Borrower
has agreed to accept a loan (the "Loan") in the maximum principal amount of
$85,000,000.
B. To evidence the Loan, Borrower executed and delivered to
Lender Borrower's promissory note (the "Note"), dated of even date herewith, in
the principal amount of Eighty-Five Million Dollars ($85,000,000) (that amount
or so much as is outstanding from time to time is referred to as the
"Principal"). Pursuant to the Note, Borrower promises to pay the Principal with
interest thereon to the order of Lender as set forth in the Note and with the
balance, if any, of the Debt being due and payable on November 1, 2008 (the
"Maturity Date").
C. Grantor has executed a Conditional Guaranty Agreement of
even date herewith, to and for the benefit of Lender (the "Guaranty"), pursuant
to which Grantor has, jointly and severally, conditionally guaranteed to Lender
the Borrower's obligations under the Note. The Guarantor is not primarily
obligated under the Loan.
D. To secure the Grantor's obligations under the Guaranty,
this Deed of Trust conveys, among other things, Grantor's fee interest in the
certain real property located in the County of Anne Arundel, City of Laurel
(County of Prince George's) and County of Howard, all in the State of Maryland
more particularly described in Exhibit A as Parcels 1 through 8 (the "Land").
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<PAGE>
E. As a condition precedent to making the Loan to Borrower,
Lender required Grantor to execute and deliver this Deed of Trust to secure the
Guarantor's Obligations udner the Guaranty. As used herein, "Obligations" means
and includes: (a) all present and future liabilities and obligations of Grantor
under the Guaranty, this Deed of Trust and the other Financing Documents,
including principal, interest and all other amounts due or to become due under
the Guaranty, this Deed of Trust and the other Financing Documents, and (b) all
present and future liabilities and obligations of Grantor under the provisions
of this Deed of Trust including (i) all Expenses, and (ii) any and all other
amounts and indemnifications which are included as a part of the Obligations
pursuant to the provisions of this Deed of Trust. The Guaranty, this Deed of
Trust, and any other agreements or documents both now and hereafter furnished or
executed by Grantor or any other person or persons to evidence, secure, guaranty
or in connection with the Obligations are hereinafter collectively referred to
as the "Financing Documents".
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------
Section 1.1. Definitions. Capitalized terms used in this Deed of Trust
are defined in Exhibit B or in the text with a cross-reference in Exhibit B.
Section 1.2. Rules of Construction. This Deed of Trust will be
interpreted in accordance with the rules of construction set forth in Exhibit C.
ARTICLE II
GRANTING CLAUSES
----------------
Section 2.1. Encumbered Property. Grantor irrevocably grants,
mortgages, warrants, conveys, assigns and pledges to Trustees, in trust, WITH
POWER OF SALE and the right of entry and possession, and grants to Trustees a
security interest in, the following property, rights, interests and estates now
or in the future owned or held by Grantor (the "Property") for the uses and
purposes set forth in this Deed of Trust forever:
(i) the Land;
(ii) all buildings and improvements located on the Land (the
"Improvements");
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<PAGE>
(iii) all easements; rights of way or use, including any rights of
ingress and egress; streets, roads, ways, sidewalks, alleys and
passages; strips and gores; sewer rights; water, water rights, water
courses, riparian rights and drainage rights; air rights and
development rights; oil and mineral rights; and tenements,
hereditaments and appurtenances, in each instance adjoining or
otherwise appurtenant to or benefitting the Land or the Improvements;
(iv) all materials intended for construction, re-construction,
alteration or repair of the Improvements, such materials to be deemed
included in the Land and the Improvements immediately on delivery to
the Land; all fixtures and personal property that are attached to,
contained in or used in connection with the Land or the Improvements
(excluding personal property owned by tenants and excluding removable
fixtures and appurtenances), including: furniture; furnishings;
machinery; motors; elevators; fittings; microwave ovens; refrigerators;
office systems and equipment; plumbing, heating, ventilating and air
conditioning systems and equipment; maintenance and landscaping
equipment; lighting, cooking, laundry, dry cleaning, refrigerating,
incinerating and sprinkler systems and equipment; telecommunications
systems and equipment; computer or word processing systems and
equipment; security systems and equipment; and equipment leases for any
of the property described in this subsection (the "Fixtures and
Personal Property");
(v) all agreements, ground leases, grants of easements or
rights-of-way, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit
development agreements, cooperative, condominium or similar ownership
or conversion plans, management, leasing, brokerage or parking
agreements or other material documents affecting Borrower of the Land,
the Improvements or the Fixtures and Personal Property, including the
documents described in Exhibit D but expressly excluding the Leases
(the "Property Documents");
(vi) all inventory (including all goods, merchandise, raw materials,
incidentals, office supplies and packaging materials) held for sale,
lease or resale or furnished or to be furnished undercontracts of
service, or used or consumed in the ownership, use or operation of the
Land, the Improvements or the Fixtures and Personal Property, all
documents of title evidencing any part of any of the foregoing and all
returned or repossessed goods arising from or relating to any sale or
disposition of inventory;
(vii) all intangible personal property relating to the Land, the
Improvements or the Fixtures and Personal Property, including choses in
action and causes of action (except those personal to Grantor),
corporate and other business records, inventions, designs, promotional
materials, blueprints, plans, specifications, patents, patent
applications,
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trademarks, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, claims for refunds or rebates of
taxes, insurance surpluses, refunds or rebates of taxes and any letter
of credit, guarantee, claim, security interest or other security held
by or granted to Grantor to secure payment by an account debtor of any
of the accounts of Grantor arising out of the ownership, use or
operation of the Land, the Improvements or the Fixtures and Personal
Property, and documents covering all of the foregoing; all accounts,
accounts receivable, documents, instruments, money, deposit accounts,
funds deposited in accounts established with a bank, savings and loan
association, trust company or other financial institution in connection
with the ownership, use or operation of the Property, including any
reserve accounts or escrow accounts, and all investments of the funds
and all other general intangibles;
(viii) all awards and other compensation paid after the date of this
Deed of Trust for any Condemnation (the "Condemnation Awards");
(ix) all proceeds of and all unearned premiums on the Policies (the
"Insurance Proceeds");
(x) all licenses, certificates of occupancy, contracts, management
agreements, operating agreements, operating covenants, franchise
agreements, permits and variances relating to the Land, the
Improvements or the Fixtures and Personal Property;
(xi) all books, records and other information, wherever located, which
are in Borrower's possession, custody or control or to which Grantor is
entitled at law or in equity and which are related to the Property,
including all computer or other equipment used to record, store,
manage, manipulate or access the information;
(xii) all deposits held from time to time by the Accumulations
Depositary to provide reserves for Taxes and Assessments together with
interest thereon, if any (the "Accumulations");
(xiii) all after-acquired title to or remainder or reversion in any of
the property described in this Section; all additions, accessions and
extensions to, improvements of and substitutions or replacements for
any of such property; all products and all cash and non-cash proceeds,
immediate or remote, of any sale or other disposition of any of such
property, excluding sales or other dispositions of inventory in the
ordinary course of the business of operating the Land or the
Improvements; and all additional lands, estates, interests, rights or
other property acquired by Grantor after the date of this Deed of Trust
for use in connection with the Land and Improvements, all without the
need for any additional mortgage, assignment, pledge or conveyance to
Lender but Grantor will execute and deliver to Lender, upon Lender's
request, any documents reasonably
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<PAGE>
requested by Lender to further evidence the foregoing; and
(xiv) all deposits for reserves held from time to time by an escrow
holder in accordance with the Pledge and Security Agreement described
in the Section entitled "Reserves" and all accounts established to
maintain the deposits together with investments thereof and interest
thereon.
Section 2.2. Habendum Clause. The Property is conveyed to Trustees, and
the Trustees' successors and assigns, to have and to hold forever in fee simple,
but subject, however, to defeasance as described in Section 2.4 of this Deed of
Trust.
Section 2.3. Security Agreement.
The Property includes both real and personal property and this Deed of
Trust is a real property mortgage and also a "security agreement" and a
"financing statement" within the meaning of the Maryland Uniform Commercial
Code. By executing and delivering this Deed of Trust, Grantor grants to Lender,
as security for the Obligations, a security interest in the Property to the full
extent that any of the Property may be subject to the Uniform Commercial Code.
Section 2.4. Conditions to Grant. This Deed of Trust is made on the
express condition that if Grantor pays and performs the Obligations in full in
accordance with the Loan Documents, whether such obligations are now existing or
hereafter arising, then, the lien of this Deed of Trust will be released at
Grantor's expense. Any contractual provisions of a Loan Document that expressly
provides in such Loan Document to continue beyond the repayment of the Loan and
release of lien of the Deed of Trust shall continue in accordance with their
terms.
ARTICLE III
OBLIGATIONS SECURED
-------------------
Section 3.1. The Obligations. This Deed of Trust secures the
Obligations, provided that the foregoing does not limit, qualify or affect in
any way the present, absolute nature of the Assignment.
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<PAGE>
ARTICLE IV
TITLE AND AUTHORITY
-------------------
Section 4.1. Title to the Property.
(a) Subject to the conveyance effectuated by this Deed of Trust,
Grantor has and will continue to have good and marketable title in fee simple
absolute to the Land and the Improvements and good and marketable title to the
Fixtures and Personal Property, all free and clear of liens, encumbrances and
charges except the Permitted Exceptions, and has the right to mortgage, give,
grant, bargain, sell, lien, setoff, convey, confirm, pledge, assign and
hypothecate the same. To Grantor's knowledge, there are no facts or
circumstances that might give rise to a lien, encumbrance or charge on the
Property. Subject to the Permitted Exceptions, Grantor shall forever specially
warrant, defend and preserve such title and the validity and priority of the
lien of this Deed of Trust and shall forever warrant and defend the same to
Lender against the claims of all persons whomsoever.
(b) Grantor owns and will continue to own all of the other Property
free and clear of all liens, encumbrances and charges except the Permitted
Exceptions.
(c) This Deed of Trust is and will remain a valid and enforceable first
lien on and security interest in the Property, subject only to the Permitted
Exceptions.
Section 4.2. Authority.
(a) Grantor is and will continue to be (i) duly organized, validly
existing and in good standing under the Laws of the state or commonwealth in
which it was organized or incorporated and (ii) duly qualified to conduct
business, in good standing, in the state or commonwealth where the Property is
located.
(b) Grantor has and will continue to have all approvals required by Law
or otherwise and full right, power and authority to (i) own and operate the
Property and carry on Grantor's business as now conducted or as proposed to be
conducted; (ii) execute and deliver those of the Financing Documents to which it
is a party; (iii) grant, mortgage, warrant the title to, convey, assign and
pledge the Property to Lender pursuant to the provisions of this Deed of Trust;
and (iv) perform the Obligations.
(c) The execution and delivery of the Financing Documents and the
performance of the Obligations do not and will not conflict with or result in a
default under any Laws or any Leases or Property Documents and do not and will
not conflict with or result in a default under any agreement binding upon any
party to the Financing Documents.
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<PAGE>
(d) The Financing Documents constitute and will continue to constitute
legal, valid and binding obligations of all parties to the Financing Documents
enforceable in accordance with their respective terms.
Section 4.3. No Foreign Person. Grantor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
Section 4.4. Litigation. There are no Proceedings or, to Grantor's
knowledge, investigations against or affecting Grantor or the Property and, to
Grantor's knowledge, there are no facts or circumstances that might give rise to
a Proceeding or an investigation against or affecting Grantor or the Property.
Grantor will give Lender prompt notice of the commencement of any Proceeding or
investigation against or affecting the Property or Grantor which could have a
material adverse effect on the Property or on Lender's interests in the Property
or under the Financing Documents. Grantor also will deliver to Lender such
additional information relating to the Proceeding or investigation as Lender may
request from time to time.
ARTICLE V
PROPERTY STATUS, MAINTENANCE AND LEASES
---------------------------------------
Section 5.1. Status of the Property.
(a) Grantor has obtained and will maintain in full force and effect all
certificates, licenses, permits and approvals that are issued or required by Law
or by any entity having jurisdiction over the Property or over Grantor or that
are necessary for the Permitted Use, for occupancy and operation of the Property
for the conveyance described in this Deed of Trust and for the conduct of
Grantor's business on the Property in accordance with the Permitted Use.
(b) The Property is and will continue to be serviced by all public
utilities required for the Permitted Use of the Property.
(c) All roads and streets necessary for service of and access to the
Property for the current or contemplated use of the Property have been completed
and are and will continue to be serviceable, physically open and dedicated to
and accepted by the Government for use by the public.
(d) The Property is free from damage caused by a Casualty.
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(e) All costs and expenses of labor, materials, supplies and equipment
used in the construction of the Improvements have been paid in full.
Section 5.2. Maintenance of the Property. Grantor will maintain the
Property in thorough repair and good and safe condition, suitable for the
Permitted Use, including, to the extent necessary, replacing the Fixtures and
Personal Property with property at least equal in quality and condition to that
being replaced. Grantor will not erect any new buildings, building additions or
other structures on the Land or otherwise materially alter the Improvements
without Lender's prior consent which may be withheld in Lender's sole
discretion. The Property will be managed by a property manager satisfactory to
Lender pursuant to a management agreement satisfactory to Lender and terminable
by Grantor upon 30 days notice to the property manager.
Section 5.3. Change in Use. Grantor will use and permit the use of the
Property for the Permitted Use and for no other purpose.
Section 5.4. Waste. Grantor will not commit or permit any waste
(including economic and non-physical waste), impairment or deterioration of the
Property or any alteration, demolition or removal of any of the Property without
Lender's prior consent which may be withheld in Lender's sole discretion.
Section 5.5. Inspection of the Property. Subject to the rights of
tenants under the Leases (including without limitation the right of the GSA
tenant at One National Business Park having a highly restrictive entry
provision), Lender has the right to enter and inspect the Property on reasonable
prior notice, except during the existence of an Event of Default, when no prior
notice is necessary. Lender has the right to engage an independent expert to
review and report on Grantor's compliance with Grantor's obligations under this
Deed of Trust to maintain the Property, comply with Law and refrain from waste,
impairment or deterioration of the Property and the alteration, demolition or
removal of any of the Property except as may be permitted by the provisions of
this Deed of Trust. If the independent expert's report discloses material
failure to comply with such obligations or if Lender engages the independent
expert after the occurrence of an Event of Default, then the independent
expert's review and report will be at Grantor's expense, payable on demand.
Section 5.6. Leases and Rents.
(a) Grantor assigns the Leases and the Rents to Lender absolutely and
not merely as additional collateral or security for the payment and performance
of the Obligations, but subject to a license back to Grantor of the right to
collect the Rents unless and until an Event of Default occurs at which time the
license will terminate automatically, all as more particularly set forth in the
Assignment, the provisions of which are incorporated in this Deed of Trust by
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reference.
(b) Grantor acknowledges its obligations to Lender under Section
12.4(b) of this Deed of Trust and agrees that if ACE should exercise its
purchase option and Substitute Collateral is not provided, then Grantor shall
cause the proceeds of sale of One National Business Park to be applied towards
partial prepayment of the Loan; such partial prepayment shall not constitute a
default under Section 2(b) of the Note provided that, on the partial prepayment
date, Borrower pays the amount of Principal allocated to One National Business
Park and the Prepayment Premium allocable to such prepaid amount. Upon such
partial prepayment, Lender shall release One National Business Park from the
lien of this Deed of Trust.
(c) Grantor acknowledges that the space tenant occupying the parcel of
the Property known as "Woodlands" has under its lease a right of first refusal
to purchase Woodlands. Grantor agrees that it shall not take any action to cause
such tenant to be able to exercise such purchase right.
Section 5.7. Parking. Grantor will provide, maintain, police and light
parking areas within the Property, including any sidewalks, aisles, streets,
driveways, sidewalk cuts and rights-of-way to and from the adjacent public
streets, in a manner consistent with the Permitted Use and sufficient to
accommodate the greatest of: (i) the number of parking spaces required by Law;
(ii) the number of parking spaces required by the Leases and the Property
Documents; or (iii) for each of the parcels constituting the Property, the
following number of spaces: (A) Parcel I - 1,181 space, (B) Parcel II - 266
spaces, (C) Parcel III - 341 spaces, (D) Parcel IV - 326 spaces, (E) Parcel V -
225 spaces, (F) Parcel VI - 234 spaces, (G) Parcel VII - 147 spaces, (H) Parvel
VIII - 480 spaces, and (I) Parcel IX - 336 spaces; subject, however, in each
instance to temporary reduction resulting from repairs or alterations at the
Property. The parking areas will be reserved and used exclusively for ingress,
egress and parking for Grantor and the tenants under the Leases and their
respective employees, customers and invitees and in accordance with the Leases
and the Property Documents.
Section 5.8. Separate Tax Lot. Each of the Parcels constituting the
Property is and will remain assessed for real estate tax purposes as one or more
wholly independent tax lots, separate from any property that is not part of the
Property.
Section 5.9. Changes in Zoning or Restrictive Covenants. Grantor will
not (i) initiate, join in or consent to any change in any Laws pertaining to
zoning, any restrictive covenant or other restriction which would restrict the
Permitted Uses for the Property; (ii) permit the Property to be used to fulfill
any requirements of Law for the construction or maintenance of any improvements
on property that is not part of the Property; (iii) permit the Property to be
used for any purpose not included in the Permitted Use; or (iv) impair the
integrity of each of the Parcels of the Property as a single, legally subdivided
zoning lot
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separate from all other property.
Section 5.10. Lender's Right to Appear. Lender has the right to appear
in and defend any Proceeding brought regarding the Property and to bring any
Proceeding, in the name and on behalf of Borrower or Grantor or in Lender's
name, which Lender, in its sole but reasonable discretion, determines should be
brought to protect Lender's interest in the Property.
ARTICLE VI
IMPOSITIONS AND ACCUMULATIONS
-----------------------------
Section 6.1. Impositions. Subject to the requirements of any separate
agreement between Grantor and Lender as described in Sections 6.2 and 6.4:
(a) Grantor will pay each Imposition at least 5 days before the date
(the "Imposition Penalty Date") that is the earlier of (i) the date on which the
Imposition becomes delinquent and (ii) the date on which any penalty, interest
or charge for non-payment of the Imposition accrues.
(b) Before each Imposition Penalty Date, Grantor will deliver to Lender
a receipted bill or other evidence of payment.
(c) Grantor, at its own expense, may contest any Taxes or Assessments,
provided that the following conditions are met:
(i) not less than 15 days prior to the Imposition Penalty Date, Grantor
delivers to Lender notice of the proposed contest;
(ii) the contest is by a Proceeding promptly initiated and conducted
diligently and in good faith;
(iii) there is no Event of Default;
(iv) the Proceeding suspends the collection of the contested Taxes or
Assessments or Grantor otherwise secures assurances reasonably
satisfactory to Lender from the taxing authority that the taxation will
be stayed pending such proceeding;
(v) the Proceeding is permitted under and is conducted in accordance
with the Leases and the Property Documents;
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(vi) the Proceeding precludes imposition of criminal or civil penalties
and sale or forfeiture of the Property and Lender will not be subject
to any civil suit; and
(vii) Grantor either deposits with the Accumulations Depository
reserves or furnishes a bond or other security satisfactory to Lender,
in either case in an amount sufficient to pay the contested Taxes or
Assessments, together with all interest and penalties or Grantor pays
all of the contested Taxes or Assessments under protest.
(d) Installment Payments. If any Assessment is payable in installments,
Grantor will nevertheless pay the Assessment in its entirety on the day the
first installment becomes due and payable or a lien, unless Lender, in its sole
discretion, approves payment of the Assessment in installments.
Section 6.2. Accumulations.
(a) Grantor made an initial deposit with either Lender or a mortgage
servicer or financial institution designated or approved by Lender from time to
time to receive, hold and disburse the Accumulations in accordance with this
Section (the "Accumulations Depository") and in accordance with the Pledge and
Security Agreement (the "Pledge and Security Agreement") to be entered into
among Grantor, Lender and a pledge agent for the Accumulations Depository. On
the first day of each calendar month during the Term Grantor will deposit with
the Accumulations Depository an amount equal to one-twelfth (1/12) of the annual
Taxes and Assessments as determined by Lender or its designee. At least 30 days
before each Imposition Penalty Date, Grantor will deliver to the Accumulations
Depository any bills and other documents that are necessary to pay the Taxes and
Assessments.
