<PAGE>
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 EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-12566
-------------------
G&L REALTY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 95-4449388
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
439 N. BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 273-9930
-----------------
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
Registrants was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes X No
--- ---.
The number of shares outstanding of the Registrant's Common Stock, as
of August 13, 1996, was 4,062,500 shares.
<PAGE>
G&L REALTY CORP.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Part I Financial Information.
Item 1 Condensed Consolidated Balance Sheets as of
June 30, 1996 (unaudited) and December 31, 1995. 3
Condensed Consolidated Statements of Operations for
the Three Month and the Six Month Periods Ended
June 30, 1996 and 1995 (unaudited). 4
Condensed Consolidated Statements of Cash Flows for
the Six Month Periods Ended June 30, 1996 and 1995 5
(unaudited).
Condensed Consolidated Statements of Cash Flows:
Supplemental Schedule of Noncash Financing 6
Activities for the Six Month Periods Ended
June 30, 1996 and 1995 (unaudited).
Notes to Condensed Consolidated Financial
Statements (unaudited). 7 - 11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12 - 15
Part II Other Information.
Item 1 Legal Proceedings. 16
Item 2 Changes in Securities. 16
Item 3 Defaults Upon Senior Securities. 16
Item 4 Submission of Matters to a Vote of Security 16
Holders.
Item 5 Other Information. 16
Item 6 Exhibits and Reports on Form 8-K. 16
Signature. 17
Exhibit 18
Index
</TABLE>
Page 2
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------------------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Rentals properties:
Land $ 14,055,674 $ 15,262,221
Buildings and improvements, net 58,959,630 76,884,946
------------ ------------
Total rental properties 73,015,304 92,147,167
Cash and restricted cash 2,746,260 1,280,191
Accounts receivable, net 380,502 129,265
Tenant rent and reimbursements receivable, net 373,333 709,436
Unbilled rent receivable, net 1,324,214 2,581,756
Mortgage loans and bonds receivable 44,235,415 33,633,635
Deferred charges and other assets, net 6,084,085 2,865,707
------------ ------------
TOTAL ASSETS $128,159,113 $133,347,157
============ ============
LIABILITIES AND STOCKHOLDERS'EQUITY
- -----------------------------------
Liabilities:
Notes payable $100,352,993 $111,626,872
Accounts payable and other liabilities 2,183,496 1,766,718
Distributions payable 1,459,529 1,401,607
Tenant security deposits 785,943 1,032,437
------------ ------------
Total liabilities 104,781,961 115,827,634
Minority interest in consolidated partnership (2,775,042) (2,846,777)
Minority interest in Operating Partnership 3,170,000 2,099,204
Stockholders' equity:
Common shares - $.01 par value, 50,000,000 shares
authorized, 4,062,500 and 4,062,000 shares issued and
outstanding as of 6/30/96 and 12/31/95 respectively 40,625 40,620
Preferred shares - $.01 par value, 10,000,000
shares authorized, no shares issued and outstanding 0 0
Additional paid - in capital 23,710,054 23,705,496
Distributions in excess of net income (768,485) (5,479,020)
------------ ------------
Total stockholders' equity 22,982,194 18,267,096
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $128,159,113 $133,347,157
============ ============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 3
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
1996 1995 1996 1995
---------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Rental $ 3,651,005 $4,291,219 $ 7,673,169 $8,500,254
Tenant reimbursements 118,329 144,871 257,095 313,959
Parking 288,303 366,160 632,952 716,853
Interest, loan fees and related income 1,626,119 14,281 3,271,221 24,178
Other 137,804 220,489 224,348 369,696
----------- ---------- ----------- ----------
Total revenues 5,821,560 5,037,020 12,058,785 9,924,940
=========== ========== =========== ==========
EXPENSES:
Property operations 1,204,328 1,318,138 2,463,932 2,613,608
Earthquake costs (reimbursements) 112,000 (133,162)
Depreciation and amortization 840,206 1,021,433 1,657,335 2,066,897
Interest 2,080,922 1,333,246 4,296,703 2,674,580
General and administrative 521,212 440,884 922,841 836,146
Loss on disposition of rental property 4,873,788 4,873,788
----------- ---------- ----------- ----------
Total expenses 9,520,456 4,225,701 14,214,599 8,058,069
----------- ---------- ----------- ----------
Income (loss) from operations (3,698,896) 811,319 (2,155,814) 1,866,871
Minority interest in consolidated partnership (34,616) (43,751) (71,735) (70,451)
Minority interest in Operating Partnership 380,199 (77,665) 227,354 (179,989)
----------- ---------- ----------- ----------
Net income (loss) before extraordinary gain (3,353,313) 689,903 (2,000,195) 1,616,431
Extraordinary gain on retirement of debt 9,310,730 9,310,730
----------- ---------- ----------- ----------
Net income $ 5,957,417 $ 689,903 $ 7,310,535 $1,616,431
=========== ========== =========== ==========
Per share data:
Before extraordinary gain $ (0.82) $ 0.17 $ (0.49) $ 0.39
Extraordinary gain 2.29 2.29
----------- ---------- ----------- ----------
Net income $ 1.47 $ 0.17 $ 1.80 $ 0.39
=========== ========== =========== ==========
Weighted average number of outstanding shares 4,062,500 4,080,077 4,062,470 4,119,539
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 4
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,310,535 $ 1,616,431
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary gain on retirement of debt (9,310,730)
Minority interests (155,619) 250,440
Loss on disposition of rental property 4,873,788
Depreciation and amortization 1,657,335 2,066,897
Unbilled rent receivable, net 148,260 (128,252)
(Increase) decrease in:
Deferred charges and other assets (163,193) (189,865)
Accounts receivable (341,895) 587,852
Tenant rent and reimbursements receivable 86,537 (200,704)
Increase (decrease) in:
Accounts payable and other liabilities (180,300) (223,893)
Tenant security deposits 16,242 49,382
------------ -----------
Net cash provided by operating activities 3,940,960 3,828,288
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to rental properties (944,858) (1,011,857)
Purchase of rental properties (1,822,395)
Acquisition of assets held for sale (3,005,251)
Pre-acquisition costs (812,370) (167,321)
Return of pre-acquisition deposits 1,115,104
Leasing commissions (67,264) (16,409)
Increase in notes and bonds receivable (10,601,780) (1,743,941)
------------ -----------
Net cash used in investing activities (16,138,814) (2,939,528)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 31,800,000 3,626,447
Deferred fees and financing costs (1,095,900) (488,373)
Repayments of notes payable (14,687,241) (186,642)
Sale (Purchase) of common stock and partnership units 553,573 (812,050)