(b) The Accumulations will be applied to the payment of Taxes and
Assessments. Any excess Accumulations after payment of Taxes and Assessments
will be returned to Grantor or credited against future payments of the
Accumulations, at Lender's election or as required by Law. If the Accumulations
are not sufficient to pay Taxes and Assessments, Grantor will pay the deficiency
to the Accumulations Depository within 5 days of demand. At any time after an
Event of Default occurs, Lender may apply the Accumulations as a credit against
any portion of the Obligations selected by Lender in its sole discretion.
(c) The Accumulations Depository will hold the Accumulations as
additional security for the Obligations until applied in accordance with the
provisions of this Deed of Trust. If Lender is not the Accumulations Depository,
the Accumulations Depository will deliver the Accumulations to Lender upon
Lender's demand at any time after an Event of Default.
(d) If the Property is sold or conveyed other than by foreclosure or
transfer in lieu of
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foreclosure, all right, title and interest of Grantor to the Accumulations
will automatically, and without necessity of further assignment, be held for the
account of the new owner, subject to the provisions of this Section and Grantor
will have no further interest in the Accumulations.
(e) The Accumulations Depository has deposited the initial deposit and
will deposit the monthly deposits into a separate interest bearing account in
the name of Borrower, as pledged to the Lender as secured party, all in
accordance with the Pledge and Security Agreement.
(f) Lender has the right to pay, or to direct the Accumulations
Depository to pay, any Taxes or Assessments unless Grantor is contesting the
Taxes or Assessments in accordance with the provisions of this Deed of Trust, in
which event any payment of the contested Taxes or Assessments will be made under
protest in the manner prescribed by Law or, at Lender's election, will be
withheld.
(g) If Lender assigns this Deed of Trust, Lender will pay, or cause the
Accumulations Depository to pay, the unapplied balance of the Accumulations to
or at the direction of the assignee. Simultaneously with the payment, Lender and
the Accumulations Depository will be released from all liability with respect to
the Accumulations and Grantor will look solely to the assignee with respect to
the Accumulations. When the Obligations have been fully satisfied, any unapplied
balance of the Accumulations will be returned to Grantor.
Section 6.3. Changes in Tax Laws. If a Law requires the deduction of
the Obligations from the value of the Property for the purpose of taxation or
imposes a tax, either directly or indirectly, on the Obligations, any Financing
Document or Lender's interest in the Property, Grantor will pay the tax with
interest and penalties, if any. If Lender determines that Grantor's payment of
the tax may be unlawful, unenforceable, usurious or taxable to Lender, the
Obligations will become immediately due and payable on 90 days' prior notice
unless the tax must be paid within the 120-day period, in which case, the
Obligations will be due and payable within the lesser period, but in such latter
event, without the payment of the Prepayment Premium or the Evasion Premium, if
then applicable.
Section 6.4. Reserves. Grantor made an initial deposit and will make
periodic deposits into an account established as additional security for the
payment and performance of the Obligations and further deposits towards
potential obligations of lease rollover costs at certain parcels of the
Property, each to be held and disbursed in accordance with the Pledge and
Security Agreement.
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ARTICLE VII
INSURANCE, CASUALTY, CONDEMNATION
AND RESTORATION
---------------
Section 7.1. Insurance Coverages.
(a) Borrower and Grantor will maintain such insurance coverages and
endorsements in form and substance and in amounts as Lender may require in its
sole reasonable discretion, from time to time. Until Lender notifies Borrower or
Grantor of changes in Lender's requirements, Borrower and Grantor will maintain
not less than the insurance coverages and endorsements Lender required for
closing of the Loan.
(b) The insurance, including renewals, required under this Section will
be issued on valid and enforceable policies and endorsements reasonably
satisfactory to Lender (the "Policies").
Each Policy will contain a standard waiver of subrogation and a
replacement cost endorsement and will provide that Lender will receive not less
than 30 days' prior written notice of any cancellation, termination or
non-renewal of a Policy or any material change other than an increase in
coverage and that Lender will be named under a standard mortgage endorsement as
loss payee.
(c) The insurance companies issuing the Policies (the "Insurers") must
be authorized to do business in the State or Commonwealth where the Property is
located, must have been in business for at least 5 years, must carry an A.M.
Best Company, Inc. policy holder rating of A or better and an A.M. Best Company,
Inc. financial category rating of Class X or better and must be otherwise
satisfactory to Lender. Lender may select an alternative credit rating agency
and may impose different credit rating standards for the Insurers.
Notwithstanding Lender's right to approve the Insurers and to establish credit
rating standards for the Insurers, Lender will not be responsible for the
solvency of any Insurer.
(d) Notwithstanding Lender's rights under this Article, Lender will not
be liable for any loss, damage or injury resulting from the inadequacy or lack
of any insurance coverage.
(e) Grantor and Borrower will each comply with the provisions of the
Policies and with the requirements, notices and demands imposed by the Insurers
and applicable to Grantor, Borrower or the Property.
(f) Grantor and Borrower will pay the Insurance Premiums for each
Policy not less than 30 days before the expiration date of the Policy being
replaced or renewed and will
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deliver to Lender a certified copy of each Policy (for the initial closing or
any replacements of the original policy, with an ACORD 27 certificate for any
renewals thereafter) marked "Paid" not less than 10 days prior to the expiration
date of the Policy being replaced or renewed.
(g) Neither Grantor nor Borrower will carry separate insurance
concurrent in kind or form or contributing in the event of loss with any other
insurance carried by Grantor or Borrower.
(h) If Grantor and/or Borrower carries any insurance under a blanket
policy, it will deliver to Lender prior to the date hereof or for any
replacement policy a certified duplicate copy of the blanket policy (and
certificates as described in paragraph (f), above, for renewals) which will
allocate to the Property the amount of coverage required under this Section and
otherwise will provide the same coverage and protection as would a separate
policy insuring only the Property.
(i) Grantor will give the Insurers prompt notice of any change in
ownership or use of the Property. This subsection does not abrogate the
prohibitions on transfers set forth in this Deed of Trust.
(j) If the Property is sold at a foreclosure sale or otherwise is
transferred so as to extinguish the Obligations, all of Grantor's right, title
and interest in and to the Policies then in force will be transferred
automatically to the purchaser or transferee.
Section 7.2. Casualty and Condemnation.
(a) Grantor will give Lender notice of any Casualty immediately after
it occurs and will give Lender notice of any Proceeding in Condemnation
immediately after Grantor receives notice of commencement or notice that such a
Proceeding will be commencing. Grantor immediately will deliver to Lender copies
of all documents Grantor delivers or receives relating to the Casualty or the
Proceeding, as the case may be.
(b) If the amount of any Insurance Proceeds or Condemnation Awards, as
estimated by Lender in its sole but reasonable discretion, is equal to or less
than Five Hundred Thousand Dollars ($500,000), and if Grantor is not at the date
of the Casualty subject of an Event of Default beyond any applicable notice and
cure period, then in the event of both such instances Grantor shall be
authorized to act without Lender's review or consent in collecting, adjusting
and compromising any claims for loss, damage or destruction under the Policies
or with any Condemnation Proceeding, as may be applicable. If Grantor is
entitled to settle such claims without Lender's review or consent, Grantor shall
still be required to have the Insurance proceeds or Condemnation Awards, as the
case may be, held and applied in accordance with the terms of this Section 7.2
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(c) If the amount of any Insurance Proceeds or Condemnation Award
exceeds $500,000, in Lender's sole but reasonable estimation, or if any Event of
Default under any Loan Document then remains uncured beyond any applicable
notice or cure period (each such event, a "Consent Trigger"), then Grantor
authorizes Lender, at Lender's option, to act on Grantor's behalf to collect,
adjust and compromise any claims for loss, damage or destruction under the
Policies on such terms as Lender determines in Lender's sole discretion.
Further, in the event of any Consent Trigger, Grantor authorizes Lender to act,
at Lender's option, on Grantor's behalf in connection with any Condemnation
Proceeding. Grantor will execute and deliver to Lender all documents requested
by Lender and all documents as may be required by Law to confirm such
authorizations. Nothing in this Section will be construed to limit or prevent
Lender from joining with Grantor either as a co-defendant or as a co-plaintiff
in any Condemnation Proceeding.
(c) If a Consent Trigger occurs but Lender elects not to act on
Grantor's behalf as provided in this Section, then Grantor promptly will file
and prosecute all claims (including Lender's claims) relating to the Casualty
and will prosecute or defend (including defense of Lender's interest) any
Condemnation Proceeding. Grantor will have the authority to settle or compromise
the claims or Proceeding, as the case may be, provided that Lender has approved
in Lender's sole discretion any compromise or settlement that exceeds
$500,000.00. Any check for Insurance Proceeds or Condemnation Awards, as the
case may be (the "Proceeds") will be made payable to Lender and Grantor. Grantor
will endorse the check to Lender immediately upon Lender presenting the check to
Grantor for endorsement or if Grantor receives the check first, will endorse the
check immediately upon receipt and forward it to Lender. If any Proceeds are
paid to Grantor, Grantor immediately will deposit the Proceeds with Lender, to
be applied or disbursed in accordance with the provisions of this Deed of Trust.
Lender will be responsible for only the Proceeds actually received by Lender.
Section 7.3. Application of Proceeds. After deducting the costs
incurred by Lender in collecting the Proceeds, Lender may, in its sole
discretion, (i) apply the Proceeds as a credit against any portion of the Debt
selected by Lender in its sole discretion of the Debt (in which event neither
the Prepayment Premium nor the Evasion Premium, if any, shall apply); (ii) apply
the Proceeds to restore the Improvements, provided that Lender will not be
obligated to see to the proper application of the Proceeds and provided further
that any amounts released for Restoration will not be deemed a payment on the
Debt; or (iii) deliver the Proceeds to Grantor.
Section 7.4. Conditions to Availability of Proceeds for Restoration.
Notwithstanding the preceding Section, after a Casualty or a Condemnation (a
"Destruction Event"), Lender will make the Proceeds (less any costs incurred by
Lender in collecting the Proceeds) available for Restoration in accordance with
the conditions for disbursements set forth in the Section entitled
"Restoration", provided that the following
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conditions are met:
(i) Each of the entities described above as an original Grantor
hereunder, or the transferee under a Permitted Transfer, if any,
continues to be Grantor at the time of the Destruction Event and at all
times thereafter until the Proceeds have been fully disbursed;
(ii) no default under the Financing Documents exists at the time of the
Destruction Event;
(iii) all Leases in effect immediately prior to the Destruction Event
and all Property Documents in effect immediately prior to the
Destruction Event that are essential to the use and operation of the
Property continue in full force and effect, subject to any rental
abatements provided in the leases, notwithstanding the Destruction
Event;
(iv) the annual Rents (excluding security deposits) under Leases in
effect on the date of the Destruction Event, plus any rental insurance
proceeds paid or to be paid to Grantor, plus any additional collateral
satisfactory to Lender in its sole but reasonable discretion, are
providing debt service coverage for the annual Debt Service Payments of
1.40 after payment of annual Insurance Premiums, Impositions and
operating expenses of the Property (including ground rent, if any),
provided that, if the combined Rents, rental insurance and other
approved collateral, if any, do not provide such debt service coverage,
then Grantor expressly authorizes and directs Lender to apply an amount
from the Proceeds to reduction of Principal in order to reduce the
annual Debt Service Payments sufficiently for such debt service
coverage to be achieved (in which event neither the Prepayment Premium
nor the Evasion Premium, if any, shall apply). The reduced debt service
payments will be calculated using the Fixed Interest Rate and an
amortization schedule that will achieve the same proportionate
amortization of the reduced Principal over the then remaining Term as
would have been achieved if the Principal and the originally scheduled
Debt Service Payments had not been reduced. Grantor will execute any
documentation that Lender deems reasonably necessary to evidence the
reduced Principal and debt service payments.
Section 7.5. Restoration.
(a) If the total Proceeds for any Destruction Event are $500,000.00 or
less and Lender elects or is obligated by Law or under this Article to make the
Proceeds available for Restoration, Lender will disburse to Grantor the entire
amount received by Lender and Grantor will commence Restoration promptly after
the Destruction Event and complete Restoration not later than the Restoration
Completion Date.
(b) If the Proceeds for any Destruction Event exceed $500,000.00 and
Lender elects or
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is obligated by Law or under this Article to make the Proceeds available for
Restoration, Lender will disburse the Proceeds and any Additional Funds (the
"Restoration Funds") upon Grantor's request as Restoration progresses, generally
in accordance with normal construction lending practices for disbursing funds
for construction costs, provided that the following conditions are met:
(i) Grantor commences Restoration promptly after the
Destruction Event and completes Restoration on or before the
Restoration Completion Date;
(ii) if Lender requests, Grantor delivers to Lender
prior to commencing Restoration, for Lender's approval, plans
and specifications and a detailed budget for the Restoration;
(iii) Grantor delivers to Lender satisfactory evidence of the
costs of Restoration incurred prior to the date of the
request, and such other documents as Lender may request
including mechanics' lien waivers and title insurance
endorsements;
(iv) Grantor pays all costs of Restoration whether or
not the Restoration Funds are sufficient and, if at any time
during Restoration, Lender determines that the undisbursed
balance of the Restoration Funds is insufficient to complete
Restoration, Grantor deposits with Lender, as part of the
Restoration Funds, an amount equal to the deficiency (or a
guaranty or other collateral reasonably satisfactory to Lender
in its sole but reasonable discretion) within 30 days of
receiving notice of the deficiency from Lender; and
(v) there is no default under the Financing Documents at the time
Grantor requests funds or at the time Lender disburses funds.
(c) If an Event of Default occurs at any time after the Destruction
Event, then Lender will have no further obligation to make any remaining
Proceeds available for Restoration and may apply any remaining Proceeds as a
credit against any portion of the Debt selected by Lender in its sole
discretion.
(d) Lender may elect at any time prior to commencement of Restoration
or while work is in progress to retain, at Grantor's expense, an independent
engineer or other consultant to review the plans and specifications, to inspect
the work as it progresses and to provide reports. If any matter included in a
report by the engineer or consultant is unsatisfactory to Lender, Lender may
suspend disbursement of the Restoration Funds until the unsatisfactory matters
contained in the report are resolved to Lender's satisfaction.
(e) If Grantor fails to commence and complete Restoration in accordance
with the
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terms of this Article, then in addition to the Remedies, Lender may elect to
restore the Improvements on Grantor's behalf and reimburse itself out of the
Restoration Funds for costs and expenses incurred by Lender in restoring the
Improvements, or Lender may apply the Restoration Funds as a credit against any
portion of the Debt selected by Lender in its sole discretion.
(f) Lender may commingle the Restoration Funds with its general assets
but shall assure that any Restoration Funds so commingled shall nonetheless be
made available by Lender for application under this Section 7.5; and Lender will
not be liable to pay any interest or other return on the Restoration Funds
unless otherwise required by Law. Lender will not hold any Restoration Funds in
trust. Lender may elect to deposit the Restoration Funds with a depository
satisfactory to Lender under a disbursement and security agreement satisfactory
to Lender, which Agreement shall provide for a segregation of funds and
obligation to pay interest.
(g) Grantor will pay all of Lender's expenses incurred in connection
with a Destruction Event or Restoration. If Grantor fails to do so, then in
addition to the Remedies, Lender may from time to time reimburse itself out of
the Restoration Funds.
(h) If any excess Proceeds remains after Restoration, Lender may elect,
in its sole discretion either to apply the excess as a credit against any
portion of the Debt as selected by Lender in its sole discretion or to deliver
the excess to Grantor.
ARTICLE VIII
COMPLIANCE WITH LAW AND AGREEMENTS
----------------------------------
Section 8.1. Compliance with Law. Grantor, the Property and the use of
the Property complies and will continue to comply with Law and with all
agreements and conditions necessary to preserve and extend all rights, licenses,
permits, privileges, franchises and concessions (including zoning variances,
special exceptions and non-conforming uses) relating to the Property or Grantor.
Grantor will notify Lender of the commencement of any investigation or
Proceeding relating to a possible violation of Law promptly (but in no event
beyond five (5) business days) after Grantor receives notice thereof and, will
deliver promptly to Lender copies of all documents Grantor receives or delivers
in connection with the investigation or Proceeding. Grantor will not alter the
Property in any manner that would increase Grantor's responsibilities for
compliance with Law.
Section 8.2. Compliance with Agreements. There are no defaults, events
of defaults or events which, with the passage of time or the giving of notice,
would constitute an event of default under the Property Documents. Grantor will
pay and perform all of its obligations
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under the Property Documents as and when required by the Property Documents.
Grantor will cause all other parties to the Property Documents to pay and
perform their obligations under the Property Documents as and when required by
the Property Documents. Grantor will not amend or waive any provisions of the
Property Documents; exercise any options under the Property Documents; give any
approval required or permitted under the Property Documents that would adversely
affect the Property or Lender's rights and interests under the Financing
Documents; cancel or surrender any of the Property Documents; or release or
discharge or permit the release or discharge of any party to or entity bound by
any of the Property Documents, without, in each instance, Lender's prior
approval (excepting therefrom all service contracts or other agreements entered
into in the normal course of business that are cancelable upon not more than 30
days notice). Grantor promptly will deliver to Lender copies of any notices of
default or of termination that Grantor receives or delivers relating to any
Property Document.
Section 8.3. ERISA Compliance.
(a) Neither Grantor nor any of its constituent entities is or will be
an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA") that is subject to Title I of ERISA or a
"plan" as defined in Section 4975(e)(1) of the Code that is subject to Section
4975 of the Code, and neither the assets of Borrower, Grantor or of any of their
constituent entities are or will constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA or Section 4975 of the Code.
(b) Grantor is not and will continue to not be a "governmental plan"
within the meaning of Section 3(32) of ERISA and transactions by or with Grantor
or Borrower are not and will not be subject to any Laws regulating investments
of and fiduciary obligations with respect to governmental plans.
(c) Grantor will not engage in any transaction which would cause any
obligation or any action under the Financing Documents or the Loan Documents,
including Lender's exercise of the Remedies, to be a non-exempt prohibited
transaction under ERISA.
Section 8.4. Section 6045(e) Filing. Grantor will supply or cause to be
supplied to Lender either (i) a copy of a completed Form 1099-S, Statement for
Recipients of Proceeds from Real Estate, Broker and Barter Exchange Proceeds
prepared by Grantor's attorney or other person responsible for the preparation
of the form, together with a certificate from the person who prepared the form
to the effect that the form has, to the best of the preparer's knowledge, been
accurately prepared and that the preparer will timely file the form; or (ii) a
certification from Grantor that the Loan is a refinancing of the Property or is
otherwise not required to be reported to the Internal Revenue Service pursuant
to Section 6045(e) of the Code. Under no circumstances will Lender or Lender's
counsel be obligated to file the reports
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or returns.
ARTICLE IX
ENVIRONMENTAL
-------------
Section 9.1. Environmental Representations and Warranties.
Except as disclosed in the Environmental Report and to Grantor's
knowledge as of the date of this Deed of Trust:
(i) no Environmental Activity has occurred or is occurring on the
Property other than the use, storage, and disposal of
Hazardous Materials which (A) is in the ordinary course of
business consistent with the Permitted Use; (B) is in
compliance with all Environmental Laws and (C) has not
resulted in Material Environmental Contamination of the
Property; and
(ii) no Environmental Activity has occurred or is occurring on any
property in the vicinity of the Property which has resulted in
Material Environmental Contamination of the Property.
Section 9.2. Environmental Covenants.
(a) Grantor will not cause or permit any Material Environmental
Contamination of the Property.
(b) No Environmental Activity will occur on the Property other than the
use, storage and disposal of Hazardous Materials which (A) is in the ordinary
course of business consistent with the Permitted Use; (B) is in compliance with
all Environmental Laws; and (C) does not create a risk of Material Environmental
Contamination of the Property.
(c) Grantor will notify Lender immediately upon Grantor becoming aware
of (i) any Material Environmental Contamination of the Property or (ii) any
Environmental Activity with respect to the Property that is not in accordance
with the preceding subsection (b). Grantor promptly will deliver to Lender
copies of all documents delivered to or received by Grantor regarding the
matters set forth in this subsection, including notices of Proceedings or
investigations concerning any Material Environmental Contamination of the
Property or Environmental Activity or concerning Grantor's status as a
potentially responsible party (as defined in the Environmental Laws). Grantor's
notification of Lender in accordance with the provisions of this subsection will
not be deemed to excuse any default under the Financing Documents resulting from
the violation of Environmental Laws or the Material Environmental Contamination
of the Property or Environmental Activity that is the subject of the notice. If
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Grantor receives notice of a suspected violation of Environmental Laws in the
vicinity of the Property that poses a risk of Material Environmental
Contamination of the Property, Grantor will give Lender notice and copies of any
documents received relating to such suspected violation.
(d) From time to time at Lender's request, Grantor will deliver to
Lender any information known and documents available to Grantor relating to the
environmental condition of the Property.
(e) Lender may perform or engage an independent consultant to perform
an assessment of the environmental condition of the Property and of Grantor's
compliance with this Section at any time for reasonable cause or after an Event
of Default (if, in both instances, Lender has reasonable suspicion to believe
that an Environmental Activity has occurred which could result in a Material
Environmental Contamination). In connection with the assessment: (i) Lender or
consultant may enter and inspect the Property and perform tests of the air,
soil, ground water and building materials; (ii) Grantor will cooperate and use
best efforts to cause tenants and other occupants of the Property to cooperate
with Lender or consultant; (iii) Grantor will receive a copy of any final report
prepared after the assessment, to be delivered to Grantor not more than 10 days
after Grantor requests a copy and executes Lender's standard confidentiality and
waiver of liability letter; (iv) Grantor will accept custody of and arrange for
lawful disposal of any Hazardous Materials required to be disposed of as a
result of the tests; (v) Lender will not have liability to Grantor with respect
to the results of the assessment; and (vi) Lender will not be responsible for
any damage to the Property resulting from the tests described in this subsection
and Grantor will look solely to the consultants to reimburse Grantor for any
such damage. The consultant's assessment and reports will be at Grantor's
expense (i) if the reports disclose any material adverse change in the
environmental condition of the Property from that disclosed in the Environmental
Report; (ii) if Lender engaged the consultant when Lender had reasonable cause
to believe Grantor was not in compliance with the terms of this Article and,
after written notice from Lender, Grantor failed to provide promptly reasonable
evidence that Grantor is in compliance; or (iii) if Lender engaged the
consultant or after the occurrence of an Event of Default.
(f) If Lender has reasonable cause to believe that there is
Environmental Activity at the Property, Lender may elect in its sole discretion
to direct the Trustees to Reconvey any portion of the Property affected by the
Environmental Activity and Grantor will accept the reconveyance.
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ARTICLE X
FINANCIAL REPORTING
-------------------
Section 10.1. Financial Reporting.
(a) Grantor will deliver to Lender within 90 days after the close of
each Fiscal Year an annual financial statement (the "Annual Financial
Statement") for the Property and for Corporate Office Properties Trust, upon
request of Lender, for the Fiscal Year, which will include a comparative balance
sheet, a cash flow statement, an income and expense statement, a detailed
breakdown of all receipts and expenses and all supporting schedules. The Annual
Financial Statement will be:
(i) unaudited, but certified by the Chief Financial Officer of
Corporate Office Properties Trust, on a GAAP basis;
(ii) accompanied by an opinion of such Chief Financial Officer that, in
all material respects, the Annual Financial Statement fairly presents
the financial position of the Property; and
(iii) separate and distinct from any consolidated statement or report
for Grantor, Borrower or any other entity or any other property.
(b) Grantor will keep full and accurate Financial Books and Records for
each Fiscal Year. Grantor will permit Lender or Lender's accountants or auditors
to inspect or audit the Financial Books and Records from time to time and
without notice. Grantor will maintain the Financial Books and Records for each
Fiscal Year for not less than 3 years after the date Grantor delivers to Lender
the Annual Financial Statement and the other financial certificates, statements
and information to be delivered to Lender for the Fiscal Year. Financial Books
and Records will be maintained at Grantor's (as applicable) address set forth in
the section entitled "Notices" or at any other location as may be approved by
Lender.
ARTICLE XI
EXPENSES AND DUTY TO DEFEND
---------------------------
Section 11.1. Payment of Expenses.
(a) Grantor is obligated to pay all fees and expenses (the "Expenses")
incurred by
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Lender, Trustees or that are otherwise payable in connection with the Loan, the
Property or Grantor, including attorneys' fees and expenses and any fees and
expenses relating to (i) the preparation, execution, acknowledgment, delivery
and recording or filing of the Loan Documents; (ii) any Proceeding or other
claim asserted against Lender; (iii) any inspection, assessment, survey and test
permitted under the Financing Documents; (iv) any Destruction Event; (v) the
preservation of Trustees' title, Lender's security and the exercise of any
rights or remedies available at Law, in equity or otherwise; and (vi) the Leases
and the Property Documents.
(b) Grantor will pay the Expenses immediately on demand, together with
any applicable interest, premiums or penalties. If Lender pays any of the
Expenses, Grantor will reimburse Lender the amount paid by Lender immediately
upon demand, together with interest on such amount at the Default Interest Rate
from the date Lender paid the Expenses through and including the date Grantor
reimburses Lender. The Expenses together with any applicable interest, premiums
or penalties constitute a portion of the Obligations secured by this Deed of
Trust.
Section 11.2. Duty to Defend. If Lender or any of its trustees,
officers, participants, employees or affiliates is a party in any Proceeding
relating to the Property, Grantor, Borrower or the Loan, Grantor will indemnify
and hold harmless the party and will defend the party with attorneys and other
professionals retained by Grantor and approved by Lender. Lender may elect to
engage its own attorneys and other professionals, at Grantor's expense, to
defend or to assist in the defense of the party. In all events, case strategy
will be determined by Lender if Lender so elects and no Proceeding will be
settled without Lender's prior approval which may be withheld in its sole
discretion.
Section 11.3. Future Advances. Lender may make future advances to
Grantor or to Borrower under the Loan guaranteed by Grantor, and all such future
advances and readvances shall be fully secured by the lien and security interest
of this Deed of Trust.
ARTICLE XII
TRANSFERS LIENS AND ENCUMBRANCES
--------------------------------
Section 12.1. Prohibitions on Transfers, Liens and Encumbrances.
(a) Grantor acknowledges that in making the Loan, Lender is relying to
a material extent on the business expertise and net worth of Grantor and its
general partners, members or principals and on the continuing interest that it
has, directly or indirectly, in the Property. Accordingly, except as
specifically set forth in this Deed of Trust, Grantor (i) will not, and will not
permit its partners or members to, effect a Transfer without Lender's prior
approval,
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which may be withheld in Lender's sole discretion and (ii) will keep
the Property free from all liens and encumbrances other than the lien of this
Deed of Trust and the Permitted Exceptions. A "Transfer" is defined as any sale,
grant, lease (other than bona fide third-party space leases with tenants),
conveyance, assignment or other transfer of, or any encumbrance or pledge
against, the Property, any interest in the Property, any interest of Grantor's
partners, members or principals in the Property, or any change in Grantor's
composition, in each instance whether voluntary or involuntary, direct or
indirect, by operation of law or otherwise and including the grant of an option
or the execution of an agreement relating to any of the foregoing matters.
(b) Grantor represents, warrants and covenants that:
(i) Each entity constituting Grantor is a Maryland limited liability
company whose managing member is the Borrower, a Delaware limited
partnership owning 100% of the of the interests in Grantor.
(ii) If Grantor's member is in turn a partnership, corporation or
limited liability company, the general partner, principal or member
thereof and the percentage of partnership interest, stock or membership
interest held by each (and so on at each level) are as follows: the
sole general partner of the Borrower is COPT (defined below); the
percentage of interest in the Borrower currently held by COPT varies
because its shares are traded due to its "upreit" structure.
Section 12.2. Permitted Transfers.
(a) Notwithstanding the prohibitions regarding Transfers, transfer of
shares in Corporate Office Properties Trust ("COPT"), an affiliate of Grantor
and the Borrower, and transfers of limited partnership interests and pledges of
both general and limited partnership interests in the Borrower, (each, a
"Permitted Transfer") may occur without Lender's prior consent, provided that
the following conditions are met:
(i) at all times COPT remains the sole general partner in the Borrower
and Borrower delivers to lender on a quarterly basis notices of changes
in the ownership interests of limited partners owning one percent (1%)
or more of the Borrower; and
(ii) a Permitted Transfer does not permit a disposition in a single
transfer or a series of related transfers of all or substantially all
of the shares of COPT or of all of the limited partnership interests in
the Borrower and does not permit a merger of COPT with one or more
entities without Lender's prior written consent unless COPT is the
surviving and controlling entity or unless such successor is a real
estate company having the same standards of professional expertise and
net worth as that of COPT as of the date of this Deed of Trust or as of
the date immediately prior to the Transfer, whichever is greater;
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(iii) at least 30 days prior to the proposed Permitted Transfer (other
than transfers of shares of COPT on the open market or of any limited
partnership interests in the Borrower), Grantor or Borrower delivers to
Lender a notice that is sufficiently detailed to enable Lender to
determine that the proposed Permitted Transfer complies with the terms
of this Section;
(iv) there is no default under the Financing Documents either when
Lender receives the notice or when the proposed Permitted Transfer
occurs;
(v) the proposed Permitted Transfer (other than transfers of shares of
COPT on the open market or of any limited partnership interests in the
Borrower) will not result in a violation of any of the covenants
contained in the Section entitled, "ERISA Compliance" and Grantor or
Borrower will deliver to Lender such documentation of compliance as
Lender requests in its sole discretion;
(vi) other than in instances of transfers of shares in COPT or of
transfers of any limited partnership interests in the Borrower, when
Lender receives the notice and when the proposed Permitted Transfer
occurs, the transferee (other than a transferee that is a publicly
traded entity) has never been an adverse party to Lender in any
litigation to which Lender was a party; the transferee has never
defaulted on a loan from Lender or on any contract or other agreement
with Lender; and the transferee has never threatened litigation against
Lender (for purposes of this subsection "transferee" includes the
transferee's constituent entities at all levels and "Lender" includes
Lender's subsidiaries);
(vii) Grantor or Borrower pays all of Lender's expenses relating to the
Transfer including Lender's attorneys' fees; and
(viii) Lender is satisfied that the Property will continue to be
managed by a manager satisfactory to Lender.
Section 12.3. Right to Contest Liens. Grantor, at its own expense, may
contest the amount, validity or application, in whole or in part, of any
mechanic's, materialmen's or environmental liens in which event Lender will
refrain from exercising any of the Remedies, provided that the following
conditions are met:
(i) Grantor delivers to Lender notice of the proposed contest not more
than 30 days after the lien is filed;
(ii) the contest is by a Proceeding promptly initiated and conducted in
good faith and with due diligence;
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(iii) there is no Event of Default other than the Event of Default
arising from the filing of the lien;
(iv) the Proceeding suspends enforcement of collection of the lien,
imposition of criminal or civil penalties and sale or forfeiture of the
Property and Lender will not be subject to any civil suit;
(v) the Proceeding is permitted under and is conducted in accordance
with the Leases and the Property Document;
(vi) Grantor furnishes a bond or other security satisfactory to Lender,
in either case in an amount sufficient to pay the claim giving rise to
the lien, together with all interest and penalties, and secures an
endorsement to Lender's policy of title insurance insuring against sale
of the Property by the lienor to collect its lien, or Grantor pays the
contested lien under protest; and
(vii) with respect to an environmental lien, Grantor is using best
efforts to mitigate or prevent any deterioration of the Property
resulting from the alleged violation of any Environmental Laws or the
alleged Environmental Activity.
Section 12.4. Substitute Collateral.
(a) Upon request from Grantor, and at Grantor's expense, Trustees shall
release from the lien of this Deed of Trust any one or more of the parcels
constituting the Property, upon conveyance by Grantor and/or its affiliates of
substitute collateral property (the "Substitute Collateral") from time to time,
but not more than one time for each parcel, and not more than three times during
the duration the lien of this Deed of Trust, upon the following terms and
subject to the following conditions:
(i) the quality of the Substitute Collateral shall be comparable to or
greater than that of the parcel of Property for which the Substitute
Collateral is replacing the current-to-be-released Property;
(ii) No Event of Default shall exist under this Deed of Trust or any
other Loan Document;
(iii) The appraised value of the Substitute Collateral shall be equal
to or greater than the greater of (A) the appraised value of
current-to-be-released Property, as determined at the time of the
closing of the substitution of collateral, or (B) the appraised value
of the current-to-be released Property at the time of such
substitution;
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(iv) the Debt Service Coverage Ratio (as defined below) for the
aggregate Property (inclusive of the Substitute Collateral) shall be
greater than or equal to the actual Debt Service Coverage Ratio for
the aggregate Property (inclusive of the current-to-be released
Property), for the one year prior to the substitution, and Grantor
shall execute and deliver appropriate amendments to this Deed of Trust
and Loan Documents making the Substitute Collateral part of the
security for the Guaranty, and Lender shall have received such title
assurances and endorsements to its then-existing policies confirming
the priority of its lien under this Deed of Trust on the Substitute
Collateral, consenting to the release of the released Property, and
otherwise confirming no adverse changes in title coverage or the
amount thereof.
(v) the Substitute Collateral shall satisfy each of the covenants and
conditions to closing set forth in the commitment letter with the
Lender for the Loan guaranteed under the Guaranty, that would have been
applicable had such Substitute Collateral been an original parcel of
the Property;
(vi) the Substitute Collateral shall conform in all respects to such
other underwriting standards and criteria of the Lender and criteria
such as other appraisal, legal, business, environmental, engineering,
diversification, leasing or title requirements, all as Lender may
determine in its sole discretion.
As used herein, the following defined term shall apply:
"Debt Service Coverage Ratio" means the Net Operating Income of the Property
divided by the amount of scheduled annual payments of Debt Service on the Loan
guaranteed by the Guaranty.
"Net Operating Income" means the total gross rental income received in the most
recent twelve month period, plus other income received during the most recent
twelve month period, less actual operating expenses for the most recent twelve
month period.
(b) The parties acknowledge that the Army Corps of Engineers
(Government Services Administration) ("ACE") has an option under its lease at
that parcel of the Property known as "One National Business Park" ("One NBP") to
purchase (the "Purchase Option") the fee interest in One NBP from NBP One, LLC,
an entity of Grantor. Grantor and Lender agree that if ACE exercises its
Purchase Option, Grantor shall promptly (but in no event later than five (5)
business days) after such exercise provide Lender with a copy of the notice
exercising the same (the "Exercise Date"). An exercise by GSA of its Purchase
Option shall constitute an Event of Default (without any obligation of Lender to
provide notice of default or right on behalf of Grantor to cure the same), under
this Deed of Trust unless, within fifteen (15) days after ACE's exercise of its
Purchase Option, Grantor satisfies one of the two following requirements:
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(i) Grantor, at Grantor's expense, conveys Substitute
Collateral satisfying the requirements of Section 12.4(a); or
(ii) Grantor prepays the Loan in an amount equal to the
then-existing principal balance of the Loan allocated to One NBP, plus the
Prepayment Premium due on such prepayment (but without the payment of any
Evasion Premium, if applicable); provided, however, that if an appraisal
obtained by Lender (at Grantor's expense) at such time indicates that the
remaining parcels of Land constituting the Property do not constitute greater
than a 75% loan to value ratio, then Grantor shall have the right to prepay any
additional amounts of Principal (with Prepayment Premium) necessary to cause the
remaining Property to have greater than a 75% loan to value ratio; and Grantor
shall execute and deliver, and shall cause Borrower to execute and deliver to
Lender such amending documents necessary to keep the loan constant the same over
the remaining principal balance of the Loan over the remaining term.
ARTICLE XIII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
----------------------------------------------------
Section 13.1. Further Assurances.
(a) Grantor will execute, acknowledge and deliver to Lender or to any
other entity Lender designates any additional or replacement documents and
perform any additional actions that Lender determines are reasonably necessary
to evidence, perfect or protect Lender's first lien on and prior security
interest in the Property or to carry out the intent or facilitate the
performance of the provisions of the Financing Documents and the Note.
(b) Grantor appoints Lender as Grantor's attorney-in-fact to perform,
at Lender's election, any actions and to execute and record any of the
additional or replacement documents referred to in this Section, in each
instance only at Lender's election and only to the extent Grantor or Borrower
has failed to comply with the terms of this Section.
(c) Grantor shall pay upon demand of Lender all costs of, and
incidental to, the recording of this Deed of Trust and any such documents
described above, whether now or hereafter due and payable, including, without
limitation, the Maryland recordation tax and any other tax required to be paid
at any time with respect to such recording. The Grantor hereby agrees to
indemnify and hold the Trustees and Lender harmless from and against any
liability or loss incurred by the Trustees or Lender resulting from the failure
of the Grantor to pay
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when due and payable any such amounts. The foregoing indemnity will survive the
payment of the Obligations and the Guaranty and the release of this Deed of
Trust. The obligations of the Grantor pursuant to such indemnity will bear
interest payable upon demand of Lender from the date due until paid in full at
the Default Interest Rate and such obligations with interest thereon as
aforesaid shall be a part of the Obligations secured hereby.
Section 13.2. Estoppel Certificates.
(a) Within 10 days of Lender's request, Grantor will deliver to Lender
or to any entity Lender designates a certificate certifying (i) the original
principal amount of the Note; (ii) the unpaid principal amount of the Note;
(iii) the Fixed Interest Rate; (iv) the amount of the then current Debt Service
Payments; (v) the Maturity Date; (vi) the date a Debt Service Payment was last
made; (vii) that, except as may be disclosed in the statement, there are no
defaults or events which, with the passage of time or the giving of notice,
would constitute an Event of Default; and (viii) there are no offsets or
defenses against any portion of the Obligations except as may be disclosed in
the statement.
(b) If Lender requests, Grantor promptly will deliver to Lender or to
any entity Lender designates a certificate from each party to any Property
Document, certifying that the Property Document is in full force and effect with
no defaults or events which, with the passage of time or the giving of notice,
would constitute an event of default under the Property Document and that there
are no defenses or offsets against the performance of its obligations under the
Property Document.
(c) If Lender requests, Grantor promptly will use its commercially
reasonable efforts to obtain and deliver to Lender, or to any entity Lender
designates, a certificate from each tenant under a Lease then affecting the
Property, certifying to any facts regarding the Lease as Lender may require,
including that the Lease is in full force and effect with no defaults or events
which, with the passage of time or the giving of notice, would constitute an
event of default under the Lease by any party, that the rent has not been paid
more than one month in advance and that the tenant claims no defense or offset
against the performance of its obligations under the Lease; provided, that
Lender shall not request such certificates more often than one time in any two
calendar year period except for the purpose of a sale of the Loan.