Distributions (2,906,509) (3,407,478)
------------ -----------
Net cash provided by (used in) financing activities 13,663,923 (1,268,096)
------------ -----------
NET INCREASE (DECREASE) IN CASH AND
RESTRICTED CASH 1,466,069 (379,336)
BEGINNING CASH AND RESTRICTED CASH 1,280,191 1,168,983
------------ -----------
ENDING CASH AND RESTRICTED CASH $ 2,746,260 $ 789,647
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 4,120,139 $ 2,998,700
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 5
<PAGE>
G&L REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
For the Six Month Periods Ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------------------------
<S> <C> <C>
Net cost of assets transferred to lien holder:
Land $ 2,046,547
Buildings and improvements 21,600,736
Tenant improvements 477,245
Accumulated depreciation (3,557,101)
------------
Total rental property 20,567,427
Unbilled rent receivable, net 1,109,282
Tenant and other accounts receivable 340,224
Leasing commissions, net 180,782
Prepaid expense and other assets 87,424
Accounts payable and other liabilities 588,649
-----------
Net cost of assets transferred to lien holder 22,873,788
Nonrecourse debt extinguished 28,500,000
-----------
Excess of nonrecourse debt over net cost of assets surrendered $ 5,626,212
===========
Noncash gain from transfer of property to lien holder:
Extraordinary gain on retirement of debt $ 9,310,730
Minority interest share of extraordinary gain 1,055,650
-----------
Extraordinary gain on retirement of debt 10,366,380
Extraordinary loss related to other refinancing transactions 133,620
-----------
Extraordinary gain on transfer of property to lien holder 10,500,000
Loss on disposition of rental property (4,873,788)
-----------
Noncash gain from transfer of property to lien holder $ 5,626,212
===========
Distributions declared not yet paid $ 1,459,529 $1,401,607
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
Page 6
<PAGE>
G&L REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
G&L Realty Corp. (the "Company") was formed as a Maryland corporation on
September 15, 1993 by Daniel M. Gottlieb and Steven D. Lebowitz to continue the
ownership, management, acquisition and development operations of medical office
buildings conducted previously by G&L Development, the Company's predecessor.
All of the Company's assets are held by, and all of its operations are conducted
through the following Delaware limited partnerships:
G&L Realty Partnership, L.P. (the "Operating Partnership")
G&L Financing Partnership, L.P. (the "Financing Partnership") (liquidated
on August 17, 1995)
G&L Realty Financing Partnership II, L.P. (the "Realty Financing
Partnership")
G&L Medical Partnership, L.P. (the "Medical Partnership")
The Company, as the sole general partner and as owner of an approximately 90%
ownership interest, controls the Operating Partnership. The Company controlled
the Financing Partnership through its wholly owned subsidiary, G&L Financing,
Inc., a Delaware corporation, which is the sole general partner and 1% owner of
the Financing Partnership. The sole limited partner and 99% owner of the
Financing Partnership is the Operating Partnership. As a result of the
refinancing of debt, the Financing Partnership was liquidated effective August
17, 1995 and the assets it owned were transferred to its partners. The Company
also controls the Realty Financing Partnership through its wholly owned
subsidiary G&L Realty Financing II, Inc., a Delaware corporation, which is the
sole general partner and 1% owner of the Realty Financing Partnership. The sole
limited partner and 99% owner of the Realty Financing Partnership is the
Operating Partnership. In May 1996, in conjunction with a financing transaction,
the Company transferred three buildings into a newly formed limited partnership,
G&L Medical Partnership, L.P., a Delaware limited partnership. The sole limited
partner and 99% owner of G&L Medical Partnership, L.P. is the Operating
Partnership. The Company controls G&L Medical Partnership, L.P., through its
wholly owned subsidiary G&L Medical, Inc., a Delaware corporation, which is the
sole general partner and 1% owner of G&L Medical Partnership, L.P.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business - The Company is a growth-oriented health care Real Estate
Investment Trust ("REIT") with two major areas of operation: the Medical Office
Building Division, which owns, develops and manages high-quality, strategically
located properties, and the Senior Care Division, which facilitates the sale of
skilled nursing and assisted care facilities to not-for-profit organizations
throughout the United States.
Basis of Presentation - The accompanying condensed consolidated financial
statements include the accounts of the Company. The interests in 435 North
Roxbury Drive, Ltd. not owned by the Company have been reflected in minority
interests. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Page 7
<PAGE>
The information for the six month periods ended June 30, 1996 and 1995 has
not been audited by independent accountants, but includes all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for such period.
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of results that might be expected for the full fiscal
year.
Certain information and footnote disclosures normally included in annual
financial statements have been omitted. The Company believes that the
disclosures included in these financial statements are adequate for a fair
presentation and conform to reporting requirements established by the Securities
and Exchange Commission (SEC). The condensed consolidated financial statements
as presented herein should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-K as filed with the SEC.
The Condensed Consolidated Balance Sheets reflect the combined assets and
liabilities of the Company. The Condensed Consolidated Statements of Operations
and Cash Flows have been prepared to reflect the operations of the Company for
the periods ended June 30, 1996 and 1995.
Cash and Restricted Cash - As of June 30, 1996, the Company had $1,674,603
in a segregated interest bearing account to be used for debt service due in July
1996, current property taxes, insurance and property improvements.
Assets Held for Sale - The Company is currently involved in negotiations to
sell certain assets. The associated cost of these assets is included in the
Company's balance sheet as assets held for sale. The net realizable value of the
assets held for sale approximates cost.
Per Share Data - Earnings per share are computed based upon the weighted
average number of common shares outstanding during the period. The treasury
stock method is used to determine the number of incremental common equivalent
shares resulting from options granted under the incentive and non-qualified
share options plans. The effect of such incremental common equivalent shares is
considered to be non-dilutive.