ARTICLE XIV
DEFAULTS AND REMEDIES
---------------------
Section 14.1. Events of Default. The term "Event of Default" means the
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occurrence of any of the following events:
(i) if Grantor fails to pay any amount due, as and when required, under
any Financing Document and the failure continues for a period of 5
days;
(ii) if Grantor makes a general assignment for the benefit of creditors
or generally is not paying, or is unable to pay, or admits in writing
its inability to pay, its debts as they become due; or if Grantor or
any other party commences any Proceeding (A) relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, in
each instance with respect to Grantor; (B) seeking to have an order for
relief entered with respect to Grantor; (C) seeking attachment,
distraint or execution of a judgment with respect to Grantor; (D)
seeking to adjudicate Grantor as bankrupt or insolvent; (E) seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to Grantor or
Grantor's debts; or (F) seeking appointment of a Receiver, trustee,
custodian, conservator or other similar official for Grantor or for all
or any substantial part of Grantor's assets, provided that if the
Proceeding is commenced by a party other than Grantor or any of
Grantor's general partners or members, Grantor will have 120 days to
have the Proceeding dismissed or discharged before an Event of Default
occurs;
(iii) if Grantor is in default beyond any applicable grace and cure
period under any other mortgage, deed of trust, deed to secure debt or
other security agreement encumbering the Property whether junior or
senior to the lien of this Deed of Trust;
(iv) if a Transfer occurs except in accordance with the provisions of
this Deed of Trust;
(v) if Grantor abandons the Property or ceases to conduct its business
at the Property; or
(vi) if Grantor fails to deposit either the letter of credit required
under the letter agreement of even date herewith between Grantor and
Lender, or fails to make the deposits required or otherwise defaults
under the Pledge and Security Agreement of even date among, inter alia,
Grantor and Lender; or
(vii) if Grantor fails to comply with the requirements of Section
5.6(b) or (c) of this Deed of Trust; or
(viii) if there is a default in the performance of any other provision
of any Financing Document or if there is any inaccuracy or falsehood in
any representation or warranty contained in any Financing Document
which is not remedied within 15 days after Grantor receives notice
thereof, provided that if the default, inaccuracy or falsehood is
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of a nature that it cannot be cured within the 15-day period and during
that period Grantor commences to cure, and thereafter diligently
continues to cure, the default, inaccuracy or falsehood, then the
15-day period will be extended for a reasonable period not to exceed
120 days after the notice to Grantor.
Section 14.2. Remedies.
(a) If an Event of Default occurs, Lender may take any of the following
actions (the "Remedies") without notice to Grantor or Borrower:
(i) declare all or any portion of the Obligations immediately due and
payable ("Acceleration");
(ii) pay or perform any Obligation;
(iii) institute a Proceeding for the specific performance of any
Obligation;
(iv) apply for the appointment of a Receiver to be vested with the
fullest powers permitted by Law, without bond being required, which
appointment may be made ex parte, as a matter of right and without
regard to the value of the Property, the amount of the Debt or the
solvency of Grantor or Borrower or any other person liable for the
payment or performance of any portion of the Obligations;
(v) directly, by its agents or representatives or through a Receiver
appointed by a court of competent jurisdiction, enter on the Land and
Improvements, take possession of the Property, dispossess Grantor and
exercise Grantor's rights with respect to the Property, either in
Grantor's name or otherwise;
(vi) institute a Proceeding for the foreclosure of this Deed of Trust
or, if applicable, sell by power of sale all or any portion of the
Property;
(vii) institute proceedings for the partial foreclosure of this Deed of
Trust for the portion of the Obligations then due and payable, subject
to the continuing lien of this Deed of Trust for the balance of the
Obligations not then due;
(viii) deliver to Trustees a declaration of default and demand for sale
and a notice of default and election to cause Grantor's interest in the
Property or any portion of the Property to be sold, which notice
Trustees or Lender will file in the official records of the county in
which the Property is located or any parcel comprising the same is
located;
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(ix) exercise any and all rights and remedies granted to a secured
party under the Uniform Commercial Code; and
(x) pursue any other right or remedy available to Lender at Law, in
equity or otherwise.
(b) If an Event of Default occurs, the license granted to Grantor in
the Financing Documents to collect Rents will terminate automatically without
any action required of Lender.
Section 14.3. General Provisions Pertaining to Remedies.
(a) The Remedies are cumulative and may be pursued by Lender or
Trustees concurrently or otherwise, at such time and in such order as Lender or
Trustees may determine in their sole discretion and without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Grantor.
(b) The enumeration in the Financing Documents of specific rights or
powers will not be construed to limit any general rights or powers or impair
Lender's or Trustees' rights with respect to the Remedies.
(c) If Lender or Trustees exercise any of the Remedies, Lender will not
be deemed a mortgagee-in-possession unless Lender has elected affirmatively to
be a mortgagee-in-possession.
(d) Lender and Trustees will not be liable for any act or omission of
Lender or Trustee in connection with the exercise of the Remedies.
(e) Lender's and Trustees' right to exercise any Remedy will not be
impaired by any delay in exercising or failure to exercise the Remedy and the
delay or failure will not be construed as extending any cure period or
constitute a waiver of the default or Event of Default.
(f) If an Event of Default occurs, Lender's payment or performance or
acceptance of payment or performance will not be deemed a waiver or cure of the
Event of Default.
(g) Lender's acceptance of partial payment or receipt of Rents will not
extend or affect any grace period or constitute a waiver of a default or Event
of Default or constitute a recision of Acceleration.
Section 14.4. Foreclosure; Assent to Decree and Power of Sale.
In the event the Trustee or Lender elects to institute foreclosure
proceedings upon the occurrence of
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an Event of Default, the Grantor and Acquisition Grantors each assent to the
passage of a decree for the sale of the Property and any or all of the parcels
comprising the same and further authorizes the Trustee to sell the Property. Any
sale of the Property or any of the parcels so being sold, whether by way of the
assent to decree or power of sale, shall be made in accordance with the
provisions of Section 7-105, Real Property Article, Annotated Code of Maryland,
as amended, and Section 14-200 et seq.of the Maryland Rules of Procedure, as
amended, or other applicable Laws. The terms of the sale may be cash upon
settlement of the sale or upon such other and additional terms as the Trustee
deems necessary, proper or convenient, except as specifically limited by
applicable law or court rule. Such sale may be of the entire Property as a unit
or of such parts or parcels of the entire Property as the Trustee, in its sole
and absolute discretion, deems necessary, proper, or convenient.
(a) Application Of Proceeds. Upon the sale of the Property, the
proceeds shall be applied as follows:
(i) To the payment of all expenses incident to the sale,
including reasonable and necessary counsel fees and expenses; and a commission
to the Trustee equal to the commission allowed the Trustee for making sales of
property by virtue of a decree of a court of equity in the State of Maryland. As
used herein, expenses of sale shall specifically include auctioneer's fees at
the auctioneer's customary rate, which shall be in addition to the Trustee's
commission, and the costs of a preforeclosure appraisal;
(ii) To the payment of the Obligations other than those owed
with respect to the Guaranty and then to the payment of those Obligations owed
with respect to the Guaranty, if such Obligations have matured and are due under
the terms of the Guaranty, and including without limitation the payment of any
Evasion Premium, or if not, to be held in a demand account as a pledged fund
(which shall be interest bearing for the benefit of the Grantor) up to the
maximum sum, as determined by Lender, which could be due under the Guaranty by
the Grantor as security for the Obligations owed with respect to the Guaranty,
and to be applied to the Obligations owed with respect to the Guaranty after a
default under the Guaranty;
(iii) And the balance remaining, if any, shall be paid to the
Grantor, or to whomsoever shall be judicially determined to be entitled to the
same.
(b) Payment Before Sale. In the event the Obligations shall be paid
after the filing of a foreclosure proceeding, but before sale of the Property,
the Grantor shall also be required to pay all of the expenses of any
advertisement or notice, all court costs, and all other expenses incident to or
resulting from the foreclosure proceedings under this Deed of Trust, and a
commission on the total amount of the indebtedness owed with respect to the
Loan, both principal and interest, remaining unpaid, equal to one-half (1/2) of
the percentage allowed as commission to trustees making a sale under a decree of
a court of equity in Maryland and such reasonable and necessary counsel fees and
expenses as the Trustee or Lender may have incurred; provided, however, that the
sale may be proceeded with unless, prior to the date on which the sale is
scheduled, payment is made by Grantor of the Obligations then due (including
payment of all costs, expenses, commissions and fees, as provided herein).
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(c) Lender May Bid. Upon any sale made under this Section 14, whether
made under the power of sale or by virtue of judicial proceedings or a judgment
of foreclosure, Lender may bid for and acquire the Property. If the Obligations
owed with respect to the Guaranty are then due, in lieu of paying cash therefor
the Lender may make settlement for the purchase price by crediting the
Obligations of Grantor secured by this Deed of Trust against the net sales
price, after deducting the expenses and costs of the sale and any other sums
which Lender is authorized to deduct under this Deed of Trust.
(d) Leases. In the event of a sale of the Property under either the
power of sale or assent to decree, such sale may be made, at the option of
Lender, subject to one or more of the tenancies entered into subsequent to the
recording of this Deed of Trust, in accordance with the provisions of Section
7-105(f)(2), Real Property Article, Annotated Code of Maryland, as amended.
(e) Right To Maintain Separate Action. In the event Grantor shall fail
to pay the Obligations, Trustee and Lender shall be empowered to institute
Proceedings as may be advised by its counsel for the collection of the sums so
due and unpaid, and may prosecute any Proceedings to judgment or final decree,
and may enforce any judgments or final decree against Grantor and collect, out
of the Property in any manner provided by law, monies adjudged to be payable.
Lender shall be entitled to recover judgment before, after, or during the
pendency of any Proceedings, or the foreclosure of the lien of this Deed of
Trust. In the event of a sale of all or any parcel of the Property, and of the
application of the proceeds of sale as provided in this Deed of Trust to the
payment of the Obligations, Lender and the Trustee shall be entitled to enforce
payment of and to receive all amounts then remaining due upon the Obligations,
and shall be entitled to recover judgment for any portion of the Obligations
remaining unpaid, with interest as provided in the Guaranty. The recovery of any
judgment by Lender, and the levy of an execution under any judgment upon all or
any parcel of the Property, shall not affect in any manner the lien of this Deed
of Trust upon the Property, or any Remedies of the Trustee or of the Lender, and
the Remedies shall continue unimpaired. Any monies collected by the Trustee or
Lender under this Section 14.4(e) shall be applied in accordance with the
provisions of Section 14.4(a).
(f) Waivers of Stay, Exemptions. Grantor shall not claim or take any
advantage of any stay or extension or moratorium law, or any exemption from
execution of sale of all or any parcels of the Property, wherever enacted, which
may affect the covenants of this Deed of Trust, nor claim or insist upon any
advantage of any Law providing for the valuation or appraisal of all or any
parcels of the Property prior to any sale or pursuant to the order of any court;
nor after any sale, claim or any right under any Law to redeem the property so
sold. Grantor expressly waives all benefit or advantage of any such Law and
covenants not to impede the execution of any power herein granted or delegated
to the Trustee, but to suffer the execution of every power as though no Law had
been enacted.
Section 14.5. General Provisions Pertaining to Mortgagee-in-Possession
or Receiver.
(a) If an Event of Default occurs, any court of competent jurisdiction
will, upon application by Lender, appoint a Receiver as designated in the
application and issue an
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injunction prohibiting Grantor from interfering with the Receiver, collecting
Rents, disposing of any Rents or all of or any parcel of the Property,
committing waste or doing any other act that will tend to affect the
preservation of the Leases, the Rents and the Property and Grantor approves the
appointment of the designated Receiver or any other Receiver appointed by the
court. Grantor agrees that the appointment may be made ex parte and as a matter
of right to Lender or Trustees, either before or after sale of all or any
parcels of the Property, without further notice, and without regard to the
solvency or insolvency, at the time of application for the Receiver, of the
person or persons, if any, liable for the payment of any portion of the
Obligations and the performance of any portion of the Obligations and without
regard to the value of the Property or whether the Property is occupied as a
homestead and without bond being required of the applicant.
(b) The Receiver will be vested with the fullest powers permitted by
Law including all powers necessary or usual in similar cases for the protection,
possession and operation of all or any parcels of the Property and all the
powers and duties of Lender as a mortgagee-in-possession as provided in this
Deed of Trust and may continue to exercise all the usual powers and duties until
the Receiver is discharged by the court.
(c) In addition to the Remedies and all other available rights, Lender
or the Receiver may take any of the following actions:
(i) take exclusive possession, custody and control of all or any
parcels of the Property and manage the same so as to prevent waste;
(ii) require Grantor to deliver to Lender or the Receiver all keys,
security deposits, operating accounts, prepaid Rents, past due Rents,
the Books and Records and all original counterparts of the Leases and
the Property Documents;
(iii) collect, sue for and give receipts for the Rents and, after
paying all expenses of collection, including reasonable receiver's,
broker's and attorney's fees, apply the net collections to any portion
of the Obligations selected by Lender in its sole discretion,
(iv) enter into, modify, extend, enforce, terminate, renew or accept
surrender of Leases and evict tenants except that in the case of a
Receiver, such actions may be taken only with the written consent of
Lender as provided in this Deed of Trust and in the Assignment;
(v) enter into, modify, extend, enforce, terminate or renew Property
Documents except that in the case of a Receiver, such actions may be
taken only with the written consent of Lender as provided in this Deed
of Trust and in the Assignment;
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(vi) appear in and defend any Proceeding brought in connection with the
Property and bring any Proceeding to protect all or any parcels of the
Property as well as Grantor's and Lender's respective interests in all
or any parcels of the Property (unless any such Proceeding has been
assigned previously to Lender in the Assignment, or if so assigned,
Lender has not expressly assigned such Proceeding to the Receiver and
consented to such appearance or defense by Receiver); and
(vii) perform any act in the place of Grantor that Lender or the
Receiver deems necessary (A) to preserve the value, marketability or
rentability of all or any parcels of the Property; (B) upon consent by
Lender, to increase the gross receipts from all or any parcels of the
Property; or (C) otherwise to protect Grantor's and Lender's respective
interests in all or any parcels of the Property.
(d) Grantor appoints Lender as Grantor's attorney-in-fact, at Lender's
election, to perform any actions and to execute and record any instruments
necessary to effectuate the actions described in this Section, in each instance
only at Lender's election and only to the extent Grantor has failed to comply
with the provisions of this Section.
Section 14.6. General Provisions Pertaining to Foreclosures and the
Power of Sale. The following provisions will apply to any Proceeding to
foreclose and to any sale of the Property by power of sale or pursuant to a
judgment of foreclosure and sale:
(i) Lender's or Trustees' right to institute a Proceeding to foreclose
or to sell by power of sale will not be exhausted by a Proceeding or a
sale that is defective or not completed;
(ii) a sale pursuant to a judgment of foreclosure and sale may be held
at such time or times and such place or places and upon such terms and
conditions or after such previous public announcement as required by
Law and as Trustees may deem appropriate;
(iii) with respect to sale pursuant to a judgment of foreclosure and
sale, the Property may be sold as an entirety or in parcels, at one or
more sales, at the time and place, on terms and in the order that
Trustees deem expedient in its sole discretion with such postponement
of any such sale as Trustees may deem appropriate without regard to any
right of Grantor or any other person to the marshalling of assets and
Grantor hereby waives all right to have the Property marshalled upon
any foreclosure under this Deed of Trust;
(iv) if a portion of the Property is sold pursuant to this Article, the
Financing Documents will remain in full force and effect with respect
to any portion of the Obligations and this Deed of Trust will continue
as a valid and enforceable first lien on
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and security interest in the remaining portion of the Property, subject
only to the Permitted Exceptions, without loss of priority and without
impairment of any of Lender's or Trustees' rights and remedies with
respect to the unmatured portion of the Obligations;
(v) Lender may bid and become the purchaser at any such sale, and will,
upon presentation of the Guaranty or a true copy thereof at such sale,
be credited for the unpaid balance due under the Guaranty and any
interest accrued and unpaid thereon, or such potion of such unpaid
balance or interest as Lender may specify, against any price bid by
Lender at such sale. The terms of sale being complied with, Trustees
will convey to and at the cost of the purchaser at such sale Grantor's
interest in, so much of the Property as is so sold, free of and
discharged from all estate, right, title or interest of Grantor at law
or in equity. Lender's receipt of the proceeds of a sale will be
sufficient consideration for the portion of the Property sold and
Lender will apply the proceeds set forth in the Deed of Trust; and
(vi) Upon any sale of Grantor's interest in any or all of the Property,
whether under the assent to a decree or power of sale herein granted,
or by other foreclosure or judicial proceedings, Trustees will apply
the proceeds of such sale, together with any other sum then held as
security hereunder or due under any of the provisions of the Financing
Documents as part of the Property (after paying all expenses of sale,
including reasonable attorneys' fees and a commission to the party
making the sale equal to the commission allowed to trustees for making
sales of property under orders or decrees of a court having competent
jurisdiction, and all Impositions which either Trustees or Lender deem
it advisable or expedient to pay and all sums advanced, with interest
thereon, as herein provided) to the payment of the aggregate
Obligations and interest thereon to the date of payment and prepayment
fees, if any, paying over the surplus, if any, less the expense, if
any, of obtaining possession, to Grantor or any person entitled thereto
upon the surrender and delivery to the purchaser of possession of the
Property.
Section 14.7. Uniform Commercial Code. Lender, or the Trustee acting on
behalf of Lender, may exercise all rights and remedies of a secured creditor
under the Maryland Uniform Commercial Code, as amended, with respect to any part
of the Property constituting personal property and subject to the security
interest created by this Deed of Trust. These rights include the right to take
possession of the personal property without the use of judicial process (Grantor
hereby waiving all right to prior notice and a judicial hearing) and the right
to require Grantor to assemble the same at the Property or such other place as
Lender or Trustee may notify the Grantor. Any disposition of the personal
property shall be considered commercially reasonable if made pursuant to a
public sale which is advertised at least twice in a newspaper of local
circulation in Howard County, Maryland. Any notice required by Section 9-504 of
the Maryland Uniform Commercial Code to be given to Grantor shall be considered
reasonable and properly
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given if given in the manner and at the address provided in the notice
provisions of this Deed of Trust at least five (5) business days prior to the
date of any scheduled public sale.
Section 14.8. Power of Attorney. Grantor appoints Lender as Grantor's
attorney-in-fact to perform any actions necessary and incidental to exercising
the Remedies.
Section 14.9. Tenant at Sufferance. If Lender, Trustees, or a Receiver
enters the Property in the exercise of the Remedies and Grantor is allowed to
remain in occupancy of the Property, Grantor will pay to Lender, Trustees, or
the Receiver, as the case may be, in advance, a reasonable rent for the Property
occupied by Grantor. If Grantor fails to pay the rent, Grantor may be
dispossessed by the usual Proceedings available against defaulting tenants.
ARTICLE XV
LIMITATION OF LIABILITY
-----------------------
Section 15.1. Limitation of Liability.
(a) Notwithstanding any provision in the Financing Documents to the
contrary, except as set forth in subsections (b) and (e), if Lender seeks to
enforce the collection of the Obligations, Lender will foreclose this Deed of
Trust instead of instituting suit on the Guaranty. If following a foreclosure
and sale of all parcels comprising the Property under this Deed of Trust a
lesser sum is realized therefrom than that due under the Obligations, Lender
will not institute any Proceeding against Grantor or Grantor's general partners,
if any, for or on account of the deficiency, and Lender shall not have recourse
against any entity constituting Grantor for any portion of the Obligations,
except in each instance as set forth in subsections (b) through (e).
(b) The limitation of liability in subsection (a) will not affect or
impair (i) the lien of this Deed of Trust or Lender's other rights and Remedies
under the Financing Documents, including Lender's right as mortgagee or secured
party to commence an action to foreclose any lien or security interest Lender
has under the Financing Documents against any parcel remaining encumbered by
this Deed of Trust and against any additional collateral held; (ii) the validity
of the Financing Documents or the Obligations; or (iii) Lender's right to
present and collect on any letter of credit or other credit enhancement document
held by Lender in connection with the Obligations.
(c) The following are excluded and excepted from the limitation of
liability in
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subsection (a) and Lender may recover personally against Grantor for the
following:
(i) all losses suffered and liabilities and expenses incurred by Lender
relating to any fraud or intentional misrepresentation or omission by
Grantor or Borrower or any of their partners, members, officers,
directors, shareholders or principals in connection with (A) the
performance of any of the conditions to Lender making the Loan; (B) any
inducements to Lender to make the Loan; (C) the execution and delivery
of the Financing Documents; (D) any certificates, representations or
warranties given in connection with the Loan; or (E) Grantor's
performance of the Obligations;
(ii) all Rents derived from the Property after a default under the
Financing Documents which default is a basis of a Proceeding by Lender
to enforce collection of the Obligations and all moneys that, on the
date such a default occurs, are on deposit in one or more accounts used
by or on behalf of Grantor relating to the operation of the Property,
except to the extent properly applied to payment of Debt Service
Payments, Impositions, Insurance Premiums and any reasonable and
customary expenses incurred by Grantor in the operation, maintenance
and leasing of the Property or delivered to Lender;
(iii) the cost of remediation of any Environmental Activity affecting
the Property and any other losses suffered and liabilities and expenses
incurred by Lender relating to a default under the Article entitled
"Environmental";
(iv) all security deposits collected by Grantor or any of Grantor's
predecessors and not refunded to Tenants in accordance with their
respective Leases, applied in accordance with the Leases or Law or
delivered to Lender, and all advance rents (more than thirty (30) days
in advance) collected by Grantor or any of Grantor's predecessors and
not applied in accordance with the Leases or delivered to Lender;
(v) the replacement cost of any Fixtures or Personal Property removed
from the Property after a default occurs;
(vi) all losses suffered and liabilities and expenses incurred by
Lender relating to any acts or omissions by Grantor that result in
waste (including economic and non-physical waste) on the Property;
(vii) all losses suffered or expenses incurred by Lender by virtue of a
failure of Grantor (or any entity constituting Grantor) to comply with
the requirements of Section 5.6(b) and (c) of this Deed of Trust;
(viii) all protective advances and other payments made by Lender
pursuant to express
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provisions of the Financing Documents to protect Lender's security
interest in the Property or to protect the assignment of the property
described in and effected by the Assignment, but only to the extent
that the Rents would have been sufficient to permit Grantor to make the
payment and Grantor failed to do so;
(ix) all mechanics' or similar liens relating to work performed on or
materials delivered to the Property prior to Lender exercising its
Remedies, but only to the extent Lender had advanced funds to pay for
the work or materials;
(x) all Proceeds that are not applied in accordance with this Deed of
Trust or not paid to Lender as required under this Deed of Trust; and
(xi) all losses suffered and liabilities and expenses incurred by
Lender or Trustees in connection with the imposition or collection by
any Government or any person, at any time, of any recordation tax,
transfer tax or any other charge relating to or on account of the
recordation of this Deed of Trust or Lender's lien hereunder.
(d) Nothing under subparagraph (a) above will be deemed to be a waiver
of any right which Lender may have under Section 506(a), 506(b), 1111(b) or any
other provisions of the Bankruptcy Code or under any other Law relating to
bankruptcy or insolvency to file a claim for the full amount of the Obligations
or to require that all collateral will continue to secure all of the Obligations
in accordance with the Financing Documents.
(e) Notwithstanding the foregoing, it is expressly understood and
agreed that the aforesaid limitation of liability shall in no way affect or
apply to Grantor, and Grantor shall be liable for the entire indebtedness
evidenced hereby (including all principal, interest, prepayment charges and
other charges), if Grantor, or any of its general partners, members or officers,
as the case may be, or any person, seeks to set aside the Guaranty as a
preference in any bankruptcy or similar proceeding.
ARTICLE XVI
WAIVERS
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SECTION 16.1. WAIVER OF STATUTE OF LIMITATIONS. GRANTOR WAIVES THE
RIGHT TO CLAIM ANY STATUTE OF LIMITATIONS AS A DEFENSE TO GRANTOR'S PAYMENT AND
PERFORMANCE OF THE OBLIGATIONS.
SECTION 16.2. WAIVER OF NOTICE. GRANTOR WAIVES THE RIGHT
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TO RECEIVE ANY NOTICE FROM LENDER OR TRUSTEES WITH RESPECT TO THE FINANCING
DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER OR TRUSTEES ARE EXPRESSLY
REQUIRED TO DELIVER PURSUANT TO THE FINANCING DOCUMENTS.
SECTION 16.3. WAIVER OF MARSHALLING AND OTHER MATTERS. GRANTOR WAIVES
THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY OTHER RIGHT TO DIRECT THE ORDER
IN WHICH ANY OF THE PROPERTY WILL BE (i) SOLD; OR (ii) MADE AVAILABLE TO ANY
ENTITY IF THE PROPERTY IS SOLD BY POWER OF SALE OR PURSUANT TO A JUDGMENT OF
FORECLOSURE AND SALE. GRANTOR ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING TO
APPRAISEMENT, VALUATION, STAY, EXTENSION, REINSTATEMENT, MORATORIUM, HOMESTEAD
AND EXEMPTION RIGHTS OR A SALE IN INVERSE ORDER OF ALIENATION.
SECTION 16.4. WAIVER OF TRIAL BY JURY. GRANTOR WAIVES TRIAL BY JURY IN
ANY PROCEEDING BROUGHT BY, OR AGAINST, OR COUNTERCLAIM OR CROSS-COMPLAINT
ASSERTED BY OR AGAINST, LENDER OR TRUSTEES RELATING TO THE LOAN, THE PROPERTY
DOCUMENTS OR THE LEASES.
SECTION 16.5. [INTENTIONALLY DELETED
SECTION 16.6. WAIVER OF JUDICIAL NOTICE AND HEARING. GRANTOR WAIVES ANY
RIGHT GRANTOR MAY HAVE UNDER LAW TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THE FINANCING DOCUMENTS TO LENDER
AND GRANTOR WAIVES THE RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY
CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THE FINANCING DOCUMENTS ON THE
GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR
JUDICIAL HEARING.
SECTION 16.7. WAIVER OF SUBROGATION. GRANTOR WAIVES ALL RIGHTS OF
SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR AFFECTING THE PROPERTY OR
ANY OTHER SECURITY FOR THE LOAN UNTIL THE LOAN IS PAID IN FULL AND ALL FUNDING
OBLIGATIONS UNDER
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THE FINANCING DOCUMENTS HAVE BEEN TERMINATED.
SECTION 16.8. GENERAL WAIVER. GRANTOR ACKNOWLEDGES THAT (A) GRANTOR AND
GRANTOR'S PARTNERS, MEMBERS OR PRINCIPALS, AS THE CASE MAY BE, ARE KNOWLEDGEABLE
BORROWERS OF COMMERCIAL FUNDS AND EXPERIENCED REAL ESTATE DEVELOPERS OR
INVESTORS WHO UNDERSTAND FULLY THE EFFECT OF THE ABOVE PROVISIONS; (B) LENDER
WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF THIS ARTICLE; (C) THE LOAN IS
A COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF THE STATE OR COMMONWEALTH WHERE
THE PROPERTY IS LOCATED NEGOTIATED BY LENDER, GRANTOR AND BORROWER AND THEIR
RESPECTIVE ATTORNEYS AT ARMS LENGTH; AND (D) ALL WAIVERS BY GRANTOR IN THIS
ARTICLE HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY, AFTER GRANTOR
FIRST HAVE BEEN INFORMED BY COUNSEL OF GRANTOR'S OWN CHOOSING AS TO POSSIBLE
ALTERNATIVE RIGHTS, AND HAVE BEEN MADE AS AN INTENTIONAL RELINQUISHMENT AND
ABANDONMENT OF A KNOWN RIGHT AND PRIVILEGE. THE FOREGOING ACKNOWLEDGMENT IS MADE
WITH THE INTENT THAT LENDER AND ANY SUBSEQUENT HOLDER OF THE GUARANTY WILL RELY
ON THE ACKNOWLEDGMENT.
ARTICLE XVII
NOTICES
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Section 17.1. Notices. All acceptances, approvals, consents, demands,
notices, requests, waivers and other communications (the "Notices") required or
permitted to be given under the Financing Documents must be in writing and (a)
delivered personally by a process server providing a sworn declaration
evidencing the date of service, the individual served, and the address where the
service was made; (b) sent by certified mail, return receipt requested; or (c)
delivered by nationally recognized overnight delivery service that provides
evidence of the date of delivery, with all charges prepaid (for next morning
delivery if sent by overnight delivery service), addressed to the appropriate
party at its address listed below:
If to Lender: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Director Portfolio Management
Mortgage and Real Estate
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Application #MD-534
Mortgage #M-000454 100
with a courtesy
copy to: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Vice President and Chief
Counsel - Mortgage and
Real Estate Law
Application #MD-534
Mortgage #M-000454 100
If to Grantor: NBP ONE, LLC
NBP 131-133-141, LLC
THREE CENTRE PARK, LLC
LAKEVIEW AT GREENS, LLC, and
CORPORATE GATESPRING, LLC,
c/o Corporate Office Management, Inc.
8815 Centre Park Drive
Suite 400
Columbia, Maryland 21045
Attn: General Counsel
If to Trustee: William H. Goebel, Esquire
Mr. Matthew T. Murphy
c/o Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Lender and Grantor each may change from time to time the address to which
Notices must be sent, by notice given in accordance with the provisions of this
Section. All Notices given in accordance with the provisions of this Section
will be deemed to have been received on the earliest of (i) actual receipt; (ii)
Grantor's and Borrower's rejection of delivery; or (iii) 3 Business Days after
having been deposited in any mail depository regularly maintained by the United
States postal service, if sent by certified mail, or 1 Business Day after having
been deposited with a nationally recognized overnight delivery service, if sent
by overnight delivery or on the date of personal service, if served by a process
server.
Section 17.2. Change in Grantor's Name or Place of Business. Grantor
will
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immediately notify Lender in writing of any change in Grantor's name or the
place of business set forth in the beginning of this Deed of Trust.
ARTICLE XVIII
MISCELLANEOUS
-------------
Section 18.1. Applicable Law. The Financing Documents are governed by
and will be construed in accordance with the Laws of the State of Maryland.
Section 18.2. Usury Limitations. Grantor and Lender intend to comply
with all Laws with respect to the charging and receiving of interest. Any
amounts charged or received by Lender for the use or forbearance of the
Principal to the extent permitted by Law, will be amortized and spread
throughout the Term until payment in full so that the rate or amount of interest
charged or received by Lender on account of the Principal does not exceed the
Maximum Interest Rate. If any amount charged or received under the Financing
Documents that is deemed to be interest is determined to be in excess of the
amount permitted to be charged or received at the Maximum Interest Rate, the
excess will be deemed to be a prepayment of Principal when paid, without
premium, and any portion of the excess not capable of being so applied will be
refunded to Grantor. If during the Term the Maximum Interest Rate, if any, is
eliminated, then for purposes of the Loan, there will be no Maximum Interest
Rate.
Section 18.3. Lender's Discretion. Wherever under the Financing
Documents any matter is required to be satisfactory to Lender, Lender has the
right to approve or determine any matter or Lender has an election, Lender's
approval, determination or election will be made in Lender's reasonable
discretion unless expressly provided to the contrary.
Section 18.4. Unenforceable Provisions. If any provision in the
Financing Documents is found to be illegal or unenforceable or would operate to
invalidate any of the Financing Documents, then the provision will be deemed
expunged and the Financing Documents will be construed as though the provision
was not contained in the Financing Documents and the remainder of the Financing
Documents will remain in full force and effect.
Section 18.5. Survival of Grantor's Obligations. Grantor's
representations, warranties and covenants contained in the Financing Documents
will continue in full force and effect and survive (i) satisfaction of the
Obligations; (ii) reconveyance of the lien of this property by Trustees; (iii)
assignment or other transfer of all or any portion of Lender's interest in the
Financing Documents or the Property; (iv) Lender's or Trustees' exercise of any
of the Remedies or any of Lender's or Trustees' other rights under the Financing
Documents; (v) a Transfer; (vi) amendments to the Financing Documents; and (vii)
any other act or omission
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that might otherwise be construed as a release or discharge of Grantor.
Section 18.6. Relationship Between Grantor and Lender; No Third Party
Beneficiaries.
(a) Lender is not a partner of or joint venturer with Grantor or any
other entity as a result of the Loan or Lender's rights under the Financing
Documents; the relationship between Lender and Grantor is strictly that of
creditor and debtor. Each Financing Document and the Note is an agreement
between the parties to that Financing Document or Note for the mutual benefit of
the parties and no entities other than the parties to that Financing Document or
Note will be a third party beneficiary or will have any claim against Lender or
Grantor by virtue of the Financing Document or the Note. As between Lender and
Grantor, any actions taken by Lender under the Financing Documents and the Note
will be taken for Lender's protection only, and Lender has not and will not be
deemed to have assumed any responsibility to Grantor or to any other entity by
virtue of Lender's actions.
(b) All conditions to Lender's performance of its obligations under the
Financing Documents are imposed solely for the benefit of Lender. No entity
other than Lender will have standing to require satisfaction of the conditions
in accordance with their provisions or will be entitled to assume that Lender
will refuse to perform its obligations in the absence of strict compliance with
any of the conditions.
Section 18.7. Partial Reconveyances or Releases, Extensions, Waivers.
Lender may: (i) permit the reconveyance of any part of the Property or release
any entity obligated for the Obligations; (ii) extend the time for payment or
performance of any of the Obligations or otherwise amend the provisions for
payment or performance by agreement with any entity that is obligated for the
Obligations or that has an interest in the Property; (iii) accept additional
security for the payment and performance of the Obligations; and (iv) waive any
entity's performance of an Obligation, release any entity or individual now or
in the future liable for the performance of the Obligation or waive the exercise
of any Remedy or option. Lender may exercise any of the foregoing rights without
notice, without regard to the amount of any consideration given, without
affecting the priority of the Financing Documents, without releasing any entity
not specifically released from its obligations under the Financing Documents,
without releasing any guarantor(s) or surety(ies) of the Obligations, without
effecting a novation of the Financing Documents and, with respect to a waiver,
without waiving future performance of the Obligation or exercise of the Remedy
waived.
Section 18.8. Service of Process. Grantor irrevocably consents to
service of process by registered or certified mail, postage prepaid, return
receipt requested, to Grantor or at address set forth for Grantor in the Article
entitled "Notices".
Section 18.9. Entire Agreement. Oral agreements or commitments between
Grantor
46
<PAGE>
and/or Borrower and Lender to lend money, to extend credit or to forbear from
enforcing repayment of a debt, including promises to extend or renew the debt,
are not enforceable. Any agreements among Grantor, Lender and Trustee relating
to the Loan are contained in the Financing Documents and the Note, which contain
the complete and exclusive statement of the agreements among Grantor, Lender and
Trustee, except as Grantor, Lender and, if applicable, Trustees may later agree
in writing to amend the Loan Documents. The language of each Financing Document
will be construed as a whole according to its fair meaning and will not be
construed against the draftsman.
Section 18.10. No Oral Amendment. The Financing Documents may not be
amended, waived or terminated orally or by any act or omission made individually
by Grantor, Lender or Trustees but may be amended, waived or terminated only by
a written document signed by the party against which enforcement of the
amendment, waiver or termination is sought.
Section 18.11. Severability. The invalidity, illegality or
unenforceability of any provision of any of the Financing Documents will not
affect any other provisions of the Financing Documents, which will be construed
as if the invalid, illegal or unenforceable provision never had been included.
Section 18.12. Covenants Run with the Land. Subject to the restrictions
on transfer contained in the Article entitled "TRANSFERS, LIENS AND
ENCUMBRANCES", all of the covenants of this Deed of Trust and the Assignment run
with the Land, will bind all parties hereto and all tenants and subtenants of
the Land or the Improvements and their respective heirs, executors,
administrators, successors and assigns, and all occupants and subsequent owners
of the Property, and will inure to the benefit of Lender and all subsequent
holders of the Note and this Deed of Trust.
Section 18.13. Time of the Essence. Time is of the essence with respect
to Grantor's payment and performance of the Obligations.
Section 18.14. Subrogation. If the Principal or any other amount
advanced by Lender is used directly or indirectly to pay off, discharge or
satisfy all or any part of an encumbrance affecting the Property, then Lender is
subrogated to the encumbrance and to any security held by the holder of the
encumbrance, all of which will continue in full force and effect in favor of
Lender as additional security for the Obligations.
Section 18.15. Joint and Several Liability. If Grantor consists of more
than one person or entity, the obligations and liabilities of each such person
or entity under this Deed of Trust are joint and several.
Section 18.16. Successors and Assigns. The Financing Documents bind the
parties to the Financing Documents and their respective successors, assigns,
heirs, administrators,
47
<PAGE>
executors, agents and representatives and inure to the benefit of Lender and its
successors, assigns, heirs, administrators, executors, agents and
representatives and to the extent applicable inure to the benefit of Trustees
and their successors, assigns, heirs, administrators, executors, agents and
representatives.
Section 18.17. Duplicates and Counterparts. Duplicate counterparts of
any of the Financing Documents, other than the Note, may be executed and
together will constitute a single original document.
ARTICLE XIX
TRUSTEE PROVISIONS
------------------
Section 19.1. Acceptance by Trustees. Trustees accept this trust when
this Deed of Trust, duly executed and acknowledged, is made a public record as
provided by law.
Section 19.2. Action in Accordance With Instructions. Upon receipt by
Trustees of instructions from Lender at any time or from time to time, Trustees
will (a) give any notice or direction or exercise any right, remedy or power
hereunder or in respect of any part or all of the Property as shall be specified
in such instructions and (b) approve as satisfactory all matters required by the
terms hereof to be satisfactory to Trustees or to Lender. Trustees may, but need
not, take any of such actions in the absence of such instructions. The powers
and duties of the Trustees may be executed by either one of them with the same
legal force and effect as though executed by both of them, including the right
and power by either Trustees to execute and deliver a full or partial release of
this Deed of Trust or an amendment or modification of this Deed of Trust. At any
time or from time to time, upon request of Lender, and without affecting the
liability of any person for payment of the Obligations, Trustees will reconvey
all or any part of the Property, consent to the making of any map or plat
thereof, join in granting any easement thereon, or join in any extension
agreement or any agreement subordinating the lien and estate hereof.
Section 19.3. Resignation. Trustees may resign at any time upon giving
not less than sixty (60) days prior notice to Lender, but shall continue to act
as trustees until a successor or successors shall have been chosen and
qualified.
Section 19.4. Successor Trustees. In the event of the death, removal,
resignation or refusal or inability of either or both of the Trustees to act, or
for any reason, at any time, Lender shall have the irrevocable power, with or
without cause, without prior notice of any kind, and without applying to any
court, to select and appoint a successor trustee. Each such appointment and
substitution shall be made by recording notice of such in each office in which
48
<PAGE>
this Deed of Trust is recorded. Such notice shall be executed and acknowledged
by Lender and shall contain reference to this Deed of Trust and when so recorded
shall be conclusive proof of proper appointment of the successor trustee. Such
successors shall not be required to give bond for the faithful performance of
its duties unless required by Lender.
Section 19.5. Trust is Irrevocable. The trust created hereby is
irrevocable by Grantor subject to defeasance in accordance with this Deed of
Trust.
Section 19.6. General. Trustees shall be protected by any document
believed by them to be genuine and to have been signed by the party or parties
purporting to sign the same. Trustees shall not be liable for any error of
judgment nor for any act done or step taken or omitted, nor for any mistakes of
law or fact, nor for anything which the Trustees may do or refrain from doing in
good faith. The Trustees make no representations as to the validity, legality or
sufficiency of this Deed of Trust, the Note or any of the other Financing
Documents. Lender shall have the power to remove or substitute the Trustees at
any time and from time to time.
49
<PAGE>
IN WITNESS WHEREOF, Grantor has executed and delivered this Deed of
Trust as of the date first set forth above.
WITNESS/ATTEST NBP ONE, LLC
By: Corporate Office Properties, L.P., its member
by: Corporate Office Properties Trust, its general partner
/s/ Karen M. Singer by: /s/ Roger A. Waesche, Jr. (SEAL)
- --------------- ---------------------------------------
Name: Roger A. Waesche, Jr.
---------------------------------------
Title: Senior Vice President
--------------------------------------
NBP 131-133-141, LLC
By: Corporate Office Properties, L.P., its member
by: Corporate Office Properties Trust, its general partner
/s/ Karen M. Singer by: /s/ Roger A. Waesche, Jr. (SEAL)
- ------------------- ---------------------------------------
Name: Roger A. Waesche, Jr.
---------------------------------------
Title: Senior Vice President
--------------------------------------
THREE CENTRE PARK, LLC
By: Corporate Office Properties, L.P., its member
by: Corporate Office Properties Trust, its general partner
/s/ Karen M. Singer by: /s/ Roger A. Waesche, Jr. (SEAL)
- ------------------- ---------------------------------------
Name: Roger A. Waesche, Jr.