3. BUILDINGS AND IMPROVEMENTS
Buildings and improvements consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-----------------------------
(Unaudited)
<S> <C> <C>
Buildings and improvements 64,218,490 $ 84,638,984
Tenant improvements 3,706,420 3,450,249
Furniture, fixtures and equipment 309,665 296,070
---------- ------------
68,234,575 88,385,303
Less accumulated depreciation and amortization (9,274,945) (11,500,357)
---------- ------------
Total 58,959,630 $ 76,884,946
========== ============
</TABLE>
Page 8
<PAGE>
4. DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-----------------------------
(Unaudited)
<S> <C> <C>
Loan fees 2,052,734 $1,459,051
Pre-acquisition costs 814,230 1,203,838
Leasing commissions 643,733 1,115,595
Assets held for sale 3,005,251
Prepaid expense and other assets 209,285 46,643
--------- ----------
6,725,233 3,825,127
Less accumulated amortization (641,148) (959,420)
--------- ----------
Total 6,084,085 $2,865,707
========= ==========
</TABLE>
5. STOCKHOLDERS' EQUITY
As described in Note 2, the Company has elected to be treated, for federal
income tax purposes, as a REIT. As such, the Company is required to distribute
annually, in the form of distributions to its stockholders, at least 95% of its
taxable income. In reporting periods in which distributions exceed net income,
stockholders' equity will be reduced by the distributions in excess of net
income in such period and will be increased by the excess of net income over
distributions in reporting periods in which net income exceeds distributions.
For tax reporting purposes, a portion of the dividends declared represents a
return of capital. The following table reconciles net income and distributions
in excess of net income and the related per share data for the six month period
ended June 30, 1996 and for the year ended December 31, 1995:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------------------------
(Unaudited)
<S> <C> <C>
Distributions in excess of net income
at beginning of period ($5,479,020) ($3,753,475)
Net income during period 7,310,535 3,341,405
Less: Distributions declared (2,600,000) (5,066,950)
----------- -----------
Distributions in excess of net income ($ 768,485) ($5,479,020)
=========== ===========
</TABLE>
Page 9
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
None of the Company, the Operating Partnership, the Financing Partnership,
the Realty Financing Partnership, the Medical Partnership, nor any of the assets
within their portfolio of medical office buildings, parking facilities, and
retail space (the "Properties") is currently a party to any material litigation.
As discussed in Note 9, the Company has an outstanding commitment to take out an
additional $16.2 million in mortgage debt.
7. PROPERTY TRANSFERRED TO LIEN HOLDER
On May 24, 1996, the Operating Partnership transferred ownership of a
medical office building located at 436 North Bedford Drive, in Beverly Hills,
California (the "Property"), to Loan Asset Structured Trust I, a Delaware trust
(the "Holder"), which held the $28.5 million lien on the Property, in
satisfaction of the lien.
As part of the transaction, the Operating Partnership funded the security
deposit obligations and paid the Holder $250,000 for a right of first refusal in
the event the Holder seeks to sell the Property in the near future. In
addition, the Holder has retained the Operating Partnership to manage the
Property.
Additional information with respect to the aforementioned transaction may
be found in the Pro Forma Condensed Consolidated Statements of Operations for
the periods ended December 31, 1995 and March 31, 1996, filed as exhibits to the
Company's Form 8-K/A on July 22, 1996.
8. RELATED PARTY TRANSACTION
On June 14, 1996 the Operating Partnership and 445 Bedford, a California
limited liability company ("445 LLC"), acquired undivided tenant-in-common
interests in a hospital facility, two medical office buildings and a parcel of
vacant land in Tustin, California (the "Tustin Properties"). The Tustin
Properties were acquired for a sum of $4,514,154, of which $1,357,020 was
contributed in cash by 445 LLC. Daniel M. Gottlieb and Steven D. Lebowitz, both
directors and officers of the Company, and Reese L. Milner II, a director of the
Company, have financial interests in 445 LLC.
The Company acquired Mr. Milner's interest in 445 LLC for $808,000, after
which 445 LLC redeemed the Company's interest in 445 LLC for an increased
interest in the Tustin Properties. On June 28, 1996, 445 LLC contributed its
remaining interest in the Tustin Properties to the Company in exchange for
39,215 newly issued Operating Partnership units. The newly issued Operating
Partnership units are convertible into Company stock one year from the date of
issuance on a one-for-one basis. These new units were issued at an effective
rate of $14.00 per unit which included a premium over the $13.00 closing price
of the Company's common stock on May 1, 1996, the commitment date.
The funds contributed by 445 LLC were obtained as part of a tax deferred
exchange involving the sale of real estate held by 445 LLC to an unrelated third
party as previously disclosed in the Company's Form 10-Q for the quarter ended
March 31, 1996 filed on May 14, 1996.
Page 10
<PAGE>
9. LOAN COMMITMENT AND MORTGAGE LOAN REFINANCING
In May of 1996, the Operating Partnership entered into a commitment to
refinance $36 million of its mortgage debt for new ten year fixed rate
financing. Initially, the company refinanced approximately $19.8 million of
existing debt. This new debt is collateralized by the medical office buildings
and real property located at 12701 Schabarum Avenue in Irwindale, California;
4150 Regents Park Row in La Jolla, California; and 4955 Van Nuys Boulevard in
Sherman Oaks, California. The Company has plans to acquire additional rental
properties or refinance an additional $16.2 million of debt in order to fulfill
its remaining loan commitment.
Negotiations are progressing with Citibank, the existing lender, regarding
the $9 million note secured by 435 North Roxbury Drive. Although the previous
loan commitment expired on June 1, 1996, the Company has received a draft loan
document from Citibank extending the loan for three years. Under the new loan
terms, the Company will be required to begin reducing the outstanding principal
balance of the loan. Previously, the loan required monthly payments of interest
only. Management believes the extension will be completed shortly.
During the second quarter, the Company obtained three new loans totaling
$12 million from GMAC Commercial Mortgage Corporation to fund new short term
senior care loans to nonprofit organizations. These three loans require monthly
payments of interest only at various interest rates ranging from 8.5 to 9.5
percent. The GMAC loans are secured by the underlying nursing facilities and
are guaranteed by the Company.
Page 11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Unaudited Condensed Consolidated Financial Statements and Notes thereto included
elsewhere in this Form 10-Q.