---------------------------------------
Title: Senior Vice President
--------------------------------------
50
<PAGE>
LAKEVIEW AT GREENS, LLC
By: Corporate Office Properties, L.P., its member
by: Corporate Office Properties Trust, its general partner
/s/ Karen M. Singer by: /s/ Roger A. Waesche, Jr. (SEAL)
- ------------------- ---------------------------------------
Name: Roger A. Waesche, Jr.
---------------------------------------
Title: Senior Vice President
--------------------------------------
CORPORATE GATESPRING, LLC
By: Corporate Office Properties, L.P., its member
by: Corporate Office Properties Trust, its general partner
/s/ Karen M. Singer by: /s/ Roger A. Waesche, Jr. (SEAL)
- ------------------- ---------------------------------------
Name: Roger A. Waesche, Jr.
---------------------------------------
Title: Senior Vice President
--------------------------------------
WITNESS: TRUSTEE:
/s/ James K. Thomson /s/ William H. Goebel (SEAL)
- -------------------- ------------------------------
James K. Thomson WILLIAM H. GOEBEL
WITNESS: TRUSTEE:
/s/ James K. Thomson /s/ Matthew T. Murphy (SEAL)
- -------------------- ------------------------------
James K. Thomson MATTHEW T. MURPHY
51
<PAGE>
WITNESS/ATTEST: TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
/s/ James K. Thomson
- ---------------------------- By: /s/ Illegible (SEAL)
James K. Thomson ------------------------
Name: Illegible
------------------------
Title: Associate Director
-----------------------
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL, TO WIT:
------ ------------
I HEREBY CERTIFY, that on this 22nd day of October, 1998, before
---- -------
me, the undersigned Notary Public of the State of Maryland, personally appeared
Roger A. Waesche, Jr., who acknowledged himself to be the Senior Vice President
- --------------------- ---------------------
of Corporate Office Properties Trust, the general partner of Corporate Office
Properties, L.P., which is the member of NBP ONE, LLC, a Maryland limited
liability company, known to me (or satisfactorily proven) to be the person whose
name is subscribed to the within instrument, and acknowledged that he executed
the same for the purposes therein contained in the capacity described above.
AS WITNESS my hand and Notarial Seal.
/s/ Illegible
----------------------------------------
Notary Public
Commission Expires: 05/01/02
--------------------
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL, TO WIT:
------ ------------
I HEREBY CERTIFY, that on this 22nd day of October, 1998, before
---- -------
me, the undersigned Notary Public of the State of Maryland, personally appeared
Roger A. Waesche, Jr., who acknowledged himself to be the Senior Vice President
- --------------------- ---------------------
of Corporate Office Properties Trust, the general partner of Corporate Office
Properties, L.P., which is the member of NBP ONE, LLC, a Maryland limited
liability company, known to me (or satisfactorily proven) to be the person whose
name is subscribed to the within instrument, and acknowledged that he executed
the same for the purposes therein contained in the capacity described above.
AS WITNESS my hand and Notarial Seal.
/s/ Illegible
----------------------------------------
Notary Public
Commission Expires: 05/01/02
--------------------
52
<PAGE>
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL , TO WIT:
------- ------------
I HEREBY CERTIFY, that on this 22nd day of October , 1998, before
---- -------
me, the undersigned Notary Public of the State of Maryland, personally appeared
Roger A. Waesche, Jr., who acknowledged himself to be the Senior Vice President
- --------------------- ---------------------
of Corporate Office Properties Trust, the general partner of Corporate Office
Properties, L.P., which is the member of NBP 131-133-141, LLC, a Maryland
limited liability company, known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within instrument, and acknowledged that
he executed the same for the purposes therein contained in the capacity
described above.
AS WITNESS my hand and Notarial Seal.
/s/ Illegible
----------------------------------------
Notary Public
Commission Expires: 05/01/02
------------
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL , TO WIT:
------- ------------
I HEREBY CERTIFY, that on this 22nd day of October, 1998, before
---- -------
me, the undersigned Notary Public of the State of Maryland, personally appeared
Roger A. Waesche, Jr., who acknowledged himself to be the Senior Vice President
- -------------------- ---------------------
of Corporate Office Properties Trust, the general partner of Corporate Office
Properties, L.P., which is the member of THREE CENTRE PARK, LLC, a Maryland
limited liability company, known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within instrument, and acknowledged that
he executed the same for the purposes therein contained in the capacity
described above.
AS WITNESS my hand and Notarial Seal.
/s/ Illegible
----------------------------------------
Notary Public
Commission Expires: 05/01/02
--------------
53
<PAGE>
STATE OF MARYLAND, COUNTY OF ANNE ARUNDEL , TO WIT:
------ ------------
I HEREBY CERTIFY, that on this 22nd day of October, 1998, before
---- -------
me, the undersigned Notary Public of the State of Maryland, personally appeared
Roger A. Waesche, Jr., who acknowledged himself to be the Senior Vice President
- --------------------- ---------------------
of Corporate Office Properties Trust, the general partner of Corporate Office
Properties, L.P., which is the member of LAKEVIEW AT GREENS, LLC, a Maryland
limited liability company, known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within instrument, and acknowledged that
he executed the same for the purposes therein contained in the capacity
described above.
AS WITNESS my hand and Notarial Seal.
/s/ Illegible
----------------------------------------
Notary Public
Commission Expires: 05/01/02
------------
STATE OF NEW YORK )
---------------- To Wit:
CITY/COUNTY OF NEW YORK )
---------
I HEREBY CERTIFY that on this 19th day of October, 1998, before
---- -------
me, the undersigned, a Notary Public of said State aforesaid, personally
appeared WILLIAM H. GOEBEL, as Trustee under this Deed of Trust, and executed
the same for the purposes contained therein by signing his name, as Trustee.
AS WITNESS my hand and Notarial Seal.
/s/ Julie A. Hathaway
--------------------------------
Notary Public Julie A Hathaway
Notary Public in and for
the State of New York
Commission No. 01HA5075538
My Commission Expires: April 7, 1998
My Commission Expires:
------------
STATE OF NEW YORK )
-----------
) To Wit:
CITY/COUNTY OF NEW YORK )
------------
I HEREBY CERTIFY that on this 19th day of October, 1998, before
---- -------
me, the undersigned, a Notary Public of said State aforesaid, personally
appeared MATTHEW T. MURPHY, as Trustee under this Deed of Trust, and executed
the same for the purposes contained therein by signing his name, as Trustee.
AS WITNESS my hand and Notarial Seal.
/s/ Julie A. Hathaway
--------------------------------
Julie A Hathaway
Notary Public in and for
the State of New York
Commission No. 01HA5075538
My Commission Expires: April 7, 1998
54
<PAGE>
STATE OF NEW YORK )
--------- ) To Wit:
CITY/COUNTY OF NEW YORK )
----------
I HEREBY CERTIFY that on this 19th day of October, 1998, before
---- -------
me, the undersigned, a Notary Public of said State aforesaid, personally
appeared BRIAN R. BELLJVEAU, who acknowledged himself to be the
------------------
Associate Director of TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
- ------------------
AMERICA, a New York corporation, and that he as Associate Director, being
------------------
authorized so to do, executed the same for the purposes contained therein by
signing the name of TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, by
himself as Associate Director.
------------------
WITNESS my hand and Notarial Seal.
/s/ Julia A Hathaway (SEAL)
---------------------
Notary Public Julie A Hathaway
Notary Public in and for
the State of New York
Commission No. 01HA5075538
My Commission Expires: April 7, 1998
My Commission Expires:
--------------
Attorney Certification
----------------------
The undersigned, an attorney admitted to practice before the Court of
Appeals of Maryland, hereby certifies that the within instrument was prepared by
me or under my supervision.
/s/ Theresa Burian Shea
------------------------------------
Theresa Burian Shea
55
<PAGE>
Exhibit A
---------
LEGAL DESCRIPTION
56
<PAGE>
ONE NATIONAL BUSINESS PARK
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Anne Arundel, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED AS LOT 3-B AS SHOWN ON A PLAT ENTITLED "PHASE
THREE, AN INDUSTRIAL RESUBDIVISION OF LOTS 3, 4, AND RESERVED PARCEL "D"
PREVIOUSLY RECORDED IN PLAT BOOK 112 PAGE 39, PLAT NUMBER 5914 AND
RESUBDIVISION OF RESERVED PARCEL "H, I, J", LOT A AND LOTS 5-7 PREVIOUSLY
RECORDED IN PLAT BOOK 114, PAGE 12, PLAT NUMBER 5986, THE NATIONAL BUSINESS
PARK" AND RECORDED AMONG THE PLAT RECORDS OF ANNE ARUNDEL COUNTY, MARYLAND IN
PLAT BOOK 143 AT PAGE 31, PLAT NUMBER 7754.
BEING the same premises described in the following metes and bounds
description:
BEGINNING FOR THE SAME AT A IRON BAR FOUND ON THE NORTHWESTERLY RIGHT OF WAY
LINE OF BALTIMORE WASHINGTON PARKWAY, AS SHOWN ON MARYLAND STATE HIGHWAY
ADMINISTRATION RIGHT OF WAY PLAT NUMBER 46805, SAID POINT ALSO BEING KNOWN AS
POINT NUMBER 756 AS SHOWN ON A PLAT ENTITLED "PHASE THREE, AN INDUSTRIAL
RESUBDIVISION OF LOTS 3, 4, AND RESERVED PARCEL "D" PREVIOUSLY RECORDED IN
PLAT BOOK 112 PAGE 39, PLAT NUMBER 5914 AND RESUBDIVISION OF RESERVED PARCEL
"H, I, J", LOT A AND LOTS 5-7 PREVIOUSLY RECORDED IN PLAT BOOK 114, PAGE 12,
PLAT NUMBER 5986, THE NATIONAL BUSINESS PARK" AND RECORDED AMONG THE PLAT
RECORDS OF ANNE ARUNDEL COUNTY, MARYLAND IN PLAT BOOK 143 AT PAGE 31, PLAT
NUMBER 7754, THENCE BINDING ON SAID RIGHT OF WAY LINE AND ALSO RUNNING ALONG
THE OUTLINE OF SAID PLAT, WITH MERIDIAN REFERENCE TO MARYLAND STATE GRID
NORTH:
1. SOUTH 43 DEGREES 41 MINUTES 04 SECONDS WEST 740.17 FEET TO AN IRON BAR
FOUND, THENCE
2. SOUTH 49 DEGREES 36 MINUTES 13 SECONDS WEST 265.00 FEET, THENCE
3. SOUTH 80 DEGREES 54 MINUTES 12 SECONDS WEST 213.79 FEET TO THE
SOUTHWESTERLY CORNER OF LOT 3B AS SHOWN ON SAID PLAT. THENCE LEAVING
SAID RIGHT OF WAY LINE AND THE OUTLINE OF SAID PLAT AND BINDING ON THE
WESTERLY LINE OF LOT 3B
4. NORTH 09 DEGREES 05 MINUTES 48 SECONDS WEST 140.00 FEET, THENCE
5. BY A CURVE, TO THE LEFT, WITH A RADIUS OF 171.14 FEET AND AN ARC LENGTH
OF 93.49 FEET, SAID CURVE HAVING A CHORD BEARING OF NORTH 24 DEGREES 44
MINUTES 47 SECONDS WEST 92.33 FEET, THENCE
6. NORTH 40 DEGREES 23 MINUTES 47 SECONDS WEST 145.01 FEET, THENCE
57
<PAGE>
7. NORTH 18 DEGREES 44 MINUTES 32 SECONDS WEST 39.28 FEET TO INTERSECT THE
OUTLINE OF THE PLAT, THENCE RUNNING ALONG THE OUTLINE OF SAID PLAT
8. NORTH 28 DEGREES 52 MINUTES 21 SECONDS EAST 35.84 FEET, THENCE
9. NORTH 58 DEGREES 13 MINUTES 50 SECONDS EAST 231.72 FEET, THENCE
10. SOUTH 89 DEGREES 19 MINUTES 05 SECONDS EAST 168.01 FEET, THENCE
11. NORTH 72 DEGREES 03 MINUTES 27 SECONDS EAST 110.37 FEET, THENCE
12. NORTH 56 DEGREES 14 MINUTES 37 SECONDS EAST 239.35 FEET, THENCE
13. NORTH 62 DEGREES 03 MINUTES 12 SECONDS EAST 241.12 FEET, THENCE
14. NORTH 83 DEGREES 11 MINUTES 55 SECONDS EAST 109.77 FEET, THENCE
15. NORTH 68 DEGREES 22 MINUTES 27 SECONDS EAST 99.87 FEET TO POINT NUMBER
265 AS SHOWN ON SAID PLAT, THENCE
16. BY A NONTANGENT CURVE, TO THE LEFT, WITH A RADIUS OF 557.72 FEET AND AN
ARC LENGTH OF 110.72 FEET, SAID CURVE HAVING A CHORD BEARING OF SOUTH 04
DEGREES 59 MINUTES 29 SECONDS WEST 110.54 FEET TO THE POINT OF BEGINNING
CONTAINING 372699 SQUARE FEET OR 8.556 ACRES OF LAND MORE OR LESS
TOGETHER WITH the rights of access and such other benefits contained in Deed
of Easement and Agreement recorded among the Land Records of Anne Arundel
County, Maryland in Liber 5721, Folio 333.
TOGETHER WITH the rights of parking and access under and such other benefits
contained in the Cross Parking Easement Declaration recorded among the Land
Records of Anne Arundel County, Maryland in Liber 5459, folio 620.
BEING part of the lands conveyed by Jolly Acres Limited Partnership to NBP-I
Limited Partnership by deed dated December 2, 1988 and recorded among the
Land Records of Anne Arundel County, Maryland in Liber 4751 at Folio 295.
58
<PAGE>
131 NATIONAL BUSINESS PARK
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Anne Arundel, State of Maryland, and described as follows:
BEING KNOW AND DESIGNATED as LOT 6-AR as shown on plat entitled "Plat 2 of 2,
ADMINISTRATIVE LOT LINE CHANGE, LOTS 6A, 6B AND 7A, AN INDUSTRIAL
RESUBDIVISION, PHASE THREE, THE NATIONAL BUSINESS PARK, LOTS 6AR, 6BR AND
7AR", which plat is recorded among the Plat Records of Anne Arundel County,
Maryland in Plat Book 188, Page 37, Plat No. 9962.
BEING the same premises described in the following metes and bounds
description:
BEGINNING for the same at Point No. 232 being a P.K. Nail set as shown on
Plat 2 of 2 of a set of plats entitled "ADMINISTRATIVE LOT LINE CHANGE, LOTS
6A, 6B AND 7A, AN INDUSTRIAL RESUBDIVISION, PHASE THREE, THE NATIONAL
BUSINESS PARK, LOTS 6AR, 6BR AND 7AR", dated March, 1996 and recorded among
the Plat Records of Anne Arundel County, Maryland in Plat Book 188, Pages 36
and 37, Plat Nos. 9961 and 9962, said point being on the Easterly
right-of-way line of the National Business Parkway (Variable Width Public
R/W) formerly Orion Boulevard, said point also being the Southwest corner of
the herein described parcel, thence leaving said point of beginning and
running with and binding on the aforesaid Easterly right-of-way line of the
National Business Parkway the two (2) following courses and distances with
all courses and distances referenced to the Maryland N.A.D. 1927 North Grid
Meridian, viz:
1. 312.74 along an arc of a curve to the left, having a radius of 660.31
feet and being subtended by a chord bearing North 32 degrees 31 minutes
33 seconds East 309.83 feet to a point of tangency, being designated as
Point No. 176 on the aforesaid Record Plats, thence continuing with a
tangent line.
2. North 18 degrees 57 minutes 26 seconds East 93.28 feet to the
Northwest corner of the herein described parcel, thence leaving the
aforesaid right-of-way of the National Business Parkway and running with
and binding on the common line of division between LOT 6AR AND LOT 6BR
as delineated on the aforesaid record plats recorded in Plat Book 188,
Pages 36 and 37, Plat Nos. 9961 and 9962, the three (3) following
courses and distances, viz:
3. South 67 degrees 13 minutes 43 seconds East 168.07 feet,
4. North 22 degrees 46 minutes 17 seconds East 39.13 feet,
59
<PAGE>
5. South 67 degrees 13 minutes 43 seconds East 290.00 feet to intersect
the Westerly outline of the First Parcel of the Cedar Knoll School
property conveyed by the National Junior Republic of the City of
Baltimore to The Inner Mission Society of the Evangelical Lutheran
Church of Baltimore City and Vicinity, Incorporated by deed dated
February 20, 1933 and recorded among the Land Records of Anne Arundel
County, Maryland in Liber F.S.R. 115 at Folio 120, thence running with
and binding on the outline of the aforesaid Cedar Knoll School Property,
6. South 22 degrees 46 minutes 17 seconds West 536.46 feet to Point No.
577 being designated as a P.K. Nail set on the aforesaid record plats,
said point being located on the Northerly right-of-way of Jolly Acres
Road (30 feet right-of-way), North 22 degrees 46 minutes 17 seconds East
30.57 feet from a stone found on South side of Jolly Acres Road, thence
running with and binding on the Northerly right-of-way of Jolly Acres
Road (30 feet right-of-way) the two (2) following courses and distances,
viz:
7. North 56 degrees 08 minutes 12 seconds West 502.13 feet to on iron
pipe, thence,
8. North 55 degrees 58 minutes 39 seconds West 11.83 feet to the point
of beginning,
CONTAINING 220,816 square feet or 5.069 acres of land, more or less.
TOGETHER WITH the rights to use parking and access on Lot 6 B-R and such
other benefits contained in Declaration of Reciprocal Parking and Access
Easements recorded among the Land Records of Anne Arundel County, Maryland in
Liber 7473, folio 720.
BEING part of the lands conveyed by Jolly Acres Limited Partnership to NBP-II
Limited Partnership by deed dated December 2, 1988 and recorded among the
Land Records of Anne Arundel County, Maryland in Liber 4751 at Folio 293.
60
<PAGE>
133 NATIONAL BUSINESS PARK
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of Anne
Arundel, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED at Lot 6-BR as shown on plat entitled "Plat 2 of
2, ADMINISTRATIVE LOT LINE CHANGE, LOTS 6A, 6B AND 7A, AN INDUSTRIAL
RESUBDIVISION, PHASE THREE, THE NATIONAL BUSINESS PARK, LOTS 6AR, 6BR AND
7AR", which plat is recorded among the Plat Records of Anne Arundel County,
Maryland in Plat Book 188, Page 37, Plat No. 9962.
BEING the same premises described in the following metes and bounds
description:
BEGINNING for the same where the common line of division between Lot 6-BR and
Lot 7-AR intersect the Easterly right-of-way line of National Business Parkway
(previously known as Orion Boulevard) as shown on a record plat entitled
"The National Business Park, Lots 6-AR 6-BR, and 7-AR", dated March, 1996 and
recorded among the Plat Records of Anne Arundel County, Maryland in Plat Book
188, Pages 36 & 37, Plat Nos. 9961 & 9962, thence leaving said right-of-way
and running with and binding on the aforesaid line of division the following
course and distance, with all courses and distances referenced to the
Maryland N.A.D. 1927 Grid North.
1. South 67 degrees 13 minutes 43 seconds East 489.25 feet to the Northeast
corner of the aforesaid Lot 6-BR as described herein and the Southeast
corner of Lot 7-AR, also being a point in the outline of Cedar Knoll
School property as recorded among the aforesaid Land Records in Liber
F.S.R. 115 at Folio 120, thence running with and binding on the Easterly
line of the herein described Lot 6-BR and part of the outline of Cedar
Knoll School the following course and distance;
2. South 22 degrees 46 minutes 17 seconds West 428.66 feet to the Southeast
corner of the herein described Lot 6-BR and the Northeast corner of Lot
6-AR, thence leaving the outline of the aforesaid Cedar Knoll School
property and running with and binding on the common line of division
between Lot 6-AR and Lot 6-BR the following three (3) courses and
distances, viz;
3. North 67 degrees 13 minutes 43 seconds West 290.00 feet,
4. South 22 degrees 46 minutes 17 seconds West 39.13 feet,
61
<PAGE>
5. North 67 degrees 13 minutes 43 seconds West 168.07 feet to intersect the
aforesaid Easterly right-of-way line of National Business Parkway, thence
leaving the aforesaid common line of division and running with and
binding on the aforesaid right-of-way the following course and distance,
6. North 18 degrees 57 minutes 26 seconds East 468.83 feet to the point of
beginning,
CONTAINING 210,226 square feet or 4.826 acres of land, more or less.
TOGETHER WITH the rights to use parking and access on Lot 6A-R and 7A-R and
such other benefits contained in Declaration of Reciprocal Parking and Access
Easements recorded among the Land Records of Anne Arundel County, Maryland in
Liber 7473, folio 720 and in the declaration of Reciprocal Parking and Access
Easement recorded among the Land Records of Anne Arundel County, Maryland in
Liber 7473, folio 747.
BEING part of the same premises which was conveyed by Jolly Acres Limited
Partnership to NBP-II Limited Partnership by deed dated December 2, 1988 and
recorded among the Land Records of Anne Arundel County, Maryland in Liber
4751 at Folio 293.
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[4] NATIONAL BUSINESS PARK
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Anne Arundel, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED as Lot 7-B as shown on plat entitled "Phase Three,
An Industrial Resubdivision of Lots 3, 4 and Reserved Parcel D, previously
recorded in Plat Book 112, Page 39, Plat No. 5914 and Resubdivision of
Reserved Parcels 'H', 'I', 'J', Lot "A" and Lots 5-7 previously recorded in
Plat Book 114, Page 12, Plat No. 5986. The National Business Park", which
plat is recorded among the Land Records of Anne Arundel County, Maryland in
Plat Book 143, Page 36, Plat No. 7759.
BEING the same premises described in the following metes and bounds
description:
BEGINNING for the same at a point located on the Easterly right-of-way of the
National Business Parkway (Variable Width Public R/W) formerly Orion
Boulevard at the intersection of the division line between LOTS 7AR AND 7B
and the aforesaid right-of-way, said point being the Southwest corner of LOT
7B as designated on a record plat entitled "PHASE THREE, THE NATIONAL
BUSINESS PARK", dated October, 1991 and recorded among the Plat Records of
Anne Arundel County, Maryland in Plat Book 143, Pages 28 through 37, Plat
Nos. 7751 through 7760, and specifically Page 36, Plat No. 7759, thence
leaving said point of beginning and running with and binding on the aforesaid
Easterly right-of-way the following five (5) courses and distances with all
courses and distances referenced to the Maryland N.A.D. 1927 North Grid
Meridian, viz:
1. 437.14 feet along the arc of a curve to the right, having a radius of
850.00 feet and being subtended by a chord bearing North 44 degrees 28
minutes 32 seconds East 432.34 feet to a point of tangency and Point No.
166 on the aforesaid record plat, thence with a tangent line,
2. North 59 degrees 12 minutes 32 seconds East 408.87 feet to Point No. 167
on the aforesaid plat, being a point of curvature, thence with a tangent
curve,
3. 9.78 feet along the arc of a curve to the left, having a radius of 420.00
feet and being subtended by a chord bearing North 58 degrees 32 minutes
31 seconds East 9.78 feet to Point No. 243 of the aforesaid plot recorded
in Plat Book 143, Page 36, Plot No. 7759, thence with a non-tangent line.
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4. South 81 degrees 43 minutes 37 seconds East 37.10 feet to Point No. 244,
5. South 39 degrees 37 minutes 53 seconds East 68.24 feet to Point No. 248
on the aforesaid plat, said point being a point of intersection with the
Westerly outline of the First Parcel of the Cedar Knoll School property
conveyed by the National Junior Republic of the City of Baltimore to the
Inner Mission Society of the Evangelical Lutheran Church of Baltimore
City and Vicinity, Incorporated by deed dated February 20, 1933 and
recorded among the Land Records of Anne Arundel County, Maryland in Liber
F.S.R. 115 at Folio 120, thence running with the binding on the Westerly
outline of the aforesaid Cedar Knoll School the following course and
distance,
6. South 22 degrees 46 minutes 17 seconds West 791.00 feet, thence leaving
the outline of Cedar Knoll School and running with and binding on the
division line between LOTS 7AR and 7B the following four (4) courses and
distances as designated on the aforesaid record plat, viz:
7. North 67 degrees 13 minutes 43 seconds West 58.00 feet,
8. North 22 degrees 46 minutes 17 seconds East 60.00 feet,
9. North 67 degrees 13 minutes 43 seconds West 326.06 feet,
10. North 60 degrees 15 minutes 27 seconds West 121.68 feet to the point of
beginning.
CONTAINING 262,889 square feet or 6.035 acres of land, more or less.
BEING part of the lands conveyed by Jolly Acres Limited Partnership to NBP-II
Limited Partnership by deed dated December 2, 1988 and recorded among the Land
Records of Anne Arundel County, Maryland in Liber 4751, at Folio 293.
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LAKEVIEW AT THE GREENS 1 - 2A
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Prince George's, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED AS TRACT 2A, AS SHOWN ON PLAT ENTITLED "THE
OFFICES AT THE GREENS, THE GREENS AT PATUXENT, TRACT TWO, LAUREL DISTRICT
NO. 10, PRINCE GEORGE'S COUNTY, MARYLAND", WHICH PLAT IS RECORDED AMONG THE
LAND RECORDS OF PRINCE GEORGE'S COUNTY IN PLAT BOOK NO. NLB 125 AT PLAT
NO. 53.
BEING the same premises described in the following metes and bounds
description:
BEGINNING FOR THE SAME AT A POINT AT THE INTERSECTION OF THE SOUTHWESTERN
MOST RIGHT OF WAY LINE OF GREENVIEW DRIVE (60 FEET RIGHT TO WAY). AND THE
EASTERN MOST RIGHT OF WAY LINE OF MARYLAND RT. 197, AS SHOWN ON THE AFORESAID
PLAT, ALSO AS SHOWN ON STATE ROAD COMMISSION PLAT NO. 26471; THENCE, BINDING
ON THE SAID GREENVIEW DRIVE, THE FOLLOWING COURSES WITH COURSES AND DISTANCES
REFERRED TO THE MERIDIAN USED ON THE BEFORE SAID PLAT OF THE GREENS AT
PATUXENT.
1. NORTH 73 DEGREES 40 MINUTES 16 SECONDS EAST 27.50 FEET TO A POINT;
THENCE,
2. SOUTH 59 DEGREES 39 MINUTES 39 SECONDS EAST 75.43 FEET TO A POINT;
THENCE,
3. 75.51 FEET ALONG THE ARC OF A TANGENT CURVE DEFLECTING TO THE RIGHT,
HAVING A RADIUS OF 260.00 MINUTES, SUBTENDED BY A CHORD BEARING AND
DISTANCE SOUTH 51 DEGREES 20 MINUTES 26 SECONDS EAST 75.25 FEET TO A
POINT OF TANGENCY; THENCE,
4. SOUTH 21 DEGREES 59 MINUTES 12 SECONDS EAST 15.00 FEET TO A POINT;
THENCE,
5. SOUTH 34 DEGREES 08 MINUTES 24 SECONDS EAST 50.94 FEET TO A POINT;
THENCE,
6. SOUTH 69 DEGREES 52 MINUTES 17 SECONDS EAST 21.90 FEET TO A POINT;
THENCE,
7. 104.33 FEET ALONG THE ARC OF A NON-TANGENT CURVE DEFLECTING TO THE
RIGHT, HAVING A RADIUS OF 270.00 MINUTES, SUBTENDED BY A CHORD BEARING
AND DISTANCE SOUTH 13 DEGREES 51 MINUTES 08 SECONDS EAST 103.69 FEET TO
A POINT OF TANGENCY; THENCE,
8. SOUTH 02 DEGREES 46 MINUTES 56 SECONDS EAST 80.93 FEET TO A POINT;
THENCE,
9. SOUTH 42 DEGREES 13 MINUTES 04 SECONDS WEST 21.21 FEET TO A POINT;
THENCE,
10. SOUTH 02 DEGREES 46 MINUTES 56 SECONDS EAST 50.00 FEET TO A POINT;
THENCE,
11. SOUTH 47 DEGREES 46 MINUTES 56 SECONDS EAST 21.21 FEET TO A POINT;
THENCE,
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12. SOUTH 02 DEGREES 46 MINUTES 56 SECONDS EAST 120.00 FEET TO A POINT;
THENCE,
13. SOUTH 42 DEGREES 13 MINUTES 04 SECONDS WEST 21.21 FEET TO A POINT;
THENCE,
14. SOUTH 02 DEGREES 46 MINUTES 56 SECONDS EAST 50.00 FEET TO A POINT;
THENCE, LEAVING GREENVIEW DRIVE AND BINDING ON THE DIVISION LINE
BETWEEN TRACTS 2A AND 2B AS SHOWN ON THE BEFORE SAID PLAT OF THE
GREENS AT PATUXENT
15. SOUTH 87 DEGREES 13 MINUTES 04 SECONDS WEST 37.00 FEET TO A POINT;
THENCE,
16. 38.92 FEET ALONG THE ARC OF A TANGENT CURVE, HAVING A RADIUS OF
36.98 FEET, AND SUBTENDED BY A CHORD BEARING AND DISTANCE OF SOUTH
57 DEGREES 04 MINUTES 04 SECONDS WEST 37.15 FEET TO A POINT OF TANGENCY;
THENCE,
17. SOUTH 26 DEGREES 55 MINUTES 04 SECONDS WEST 29.00 FEET TO A POINT;
THENCE,
18. NORTH 63 DEGREES 04 MINUTES 56 SECONDS WEST 385.20 FEET TO A POINT ON
THE BEFORE SAID RIGHT OF WAY LINE OF MD ROUTE 197; THENCE, BINDING ON
SAID RIGHT OF WAY
19. NORTH 29 DEGREES 29 MINUTES 21 SECONDS EAST 34.76 FEET TO A POINT;
THENCE,
20. NORTH 14 DEGREES 10 MINUTES 21 SECONDS EAST 175.43 FEET TO A POINT;
THENCE,
21. NORTH 27 DEGREES 00 MINUTES 10 SECONDS EAST 292.96 FEET TO THE POINT
OF BEGINNING.
CONTAINING 4.1896 ACRES OF LAND.
TOGETHER WITH rights of parking and sewer and water facilities over
"Greenview Tract" under and such other benefits contained in that Cross
Easement Agreement dated December 27, 1985, and recorded among the Land
Records of Prince George's County, Maryland at Liber 6245, folio 608, by and
between Greenview Drive Associates Limited Partnership and Laurel Tower
Associates Limited Partnership.
TOGETHER WITH rights of parking over Lot 2B on the aforementioned Plat and
"Patuxent Tract" under and such other benefits contained in that certain
Reciprocal Parking Easement Agreement dated December 1, 1987, and recorded
among the Land Records of Prince George's County, Maryland at Liber 6855,
folio 563, between Greenview Drive Associates Limited Partnership, and Laurel
Tower Associates Limited Partnership.
BEING the same land which was conveyed by Greenview Drive Associates Limited
Partnership to Laurel Tower Associates Limited Partnership by Deed dated
April 12, 1996 and recorded among the Land Records of Prince George's County,
Maryland at Liber 10728, folio 340.
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LAKEVIEW AT THE GREENS II-2B
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Prince George's, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED AS TRACT 2B, AS SHOWN ON PLAT ENTITLED "THE OFFICES
AT THE GREENS, THE GREENS AT PATUXENT, TRACT TWO, LAUREL DISTRICT NO 10,
PRINCE GEORGE'S COUNTY, MARYLAND", WHICH PLAT IS RECORDED AMONG THE LAND
RECORDS OF PRINCE GEORGE'S COUNTY IN PLAT BOOK NO. NLB 125 AT PLAT NO. 53.
BEING the same premises described in the following metes and bounds
description:
BEARING FOR THE SAME AT A POINT AT THE INTERSECTION OF THE NORTHEASTERN MOST
RIGHT OF WAY LINE OF CLUBHOUSE BOULEVARD (100 FOOT RIGHT TO WAY), AND THE
EASTERN MOST RIGHT OF WAY LINE OF MARYLAND RT. 197, AS SHOWN ON THE AFORESAID
PLAT, ALSO AS SHOWN ON STATE ROAD COMMISSION PLAT NO. 26472; THENCE, BINDING
ON THE SAID MD 197 THE FOLLOWING COURSES WITH COURSES AND DISTANCES REFERRED
TO THE MERIDIAN USED ON THE BEFORE SAID PLAT OF THE GREENS AT PATUXENT.
<TABLE>
<S> <C>
1. NORTH 19 DEGREES 47 MINUTES 52 SECONDS EAST 163.08 FEET TO A POINT;
THENCE, BINDING ON SAID MD 197 AS SHOWN ON STATE ROAD COMMISSION PLAT
NO. 26471
2. NORTH 29 DEGREES 29 MINUTES 21 SECONDS EAST 62.74 FEET TO A POINT;
THENCE, LEAVING SAID MD 197 AND BINDING ON THE DIVISION LINE BETWEEN
TRACTS 2A AND 2B AS SHOWN ON THE BEFORE SAID PLAT OF THE GREENS AT
PATUXENT
3. SOUTH 63 DEGREES 04 MINUTES 56 SECONDS EAST 385.20 FEET TO A POINT;
THENCE,
4. NORTH 26 DEGREES 55 MINUTES 04 SECONDS EAST 29.00 FEET TO A POINT;
THENCE,
5. 38.92 FEET ALONG THE ARC OF A TANGENT CURVE, HAVING A RADIUS OF 36.98
AND SUBTENDED BY A CHORD BEARING AND DISTANCE OF SOUTH 57 DEGREES 04
MINUTES 04 SECONDS EAST 37.15 FEET TO A POINT OF TANGENCY; THENCE,
6. NORTH 87 DEGREES 13 MINUTES 04 SECONDS EAST 37.0 FEET TO A POINT;
THENCE,
7. SOUTH 47 DEGREES 46 MINUTES 56 SECONDS EAST 21.21 FEET TO A POINT ON
THE SOUTHWESTERN MOST RIGHT OF WAY LINE OF GREENVIEW DRIVE (60 FEET
RIGHT OF WAY); THENCE,
8. SOUTH 02 DEGREES 46 MINUTES 56 SECONDS EAST 113.25 FEET TO A POINT;
THENCE,
9. 145.37 FEET ALONG THE ARC OF A TANGENT CURVE DEFLECTING TO THE RIGHT,
HAVING A RADIUS OF 270.00 MINUTES, SUBTENDED BY A CHORD
</TABLE>
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<TABLE>
<S> <C>
BEARING AND DISTANCE SOUTH 12 DEGREES 38 MINUTES 30 SECONDS WEST 143.62
FEET TO A POINT OF TANGENCY; THENCE,
10. SOUTH 39 DEGREES 08 MINUTES 04 SECONDS WEST 84.17 FEET TO A POINT;
THENCE,
11. SOUTH 78 DEGREES 36 MINUTES 00 SECONDS WEST 30.88 FEET TO A POINT ON
THE NORTHEASTERN MOST RIGHT OF WAY LINE OF CLUBHOUSE BOULEVARD (100 FOOT
RIGHT OF WAY); THENCE, BINDING ON SAID RIGHT OF WAY LINE THE FOLLOWING
COURSES
12. NORTH 61 DEGREES 56 MINUTES 05 SECONDS WEST 41.13 FEET TO A POINT;
THENCE,
13. 64.43 FEET ALONG THE ARC OF A TANGENT CURVE DEFLECTING TO THE RIGHT,
HAVING A RADIUS OF 250.00 SUBTENDED BY A CHORD BEARING AND DISTANCE
NORTH 54 DEGREES 33 MINUTES 05 SECONDS WEST 64.25 FEET TO A POINT OF
TANGENCY; THENCE,
14. NORTH 47 DEGREES 10 MINUTES 04 SECONDS WEST 10.00 FEET TO A POINT;
THENCE,
15. NORTH 02 DEGREES 10 MINUTES 04 SECONDS WEST 21.21 FEET TO A POINT;
THENCE,
16. NORTH 47 DEGREES 10 MINUTES 04 SECONDS WEST 50.00 FEET TO A POINT;
THENCE,
17. SOUTH 87 DEGREES 49 MINUTES 56 SECONDS WEST 21.21 FEET TO A POINT;
THENCE,
18. NORTH 47 DEGREES 10 MINUTES 04 SECONDS WEST 24.11 FEET TO A POINT;
THENCE,
19. 195.75 FEET ALONG THE ARC OF A TANGENT CURVE DEFLECTING TO THE LEFT,
HAVING A RADIUS OF 450.00 AND SUBTENDED BY A CHORD BEARING AND DISTANCE
OF NORTH 59 DEGREES 37 MINUTES 47 SECONDS, WEST 194.21 FEET TO A POINT;
THENCE,
20. NORTH 72 DEGREES 05 MINUTES 30 SECONDS WEST 81.29 FEET TO THE POINT OF
BEGINNING.
CONTAINING 2.9266 ACRES OF LAND.
</TABLE>
TOGETHER WITH rights of parking and sewer and water facilities over
"Greenview Tract" under and such other benefits contained in that Cross
Easement Agreement dated December 27, 1985, and recorded among the Land
Records of Prince George's County, Maryland at Liber 6245, folio 608, by and
between Greenview Drive Associates Limited Partnership and Laurel Tower
Associates Limited Partnership.
TOGETHER WITH rights of parking over Lot 2A shown on the aforementioned Plat
and "Patuxent Tract" under the such other benefits contained in that certain
Reciprocal Parking Easement Agreement dated December 1, 1987, and recorded
among the Land Records of Prince George's County, Maryland at Liber 6855,
folio 563, between Greenview Drive Associates Limited Partnership, and Laurel
Tower Associates Limited Partnership.
BEING the same land which was conveyed by Patuxent Group One Limited
Partnership to Laurel Tower Associates Limited Partnership by Deed dated
December 27, 1985 and recorded among the Land Records of Prince George's
County, Maryland in Liber 6245, folio 631.
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WOODLANDS 1
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of
Howard, State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED as Parcel S-19 as shown on Plat entitled "Columbia
Gateway, Parcels S-19 thru S-21, A Resubdivision of Parcels S-4, S-5 & S-7,
as Shown on Plan No. 8803", which plat is recorded among the Land Records of
Howard County, Maryland as Plat No. 12882.
BEING the same premises described in the following metes and bounds
description:
Beginning for the same of a point on the western side of Columbia Gateway
Drive (100 feet wide), said point of beginning being on the east outline of
Parcel "S-19", said point of beginning also being designated 1012 on a Plat
entitled "COLUMBIA GATEWAY PARCELS 'S-19' THROUGH 'S-21' A RESUBDIVISION OF
COLUMBIA GATEWAY, PARCELS S-4, S-5 and S-7, AS SHOWN ON PLAT No. 8803" dated
August 1997, recorded among the Plat Records of Howard County, Maryland as
Plat 12882, running thence leaving said point of beginning binding on part of
said western side Columbia Gateway Drive and binding on part of said easterly
outline of Parcel "S-19" shown on said Plat,
1. Southeasterly by a curve to the right having a radius of 650.00 feet for
a distance of 130.00 feet, said curve being subtended by a chord bearing
South 01 degrees 23 minutes 33 seconds East 129.79 feet to the
southeasternmost corner of said Parcel "S-19", thence leaving sold
western side of Columbia Gateway Drive, binding on the common division
lines of Parcel "S-19" and Parcel "S-21" on said Plat the seven following
courses;
2. North 88 degrees 45 minutes 33 seconds, West 159.19 feet,
3. North 59 degrees 20 minutes 58 seconds West 188.31 feet,
4. North 52 degrees 00 minutes 16 seconds West 392.09 feet,
5. North 88 degrees 24 minutes 28 seconds West 98.37 feet,
6. North 01 degrees, 35 minutes, 32 seconds East 47.56 feet,
7. North 88 degrees 24 minutes 28 seconds West 110.39 feet and
8. North 74 degrees 09 minutes 16 seconds West 65.97 feet to the westernmost
corner of said Parcel "S-19" on said Plat, thence binding on part of the
westerly outline of said Plat and binding on the westerly outline of said
Parcel "S-19" on said Plat.