Except for the historical information contained herein, the matters
discussed in this form 10-Q are forward-looking statements which involve risk
and uncertainties. The risk and uncertainties include but are not limited to
economic, competitive, governmental and technological factors affecting the
Company's operations, markets, products, services and prices, and other factors
discussed in the Company's filings with the Securities and Exchange Commission.
Funds from Operations
- ---------------------
Industry analysts generally consider Funds From Operations ("FFO") to be an
appropriate measure of the performance of a REIT. The Company believes that in
order to facilitate a clear understanding of the operating results of the
Company, FFO should be examined in conjunction with the net income as presented
in the Company's Condensed Consolidated Financial Statements and Notes thereto
included elsewhere in this Form 10-Q and the Additional Data presented in the
table on the following page. The table presents an analysis of FFO and
Additional Data for the quarters ended June 30, 1996 and 1995 and the six month
periods ended June 30, 1996 and 1995 for the Operating Partnership. The amounts
presented in the table on the following page are based upon the new guidelines
established by the National Association of Real Estate Investment Trusts
("NAREIT"). The primary difference relates to the treatment of average or
straight-line rents and deferred financing costs.
Under the former guidelines, FFO included rental income as received rather
than averaging rent receipts over the life of a lease. Also, expenses incurred
as a result of amortizing deferred financing costs were excluded from FFO. The
new NAREIT guidelines recommend the use of average rental revenue (i.e.
straight-line rents) and includes the amortization of deferred financing costs
in the calculation of FFO. FFO amounts previously reported for 1995 were
restated in the Company's Form 10-Q for the three months ended March 31, 1996
filed on May 14, 1996. The table on the following page reflects the restated
1995 FFO for comparative purposes.
Page 12
<PAGE>
<TABLE>
<CAPTION>
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
1996 1995 1996 1995
-------------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Funds from Operations
- ---------------------
Net income 5,957 $ 690 $ 7,311 $1,617
Extraordinary gain (9,311) (9,311)
Minority interest in Operating Partnership (380) 78 (227) 180
-------- ------ ------- ------
Net income (loss) for Operating Partnership (3,734) 768 (2,227) 1,797
Earthquake costs (net) 112 (133)
Loss on disposition of real property 4,874 4,874
Depreciation of real estate assets 642 833 1,309 1,632
Amortization of deferred lease costs 30 48 70 93
Adjustment for minority interest in
consolidated partnership (7) (9) (14) (15)
------- ------ ------- ------
FUNDS FROM OPERATIONS $ 1,805 $1,752 $ 4,012 $3,374
======= ====== ======= ======
FFO per share and unit $0.40 $0.39 $0.89 $0.74
Weighted average number of outstanding
shares and units 4,523 4,539 4,522 4,579
Additional Data
- ---------------
Building improvements 128 145 198 251
Tenant improvements 391 347 719 741
Furniture, fixtures & equipment 25 12 27 26
Leasing commissions 34 43 67 96
Accrued rent in excess of billed rent (114) 99 (148) 128
Depreciation and Amortization
- -----------------------------
Depreciation of real estate assets 642 832 1,309 1,630
Depreciation of non-real estate assets 11 6 22 12
Amortization of deferred lease costs 30 48 70 93
Amortization of capitalized financing costs 157 135 256 331
</TABLE>
Page 13
<PAGE>
Results of Operations
- ---------------------
Comparison of the Three Month Period Ended June 30, 1996 versus the Three Month
Period Ended June 30, 1995.
Revenues increased by $784,540 from $5,037,020 in the second quarter of
1995 to $5,821,560 for the same period in 1996. Interest, loans fees and
related revenues derived from the new Senior Care Division contributed to the
increase. Rents, tenant reimbursements and parking revenues were down from the
second quarter of 1995. This decline is attributed to the transfer of the 436
North Bedford Drive property to the lender in May 1996. Average occupancy at
the Company's properties is currently at 95 percent. The Company expects
current leasing activities to push occupancy levels to 96 percent by year end
due to the improving market for medical office space.
Expenses increased approximately $5.29 million from $4,225,701 in the
second quarter of 1995 to $9,520,456 for the same period in 1996. The primary
component of this increase was the $4.87 million loss resulting from the
transfer of the medical office building located at 436 North Bedford Drive in
Beverly Hills, California to the lien holder in satisfaction of the $28.5
million loan. Added interest expense was incurred in conjunction with the
Senior Care loan program. Interest costs increased $747,676 from $1,333,246 in
the second quarter of 1995 to $2,080,922 in the second quarter of 1996.
There was an offsetting $9.3 million extraordinary gain which resulted
from retirement of the debt associated with the 436 North Bedford Drive property
and other refinancing activities. Adjusted for minority interests, the property
transfer and related debt reduction contributed approximately $4.9 million to
net income after extraordinary items.
Comparison of the Six Month Period Ended June 30, 1996 versus the Six Month
Period Ended June 30, 1995
Revenues increased by approximately $2.13 million from $9,924,940 in the
six months ended June 30, 1995 to $12,058,785 for the same period in 1996. The
new Senior Care Division was responsible for the increase, which resulted from
interest, loan fees and related revenues. Similar to the second quarter results
discussed above, rents, tenant reimbursements and parking revenues were down as
a result of the transfer of the property located at 436 North Bedford Drive to
the lien holder.
Expenses increased approximately $6.15 million from $8,058,069 in the six
months ended June 30, 1995 to $14,214,599 for the same period in 1996. The
majority of this increase is attributed to a $4.87 million loss on disposition
of the 436 North Bedford Drive rental property. As mentioned above, interest
expense increased approximately $1.6 million as a result of the additional debt
needed to finance the Senior Care loan program.
An offsetting $9.3 million extraordinary gain on retirement of the debt
associated with the aforementioned transfer of property to the lien holder
contributed approximately $4.9 million to the $5.7 million increased net income
for the six months ended June 30, 1996 as compared to the same period in 1995.
Increased activity in the Senior Care and Medical Office divisions has
contributed to an overall rise in general and administrative costs. During 1995,
general and administrative expense ran approximately $1.6 million for the year.
In 1996, that amount is expected to grow to an annual rate of $1.9 million.