9. North 14 degrees 02 minutes 10 seconds East 362.19 feet to the
westernmost division corner of Parcel "S-19" and Parcel "S-20", thence
leaving the westerly outline of said Plat binding on the common division
lines of Parcel "S-19" and Parcel "S-20" on said Plat the three following
courses.
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10. South 89 degrees 39 minutes 58 seconds East 310.66 feet
11. South 45 degrees 46 minutes 44 seconds East 222.92 feet, and
12. North 89 degrees 45 minutes 25 seconds East 279.85 feet to said western
side of Columbia Gateway Drive, thence binding on part of said western
side of Columbia Gateway Drive and binding on part of said easterly
outline of Parcel "S-19" on said Plat,
13. South 07 degrees 07 minutes 30 seconds East 481.43 feet to the point of
beginning.
CONTAINING 411,459 square feet or 9.4458 acres of land, more or less.
TOGETHER WITH the rights of access and parking over Lot S-20 in Columbia
Gateway and such other benefits contained in Agreement and Declaration of
Annexation recorded in Liber 4047, folio 377 and in deed recorded in Liber
4047, folio 381.
BEING the same premises conveyed by The Howard Research and Development
Corporation to Constellation Gatespring, LLC by Deed dated 8/21/1997 and
recorded among the land records of Howard County, Maryland in Liber 4047,
folio 381.
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THREE CENTRE PARK
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in this instrument is situated in the County of Howard,
State of Maryland, and described as follows:
BEING KNOWN AND DESIGNATED as Parcel A-3 as shown on plat entitled "Oakland
Executive Park, Parcels A-1 to A-4, Resubdivision of Parcel "A", which is
recorded among the land records of Howard County, Maryland as Plat No. 6558.
BEING the same premises described in the following metes and bounds
description:
Beginning for the same on the north side of Centre Park Drive, 100 feet wide,
at the common corner of Parcel A-2 and Parcel A-3, shown on a Plat entitled
"Oakland Executive Park Parcels A-1 to A-4, Resubdivision of Parcel A", dated
August 20, 1985, recorded among the Plat Records of Howard County, Maryland
as Plat 6558, running thence leaving said point of beginning, binding on part
of said north side of Centre Park Drive, shown on said plat;
1) Southwesterly by a curve to the left having a radius of 700.00 feet for a
distance of 60.07 feet, said curve being subtended by a chord bearing South
65 degrees 30 minutes 37 seconds West 60.06 feet to the common corner of
Parcel A-1 and Parcel A-3, shown on said Plat, running thence leaving said
north side of Centre Park Drive, binding on the division line between Parcel
A-1 and Parcel A-3, shown on said Plat;
2) North 26 degrees 56 minutes 54 seconds West 600.31 feet, running thence
binding on part of the northern outline of said Plat, the two following
courses;
3) North 58 degrees 06 minutes 53 seconds East 41.00 feet to the point
designated 22 on said Plat and
4) North 85 degrees 42 minutes 27 seconds East 388.90 feet to the point
designated 24 on said Plat, running thence binding on part of the
northeastern outline of said Plat;
5) South 56 degrees 56 minutes 22 seconds East 275.70 feet, running thence
leaving said northeastern Plat outline and binding for part of the distance
on the division line between Parcel A-3 and Parcel A-4, and binding for part
of the distance on the division line between Parcel A-3 and Parcel A-2,
reversing the bearing on said Plat, in all;
6) South 72 degrees 30 minutes 00 seconds West 484.12 feet, running thence
continuing to bind on the division line between Parcel A-3 and Parcel A-2,
reversing the bearing on said Plat;
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7) South 26 degrees 56 minutes 54 seconds East 297.30 feet to the point of
beginning.
CONTAINING 3.187 acres of land, more or less.
TOGETHER WITH rights of use of storm water management areas and driveway
areas on Lot A-1, owned by MJF-2 Limited Partnership and being part of the
land conveyed by MJF-2 Limited Partnership to Three Centre Park Associates
Limited Partnership by, and such other benefits contained in, Deed and
Agreement dated June 5, 1987 and recorded among the Land Records of Howard
County, Maryland in Liber 1665, folio 270.
Being the same land which was conveyed by MJF-2 Limited Partnership to Three
Centre Park Associates Limited Partnership by Deed dated June 5, 1987 and
recorded among the Land Records of Howard County, Maryland in Liber 1665,
folio 270.
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Exhibit B
---------
DEFINITIONS
"Acceleration" is defined in Section 14.2(a)(i).
"Accumulations" is defined in Section 2.1(xii).
"Accumulations Depository" is defined in Section 6.2(a).
"Additional Funds" is defined in Section 7.4(v).
"Annual Financial Statement" is defined in Section 10.1(a).
"Assessments" is defined as all assessments now or hereafter levied, assessed or
imposed against the Property.
"Assignment" is defined as the Assignment of Leases and Rents dated of even date
with this Deed of Trust made by Grantor for the benefit of Lender.
"Bankruptcy Code" means Title 11 of the United States Code.
"Borrower" is defined in the Recitals.
"Budget" is defined in Section 10.2.
"Business Days" is defined as any day on which commercial banks are not
authorized or required by Law to close in New York, New York.
"Casualty" is defined as damage to or destruction of the Property by fire or
other casualty.
"Code" is defined as the Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"Condemnation" is defined as the permanent or temporary taking of all or any
portion of the Property, or any interest therein or right accruing thereto, by
the exercise of the right of eminent domain (including any transfer in lieu of
or in anticipation of the exercise of the right), inverse condemnation or any
similar injury or damage to or decrease in the value of the Property, including
severance and change in the grade of any streets
"Condemnation Awards" is defined in Section 2.1(viii).
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<PAGE>
"Condemnation Proceeding" is defined as a Proceeding that could result in a
Condemnation.
"CPA" is defined as an independent certified public accountant satisfactory to
Lender.
"Debt" means the Principal, the Interest, the Late Charges, the prepayment
Premiums, the Expenses, any additional advances made by Lender in connection
with the Loan and all other amounts payable under the Loan Documents.
"Debt Service Payments" is defined as the monthly installments of principal and
interest payable by Borrower to Lender as set forth in the Note.
"Deed of Trust" is defined as this Indemnity Deed of Trust, Assignment of Leases
and Rents and Security Agreement.
"Destruction Event" is defined in Section 7.4.
"Environmental Activity" is defined as any actual, suspected or threatened
abatement, cleanup, disposal, generation, handling, manufacture, possession,
release, remediation, removal, storage, transportation, treatment or use of any
Hazardous Material. The actual, suspected or threatened presence of any
Hazardous Material, or the actual, suspected or threatened noncompliance with
any Environmental Laws, will be deemed Environmental Activity.
"Environmental Indemnity" is defined as the Environmental Indemnity Agreement of
even date with this Deed of Trust by Grantor and Borrower to Lender.
"Environmental Laws" is defined as all Laws pertaining to health, safety,
protection of the environment, natural resources, conservation, wildlife, waste
management, Environmental Activities and pollution.
"Environmental Report" is defined as the report prepared by ___________, dated
__________, as amended.
"ERISA" is defined in Section 8.3(a).
"Event of Default" is defined in Section 14.1.
"Existing Member" is defined in Section 12.1(b).
"Expenses" is defined in Section 11.1(a).
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<PAGE>
"Financial Books and Records" is defined as detailed accounts of the income and
expenses of the Property and of Grantor and all other data, records and
information that either are specifically referred to in the Article entitled
"FINANCIAL REPORTING" or are necessary to the preparation of any of the
statements, reports or certificates required under such Article and includes all
supporting schedules prepared or used by the CPA in auditing the Annual
Financial Statement or in issuing its opinion.
"Financing Documents" is defined as the Guaranty, this Deed of Trust, the
Assignment and all documents now or hereafter executed by Grantor or held by
Lender or Trustees relating to the Guaranty, including all amendments.
"Fiscal Year" is defined as any calendar year or partial calendar year during
the Term.
"Fixtures and Personal Property" is defined in Section 2.1(iv).
"Government" is defined as any federal, state or municipal governmental or
quasi-governmental authority including executive, legislative or judicial
branch, division and any subdivision or agency of any of them and any entity to
which any of them has delegated authority.
"Grantor" is defined in the introductory paragraph.
"Guaranty" is defined in the introductory paragraph.
"Hazardous Materials" is defined as any by-product, chemical, compound,
contaminant, pollutant, product, substance, waste or other material (i) that is
hazardous or toxic or (ii) the abatement, cleanup, discharge, disposal,
emission, exposure to, generation, handling, manufacture, possession, presence,
release, removal, remediation, storage, transportation, treatment or use of
which is controlled, prohibited or regulated by any Environmental Laws,
including asbestos, petroleum and petroleum products and polychlorinated
biphenyls.
"Imposition Penalty Date" is defined in Section 6.1(a).
"Impositions" is defined as all Taxes, Assessments, ground rent, if any, water
and sewer rents, fees and charges, levies, permit, inspection and license fees
and other dues, charges or impositions, including all charges and license fees
for the use of vaults, chutes and similar areas adjoining the Land, maintenance
and similar charges and charges for utility services, in each instance whether
now or in the future, directly or indirectly, levied, assessed or imposed on the
Property or Grantor and whether levied, assessed or imposed as excise, privilege
or property taxes.
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"Improvements" is defined in Section 2.1(ii).
"Insurance Premiums" is defined as all present and future premiums and other
charges due and payable on policies of fire, rental value and other insurance
covering the Property and required pursuant to the provisions of this Deed of
Trust.
"Insurance Proceeds" is defined in Section 2.1(ix).
"Insurers" is defined in Section 7.1(c).
"Institutional Investor" is defined as any bank, savings institution, charitable
foundation, insurance company, real estate investment trust, pension fund or
investment advisor registered under the Investment Advisors Act of 1940, as
amended, and acting as trustee or agent.
"Land" is defined in the Recitals.
"Late Charge" is defined in the Note.
"Law" is defined as all present and future codes, constitutions, cases,
opinions, rules, manuals, regulations, determinations, laws, orders, ordinances,
requirements and statutes, as amended, of any Government that affect or that may
be interpreted to affect the Property, Grantor or the Loan, including amendments
and all guidance documents and publications promulgated thereunder.
"Leases" is defined as all present and future leases, subleases, licenses and
other agreements for the use and occupancy of the Land and Improvements, any
related guarantees and including any use and occupancy arrangements created
pursuant to Section 365 (h) of the Bankruptcy Code or otherwise in connection
with the commencement or continuation of any bankruptcy, reorganization,
arrangement, insolvency, dissolution, receivership or similar Proceedings, or
any assignment for the benefit of creditors, in respect of any tenant or other
occupant of the Land and Improvements.
"Lender" is defined in the introductory paragraph.
"Loan" is defined in the Recitals.
"Loan Documents" means the Note and the Financing Documents.
"Material Environmental Contamination" is defined as contamination of the
Property with Hazardous Materials (i) that constitutes a violation of one or
more Environmental Laws; (ii) for which there is a significant possibility that
remediation will be required under
76
<PAGE>
Environmental Laws; (iii) that results in a material risk of liability or
expense to Lender; or (iv) that diminishes the value of the Property.
"Maturity Date" is defined in the Recitals.
"Maximum Interest Rate" is defined as the maximum rate of interest, if any,
permitted by Law as of the date of this Deed of Trust to be charged with respect
to the Loan.
"Note" is defined in the Recitals.
"Note Payments" is defined in the Note.
"Notices" is defined in Section 17.1.
"Obligations" is defined in the Recitals.
"Permitted Exceptions" is defined as the matters shown in Schedule B, Part 1 and
2 of the title insurance policy insuring the lien of this Deed of Trust.
"Permitted Transfers" is defined in Section 12.2.
"Permitted Use" is defined as use as a first-class commercial office building
consistent in character, size and age of similar buildings in the
Baltimore-Washington, D.C. suburban area, and uses incidentally and directly
related to such use.
"Pledge and Security Agreement" is defined in Section 6.2.
"Policies" is defined in Section 7.1(b).
"Prepayment Premium" is defined in the Note.
"Principal" is defined in the Recitals.
"Proceeding" is defined as a pending or threatened action, claim or litigation
before a legal, equitable or administrative tribunal having proper jurisdiction.
"Proceeds" is defined in Section 7.2(c).
"Property" is defined in Section 2.1.
"Property Documents" is defined in Section 2.1(v).
77
<PAGE>
"Receiver" is defined as a receiver, custodian, trustee, liquidator or
conservator of the Property.
"Remedies" is defined in Section 14.2(a).
"Rents" is defined as all rents, prepaid rents, percentage, participation or
contingent rents, issues, profits, proceeds, revenues and other consideration
accruing under the Leases or otherwise derived from the use and occupancy of the
Land or the Improvements, including tenant contributions to expenses, security
deposits, royalties and contingent rent, if any, all other fees or payments paid
to or for the benefit of Grantor and any payments received pursuant to Section
502(b) of the Bankruptcy Code or otherwise in connection with the commencement
or continuance of any bankruptcy, reorganization, arrangement, insolvency,
dissolution, receivership or similar proceedings, or any assignment for the
benefit of creditors, in respect of any tenant or other occupant of the Land or
the Improvements and all claims as a creditor in connection with any of the
foregoing.
"Restoration" is defined as the restoration of the Property after a Destruction
Event as nearly as possible to its condition immediately prior to the
Destruction Event, in accordance with the plans and specifications, in a
first-class workmanlike manner using materials substantially equivalent in
quality and character to those used for the original improvements, in accordance
with Law and free and clear of all liens, encumbrances or other charges other
than this Deed of Trust and the Permitted Exceptions.
"Restoration Completion Date" is defined in Section 7.4(viii).
"Restoration Funds" is defined in Section 7.5(b).
"Taxes" is defined as all present and future real estate taxes levied, assessed
or imposed against the Property.
"Term" is defined as the scheduled term of this Deed of Trust commencing on the
date Lender makes the first disbursement of the Loan and terminating on the
Maturity Date.
"Transfer" is defined in Section 12.1(a).
"Uniform Commercial Code" is defined as the Uniform Commercial Code in effect in
the jurisdiction where the Land is located.
78
<PAGE>
Exhibit C
---------
RULES OF CONSTRUCTION
(a) References in any Financing Document to numbered Articles or
Sections are references to the Articles and Sections of that Financing Document.
References in any Financing Document to lettered Exhibits are references to the
Exhibits attached to that Financing Document, all of which are incorporated in
and constitute a part of that Financing Document. Article, Section and Exhibit
captions used in any Financing Document are for reference only and do not
describe or limit the substance, scope or intent of that Financing Document or
the individual Articles, Sections or Exhibits of that Financing Document.
(b) The terms "include", "including" and similar terms are construed as
if followed by the phrase "without limitation".
(c) The terms "Land", "Improvements", "Fixtures and Personal Property",
"Condemnation Awards", "Insurance Proceeds" and "Property" are construed as if
followed by the phrase "or any part thereof".
(d) Any agreement by or duty imposed on Grantor or Borrower in any
Financing Document to perform any obligation or to refrain from any act or
omission constitutes a covenant running with the ownership or occupancy of the
Land and the Improvements, which will bind all parties hereto and their
respective successors and assigns, and all lessees, subtenants and assigns of
same, and all occupants and subsequent owners of the Property, and will inure to
the benefit of Lender and all subsequent holders of the Note and this Deed of
Trust and includes a covenant by Grantor and Borrower to cause its partners,
members, principals, agents, representatives and employees to perform the
obligation or to refrain from the act or omission in accordance with the
Financing Documents. Any statement or disclosure contained in any Financing
Document about facts or circumstances relating to the Property, Grantor or
Borrower or the Loan constitutes a representation and warranty by Grantor and
Borrower made as of the date of the Financing Document in which the statement or
disclosure is contained.
(e) The term "to Grantor's knowledge" is construed as meaning to the
best of Grantor's knowledge after diligent inquiry.
(f) The singular of any word includes the plural and the plural
includes the singular. The use of any gender includes all genders.
(g) The terms "person", "party" and "entity" include natural persons,
firms, partnerships, limited liability companies and partnerships, corporations
and any other public or
79
<PAGE>
private legal entity.
(h) The term "provisions" includes terms, covenants, conditions,
agreements and requirements.
(i) The term "amend" includes modify, supplement, renew, extend,
replace or substitute and the term "amendment" includes modification,
supplement, renewal, extension, replacement and substitution.
(j) Reference to any specific Law or to any document or agreement,
including the Note, this Deed of Trust, any of the other Financing Documents,
the Leases and Property Documents includes any future amendments to the Law,
document or agreement, as the case may be.
(k) No inference in favor of or against a party with respect to any
provision in any Financing Document may be drawn from the fact that the party
drafted the Financing Document.
(l) The term "certificate" means the sworn, notarized statement of the
entity giving the certificate, made by a duly authorized person satisfactory to
Lender affirming the truth and accuracy of every statement in the certificate.
Any document that is "certified" means the document has been appended to a
certificate of the entity certifying the document that affirms the truth and
accuracy of everything in the document being certified. In all instances the
entity issuing a certificate must be satisfactory to Lender.
(m) Any appointment of Lender as Grantor's attorney-in-fact is
irrevocable and coupled with an interest. Lender may appoint a substitute
attorney-in-fact. Grantor ratifies all actions taken by the attorney-in-fact
but, nevertheless, if Lender requests, Grantor will specifically ratify any
action taken by the attorney-in-fact by executing and delivering to the
attorney-in-fact or to any entity designated by the attorney-in-fact all
documents necessary to effect the ratification.
(n) Any document, instrument or agreement to be delivered by Grantor
will be in form and content satisfactory to Lender.
(o) All obligations, rights, remedies and waivers contained in the Note
or the Financing Documents will be construed as being limited only to the extent
required to be enforceable under the Law.
(p) The unmodified word "days" means calendar days.
80
<PAGE>
Exhibit D
---------
Parcel 1
- --------
1. Deed of Easement and Agreement recorded among the Land Records of Anne
Arundel County, Maryland, in Liber 5721, Folio 333.
2. Cross Parking Easement Declaration recorded among the Land Records of
Anne Arundel County, Maryland, in Liber 5459, Folio 620.
Parcel 2
- --------
1. Declaration of Reciprocal Parking and Access Easements recorded among the
Land Records of Anne Arundel County, Maryland, in Liber 7473, Folio 720.
Parcel 3
- --------
1. Declaration of Reciprocal Parking and Access Easements recorded among the
Land Records of Anne Arundel County, Maryland, in Liber 7473, Folio 720.
2. Declaration of Reciprocal Parking and Access Easements recorded among the
Land Records of Anne Arundel County, Maryland, in Liber 7473, Folio 747.
Parcels 5 and 6
- ---------------
1. Cross Easement Agreement dated December 27, 1985, and recorded among the
Land Records of Prince George's County, Maryland, at Liber 6245, Folio 608.
2. Reciprocal Parking Easement dated December 1, 1987, and recorded among the
Land Records of Prince George's County, Maryland, at Liber 6855, Folio 563.
Parcel 7
- --------
1. Deed and Agreement dated June 5, 1987, and recorded among the Land
Records of Howard County, Maryland, in Liber 1665, Folio 270.
Parcel 8
- --------
1. Agreement and Declaration of Annexation recorded among the Land Records
of Howard County, Maryland, in Liber 4047, Folio 377.
2. Deed recorded among the Land Records of Howard County, Maryland, in Liber
4047, 381.
81
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,049
<SECURITIES> 0
<RECEIVABLES> 629
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 441,817
<DEPRECIATION> (6,984)
<TOTAL-ASSETS> 447,984
<CURRENT-LIABILITIES> 0
<BONDS> 205,338
0
9
<COMMON> 160
<OTHER-SE> 157,132
<TOTAL-LIABILITY-AND-EQUITY> 447,984
<SALES> 0
<TOTAL-REVENUES> 23,179
<CGS> 0
<TOTAL-COSTS> 8,773
<OTHER-EXPENSES> 1,692<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,690
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,769
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
<FN>
<F1>Reflects nonrecurring reformation costs of $ 637 associated with the
Reformation of the Company as a Maryland Trust.
</FN>
</TABLE>