Page 14
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company declared a quarterly distribution for the second quarter of
1996 in the amount of $0.32 per share which was paid on July 16, 1996 to
stockholders of record on June 28, 1996. During the first quarter, the dividend
was increased 3 percent from an annual rate of $1.24 to $1.28. During the six
month period ended June 30, 1996 the Company generated $3.9 million in cash from
operating activities. During the same period, the Company distributed $2.9
million to limited partners and stockholders and invested an additional $1
million to maintain its rental properties.
The Company is currently reviewing proposed loan documents on a three
year extension related to the note payable secured by 435 North Roxbury Drive.
Once this extension is executed, all loans secured by the Company's medical
office buildings will have maturities of three years or more except for the
Company's credit facility, which may be extended for an additional three year
term in 1997, and short term notes payable associated with the Company's senior
care notes receivable. By year end, management anticipates that approximately
60-percent of the Company's current debt will be in fixed rate notes due in 2005
and beyond.
The Company is currently involved in negotiations to acquire the property
located at 436 North Bedford Drive from the former lien holder. Current
discussions indicate a purchase price in the range of $18 to $19.5 million;
however, no definitive documentation has been executed and there can be no
assurance that this transaction will occur.
During the fourth quarter of 1995, the Company invested approximately
$19.8 million to acquire $21 million in tax exempt bonds secured by three
nursing homes in Massachusetts and an additional $5 million in subordinated
bonds. The Company has retained GMAC Commercial Mortgage Corporation to obtain
a commitment for mortgage insurance and credit enhancement with the assistance
of the Federal Housing Administration and the Department of Housing and Urban
Development. It is anticipated that approval will be obtained in the fourth
quarter of 1996 or the first quarter of 1997. Once the mortgage insurance is in
place, the currently unrated tax exempt bonds will be reissued on a rated basis
with an expected decrease in the 9.75 percent interest rate. These reissued tax
exempt bonds will be sold and the proceeds used to repay a $14 million term loan
to GMAC plus return the Company's investment capital. The Company intends to
retain ownership of the $5 million, 9.5 percent subordinated bonds as a long-
term investment. Management believes that by restructuring the debt on the tax
exempt bonds the underlying properties will generate sufficient cash flow to
service their obligation on the subordinated bonds plus the $2 million in
accrued and unpaid interest currently due.
The Company expects to continue meeting its short term liquidity
requirements through its working capital and cash flow provided by operations.
The Company considers its ability to generate cash to be good and expects to
continue meeting all operating requirements as well as providing sufficient
funds to maintain stockholder distributions in accordance with REIT
requirements. Long-term liquidity requirements such as refinancing mortgages,
financing acquisitions and financing capital improvements will be accomplished
through long-term borrowings, the issuance of debt securities and the offering
of additional equity securities. The Company anticipates that it will be able
to obtain financing for its long-term capital needs.
Page 15
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
None of the Company, the Operating Partnership, the Financing
Partnership, the Realty Financing Partnership, or the Properties is
currently a party to any material litigation.
Item 2 Changes in Securities.
None.
Item 3 Defaults Upon Senior Securities.
None.
Item 4 Submission of Matters to a Vote of Security Holders.
On May 7, 1996, the Company held its 1996 Annual Meeting of
Stockholders. The only item of business conducted at the meeting was
the election of directors. The seven directors elected at the Annual
Meeting, to serve for the term ending at the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified
or until they resign or are removed, were the following:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
---- --------- --------------
<S> <C> <C>
Daniel M. Gottlieb 3,683,467 17,837
Steven D. Lebowitz 3,685,467 15,837
Richard L. Lesher 3,681,167 20,137
Leslie D. Michelson 3,681,167 20,137
Reese L. Milner 3,681,167 20,137
Charles P. Reilly 3,681,047 20,257
S. Craig Tompkins 3,679,347 21,957
</TABLE>
Item 5 Other Information.
None.
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits
10.30 Mortgage Loan Agreement dated as of May 24, 1996 by and
between G&L Medical Partnership, L.P. as Borrower and Nomura
Asset Capital Corporation as Lender.
10.31 Agreement of Purchase and Sale of Membership Interest dated
April 26, 1996 by and between Milner Investment Corporation
as Seller and G&L Realty Partnership, L.P. as Buyer.
10.32 Letter of Agreement regarding purchase of Tustin Hospital to
445 North Bedford Drive, LLC from G&L Realty Partnership,
L.P., dated June 12, 1996.
10.33 Redemption Agreement by and between G&L Realty Partnership,
L.P. and 445 Bedford, LLC, dated as of June 27, 1996.
10.34 Property Contribution Agreement by and between G&L Realty
Partnership, L.P. as Purchaser and 445 Bedford, LLC as
Seller, dated as of June 28, 1996.
10.35 Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing between 445 Bedford, LLC and G&L Realty
Partnership, L.P. as tenants in common ("Trustor"), Chicago
Title Company ("Trustee"), and Tokai Bank of California
("Beneficiary"), made to be effective on June 12, 1996.
27 Summary Financial Information
(b) Reports on Form 8-K.
(i) The Company filed a report on Form 8-K/A on July 22, 1996
concerning the transfer of rental property to the secured
lender in satisfaction of the underlying nonrecourse debt
obligation.
Page 16
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
G&L REALTY CORP.
Date: August 13, 1996 By: /s/ Quentin Thompson
------------------------------------
Quentin Thompson
Secretary, Treasurer
and Chief Accounting Officer
Page 17
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- ------------------------------------------------------------
10.30 Mortgage Loan Agreement dated as of May 24, 1996 by and
between G&L Medical Partnership, L.P. as Borrower and Nomura
Asset Capital Corporation as Lender .
10.31 Agreement of Purchase and Sale of Membership Interest dated
April 26, 1996 by and between Milner Investment Corporation
as Seller and G&L Realty Partnership, L.P. as Buyer.
10.32 Letter of Agreement regarding purchase of Tustin Hospital to
445 North Bedford Drive, LLC from G&L Realty Partnership,
L.P., dated June 12, 1996.
10.33 Redemption Agreement by and between G&L Realty Partnership,
L.P. and 445 Bedford, LLC, dated as of June 27, 1996.
10.34 Property Contribution Agreement by and between G&L Realty
Partnership, L.P. as Purchaser and 445 Bedford, LLC as
Seller, dated as of June 28, 1996.
10.35 Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing between 445 Bedford, LLC and G&L Realty
Partnership, L.P. as tenants in common ("Trustor"), Chicago
Title Company ("Trustee"), and Tokai Bank of California
("Beneficiary"), made to be effective on June 12, 1996.
27 Summary Financial Information
Page 18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,746,260
<SECURITIES> 0
<RECEIVABLES> 46,823,427
<ALLOWANCES> (509,963)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 82,290,249
<DEPRECIATION> (9,274,945)
<TOTAL-ASSETS> 128,159,113
<CURRENT-LIABILITIES> 3,643,025
<BONDS> 100,352,993
0
0
<COMMON> 40,625
<OTHER-SE> 22,941,569
<TOTAL-LIABILITY-AND-EQUITY> 128,159,113
<SALES> 0
<TOTAL-REVENUES> 5,821,560
<CGS> 0
<TOTAL-COSTS> 1,204,328
<OTHER-EXPENSES> 6,235,206
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,080,922
<INCOME-PRETAX> (3,353,313)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,353,313)
<DISCONTINUED> 0
<EXTRAORDINARY> 9,310,730
<CHANGES> 0
<NET-INCOME> 5,957,417
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 10.30
MORTGAGE LOAN AGREEMENT
Dated as of May 24, 1996
by and between
G&L MEDICAL PARTNERSHIP, L.P.
as Borrower
and
NOMURA ASSET CAPITAL CORPORATION
as Lender
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CERTAIN DEFINITIONS....................................... 1
Section 1.1 Definitions....................................... 1
ARTICLE II GENERAL TERMS............................................. 28
Section 2.1 Amount of the Loan................................ 28
Section 2.2 Use of Proceeds................................... 28
Section 2.3 Security for the Loan............................. 29
Section 2.4 Borrower's Note................................... 29
Section 2.5 Principal and Interest............................ 29
Section 2.6 Voluntary Prepayment; Defeasance.................. 30
Section 2.7 Mandatory Prepayment: Defeasance.................. 31
Section 2.8 Application of Payments........................... 32
Section 2.9 Method and Place of Payment....................... 32
Section 2.10 Taxes............................................. 32
Section 2.11 Release of Collateral............................. 33
Section 2.12 Central Cash Management........................... 33
Section 2.13 Security Agreement................................ 42
Section 2.14 Securitization.................................... 45
Section 2.15 Letter of Credit in Lieu of Deposits.............. 46
ARTICLE III CONDITIONS PRECEDENT...................................... 47
Section 3.1 Conditions Precedent to Effectiveness and
Disbursement of the Loan.......................... 47
Section 3.2 Acceptance of Borrowings.......................... 52
Section 3.3 Form of Loan Documents and Related Matters........ 52
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................ 52
Section 4.1 Borrower Representations.......................... 52
Section 4.2 Survival of Representations....................... 62
ARTICLE V COVENANTS................................................. 63
Section 5.1 Financial Statements.............................. 63
Section 5.2 Litigation, Etc. ................................. 65
Section 5.3 Partnership Existence, Etc. ...................... 65
Section 5.4 Insurance......................................... 66
Section 5.5 Prohibition of Fundamental Changes................ 66
Section 5.6 Limitation on Liens............................... 66
Section 5.7 Other Indebtedness................................ 67
Section 5.8 Investments....................................... 68
Section 5.9 Payments.......................................... 68
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 5.10 Change In Business................................ 68
Section 5.11 Transactions with Affiliates...................... 68
Section 5.12 Use of Proceeds................................... 68
Section 5.13 Modifications of Certain Documents................ 69
Section 5.14 Subsidiaries...................................... 69
Section 5.15 Property Management............................... 69
Section 5.16 Environmental Matters............................. 70
Section 5.17 Change in Business................................ 71
Section 5.18 Perform Loan Documents............................ 71
Section 5.19 ADA Compliance.................................... 71
Section 5.20 Insurance Standards............................... 71
ARTICLE VI DEFAULTS.................................................. 72
Section 6.1 Event of Default.................................. 72
Section 6.2 Remedies.......................................... 75
Section 6.3 Remedies Cumulative............................... 75
Section 6.4 Certain Waivers................................... 76
ARTICLE VII MISCELLANEOUS............................................. 76
Section 7.1 Survival.......................................... 76
Section 7.2 Lender's Discretion............................... 77
Section 7.3 Governing Law..................................... 77
Section 7.4 Modification, Waiver in Writing................... 78
Section 7.5 Delay Not a Waiver................................ 78
Section 7.6 Notices........................................... 78
Section 7.7 TRIAL BY JURY..................................... 79
Section 7.8 Headings.......................................... 79
Section 7.9 Assignment........................................ 79
Section 7.10 Severability...................................... 79
Section 7.11 Preferences....................................... 80
Section 7.12 Waiver of Notice.................................. 80
Section 7.13 Remedies of Borrower.............................. 80
Section 7.14 Exculpation....................................... 80
Section 7.15 Exhibits Incorporated............................. 81
Section 7.16 Offsets, Counterclaims and Defenses............... 81
Section 7.17 No Joint Venture or Partnership................... 82
Section 7.18 Waiver of Marshalling of Assets Defense........... 82
Section 7.19 Waiver of Counterclaim............................ 82
Section 7.20 Conflict; Construction of Documents............... 82
Section 7.21 Brokers and Financial Advisors.................... 82
Section 7.22 Counterparts...................................... 83
Section 7.23 Estoppel Certificates............................. 83
Section 7.24 Payment of Expenses............................... 83
Section 7.25 Bankruptcy Waiver................................. 83
Section 7.26 Indemnification................................... 84
Section 7.27 Entire Agreement.................................. 85
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 7.28 Cross Collateralization........................... 85
Section 7.29 Confidentiality................................... 85
Section 7.30 Defeasance........................................ 85
</TABLE>
Exhibit A Allocated Loan Amounts
Exhibit B Assignment of Agreements (Form)
Exhibit C Assignment of Leases and Rents (Form)
Exhibit D Engineering Reports
Exhibit E Environmental Reports
Exhibit F Individual Properties
Exhibit G Managers and Management Agreements
Exhibit H Deed of Trust, Assignment of Rents, Security Agreement,
Financing Statement and Fixture Filing (Form)
Exhibit I Promissory Note (Form)
Exhibit J Tenant Letter (Form)
Exhibit K Letter of Instruction (Form)
Exhibit L Required Debt Service Payment Certificate (Form)
Exhibit M Cash Collateral Account Agreement (Form)
Exhibit N Security and Pledge Agreement (Form)
Exhibit 0 Financing Statements
Exhibit P Opinion of Gibson, Dunn & Crutcher (Form)
Exhibit Q Lien Search Reports
Exhibit R Tenant Estoppel Certificate and Agreement (Form)
Exhibit S Litigation
Exhibit T Officer's Certificate (Form)
Exhibit U Indemnity Agreement (Form)
Schedule 1 Capital Reserve Amounts
Schedule 2 Material Leases for which Tenant Estoppel Certificates and
Non-Disturbance, Subordination and Attornment Agreements
are Required
Schedule 3 Material Contracts
-iii-
<PAGE>
MORTGAGE LOAN AGREEMENT
-----------------------
THIS MORTGAGE LOAN AGREEMENT (this "Agreement"), made as of
---------
May 24, 1996, is by and between NOMURA ASSET CAPITAL CORPORATION, a Delaware
corporation, having an address at 2 World Financial Center, Building B, New
York, New York 10281-1198 ("Lender"), and G&L MEDICAL PARTNERSHIP, L.P., a
------
Delaware limited partnership ("Borrower"), having an address at 439 North
--------
Bedford Drive, Beverly Hills, California 90210.
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from Lender in
----
the aggregate amount of up to $19,800,000 (the "Loan Amount");
-----------
WHEREAS, Lender is unwilling to make the Loan unless Borrower joins in
the execution and delivery of this Agreement, the Note and the other Loan
Documents (all of the foregoing capitalized terms as hereinafter defined) which
shall establish the terms and conditions of the Loan;
WHEREAS, Borrower and Lender contemplate that Lender's interest in and
to the Loan may be assigned by Lender to Trustee for the benefit of
Certificateholders in connection with the Securitization (all of the foregoing
capitalized terms as hereinafter defined); and
WHEREAS, Borrower has agreed to establish certain accounts and to
grant to Lender a security interest therein upon the terms and conditions of the
security agreement set forth in Section 2.13.
------------
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
Section 1.1 Definitions. For all purposes of this Agreement:
-----------
(1) the capitalized terms defined in this Article I have the meanings
---------
assigned to them in this Article I, and include the plural as well as the
---------
singular;
(2) all accounting terms have the meanings assigned to them in
accordance with generally accepted accounting principles in effect on the date
hereof;
<PAGE>
(3) the words "herein", "hereof", and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; and
(4) the following terms have the following meanings:
"Account Collateral" has the meaning provided in Section 2.13(a).
------------------ ---------------
"Accounts" means any of Borrower's rights to payment for goods sold or
--------
leased or for services rendered arising from the operation of Borrower's
Individual Properties and not evidenced by an Instrument, including, without
limitation, all accounts and accounts receivable arising from the operation of
such Individual Properties, now existing or hereafter coming into existence, and
all Proceeds thereof. In addition to the foregoing, the term "Accounts" shall
include the meaning such term has in the New York Uniform Commercial Code.
"Accrued Interest" has the meaning specified in Section 2.5(c).
---------------- --------------
"Additional Interest" means, for the applicable period, the amount by
-------------------
which interest calculated on the Principal Indebtedness at the Revised Interest
Rate exceeds interest calculated on the Principal Indebtedness at the Base
Interest Rate.
"Affiliate" of any specified Person means any other Person controlling
---------
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
-------
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interests, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
----------- ----------
"Agreement" means this Mortgage Loan Agreement, as the same may from
---------
time to time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means the portion of the Loan Amount allocated
---------------------
to each Individual Property as set forth in Exhibit A attached hereto, as such
---------
amounts shall be adjusted from time to time as hereinafter set forth. Upon
each adjustment in the amount of Principal Indebtedness due to a regular monthly
payment of principal pursuant to Section 2.5(b), each Allocated Loan Amount
--------------
shall be decreased by an amount equal to the product of (i) the amount of such
principal payment and (ii) a fraction, the numerator of which is the applicable
Allocated Loan Amount (prior to the adjustment in question) and the denominator
of which is the total of all Allocated Loan Amounts prior to the adjustment to
the Principal Indebtedness resulting in the recalculation of the Allocated Loan
Amount. When the Principal Indebtedness is reduced as a result of Lender's
receipt of Net Proceeds or Loss Proceeds with respect to a Taking or casualty
affecting 100% of an Individual Property, the Allocated Loan Amount for the
Individual Property with respect to which the Net Proceeds or Loss Proceeds were
received shall be reduced to zero (such Allocated Loan Amount being referred to
as the "Withdrawn Allocated Amount"), and each other Allocated Loan Amount
--------------------------
-2-
<PAGE>
shall (i) if the Withdrawn Allocated Amount exceeds the Net Proceeds or Loss
Proceeds (such excess being referred to as the "Proceeds Deficiency"), be
-------------------
increased by an amount equal to the product of (1) the Proceeds Deficiency and
(2) a fraction, the numerator of which is the applicable Allocated Loan Amount
(prior to the adjustment in question) and the denominator of which is the
aggregate of all of the Allocated Loan Amounts other than the Withdrawn
Allocated Amount or (ii) if the Net Proceeds or Loss Proceeds are greater than
or equal to the Withdrawn Allocated Amount, remain unadjusted.
"Assignment of Agreements" means, with respect to an Individual
------------------------
Property, a first priority Assignment of Contracts, in the form attached hereto
as Exhibit B, dated as of the Closing Date, from Borrower, as assignor, to
---------
Lender, as assignee, assigning to Lender (to the extent set forth in the
Assignment of Agreements) Borrower's interest in and to all contracts between
Borrower and third parties in connection with the management and operation of
the Individual Property, including, without limitation, the Management
Agreement, any agreements with design professionals, all agreements, allocations
and rights with all utility services affecting the Individual Property and all
development agreements and Permits, as the same may hereafter from time to time
be supplemented, amended, modified or extended by one or more written agreements
supplemental thereto, and "Assignments of Agreements" means all such instruments
collectively.
"Assignment of Leases" mean, with respect to an Individual Property,
--------------------
a first priority Absolute Assignment of Leases and Rents, in the form attached
hereto as Exhibit C, dated as of the Closing Date, from Borrower, as assignor,
---------
to Lender, as assignee, assigning to Lender Borrower's interest in and to the
Leases and the Rents with respect to such Individual Property, as the same may
hereafter from time to time be supplemented, amended, modified or extended by
one or more agreements supplemental thereto, and "Assignments of Leases" means
all such instruments collectively.
"Available Cash" means for any period (and calculated either for an
--------------
Individual Property or for the Individual Properties as a whole) the excess, if
any, of Cash Income for such period over Cash Expenses for such period, adjusted
as follows: (i) the Capital Reserve Amount shall be deducted (to the extent such
amount has not been included in Cash Expenses); (ii) deduction shall be made for
management fees equal to the lesser of (x) actual management fees paid pursuant
to the Management Agreement and (y) 4% of Operating Income (to the extent such
costs have not been included in Cash Expenses); (iii) the Basic Carrying Costs
Monthly Installment shall be deducted (to the extent such amount has not been
included in Cash Expenses); and (iv) amounts allocated to the Leasing Reserve
Sub-Account for such period pursuant to Section 2.12(h)(i)(5) shall be deducted
---------------------
(to the extent not included in Cash Expenses). Additional adjustments shall be
made if required by Lender to reflect reasonable provisions for market vacancies
and similar factors which would materially impact historical cash flow.
"Available Cash Payment" means, for any period, the payment described
----------------------
in clause (ii) of Section 2.5(c) that would be due and payable in accordance
--------------
with this Agreement during such period.
-3-
<PAGE>
"Bank" means LaSalle National Bank or any successor bank hereafter
----
selected by Lender in accordance with the terms hereof.
"Base Interest Rate" means 9.475% per annum.
------------------
"Basic Carrying Costs" means the following costs with respect to the
--------------------
Mortgaged Property: (i) real property taxes and assessments applicable to the
Individual Properties (excluding taxes which tenants are required by their
Leases to pay directly to the taxing authority, unless Lender or its designee
determines, in its reasonable discretion, that said tenants will be unable to
make such payments on a timely basis) and (ii) insurance premiums for policies
of insurance required to be maintained by Borrower pursuant to this Agreement or
the other Loan Documents.
"Basic Carrying Costs Monthly Installment" means Lender's good faith
----------------------------------------
estimate of 1/12th of the annual amount of Basic Carrying Costs. Should the
Basic Carrying Costs for the current Fiscal Year or payment period not be
ascertainable at the time a monthly deposit is required to be made, the Basic
Carrying Costs Monthly Installment shall be Lender's good faith estimate based
on 1/12th of the aggregate Basic Carrying Costs for the prior Fiscal Year or
payment period with reasonable adjustments. As soon as the Basic Carrying Costs
are fixed for the current Fiscal Year or period, the next ensuing Basic Carrying
Costs Monthly Installment shall be adjusted to reflect any deficiency or surplus
in prior Basic Carrying Costs Monthly Installments.
"Basic Carrying Costs Sub-Account" means the Sub-Account of the Cash
--------------------------------
Collateral Account established and maintained pursuant to Section 2.12 relating
------------
to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the first paragraph of this
--------
Agreement.
"Budgeted Cash Expense" has the meaning provided in Section
--------------------- -------
2.12(h)(ii).
- -----------
"Business Day" means any day other than (i) a Saturday or a Sunday,
------------
and (ii) a day on which federally insured depository institutions in (x) New
York, (y) a state in which Lender or its designee or Bank is located or (z) the
state in which the Corporate Trust Office is located are authorized or obligated
by law, governmental decree or executive order to be closed.
"Capital Costs" means costs incurred by Borrower in connection with
-------------
capital expenditures (excluding Leasing Costs) with respect to the Mortgaged
Property.
"Capital Reserve Amount" means $54,851 per annum, which is the sum of
----------------------
the amounts specified for each Individual Property on Schedule 1 attached
----------
hereto.
"Capital Reserve Monthly Installment" means an amount equal to 1/12th
-----------------------------------
of the Capital Reserve Amount.
-4-
<PAGE>
"Capital Reserve Sub-Account" means the Sub-Account of the Cash
---------------------------
Collateral Account established and maintained pursuant to Section 2.12 relating
------------
to the payment of Capital Costs.
"Cash Budget" has the meaning provided in Section 2.12(h)(ii).
----------- -------------------
"Cash Collateral Account" has the meaning provided in Section 2.12(b).
----------------------- ---------------
"Cash Expenses" means, for any period, all expenditures by Borrower
-------------
required to be expensed on a cash basis during such period in connection with
the ownership, operation, maintenance, repair or leasing of the Individual
Properties (or of an Individual Property), including, without limitation:
(i) expenses in connection with the cleaning, repair and maintenance
of the Individual Properties (or of an Individual Property);
(ii) wages, benefits, payroll taxes, uniforms, insurance costs and all
other related expenses for employees of Borrower or any Affiliate engaged in the
repair, operation and maintenance of the Individual Properties (or of an
Individual Property);
(iii) any management fees and expenses incurred with respect to the
Individual Properties (or of an Individual Property);
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item and
overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions (other than income taxes);
(vii) business interruption, liability, casualty (including
earthquake if in force) and fidelity insurance premiums (which, in the case of
any policies covering more than one Individual Property, shall be allocated
among the Individual Properties pro rata in proportion to the insured value of
the Individual Properties covered by such policies);
(viii) reasonable legal, accounting and other professional fees and
expenses incurred in connection with the ownership and operation of the
Individual Properties (or of an Individual Property) including, without
limitation, collection costs and expenses;
(ix) costs and expenses of security and security systems provided to
and/or installed and maintained with respect to the Individual Properties (or an
Individual Property);
(x) trash removal and exterminating costs and expenses;
(xi) advertising and marketing costs;
-5-
<PAGE>
(xii) costs of environmental audits and monitoring, environmental
remediation work or any other expenses incurred with respect to compliance with
Environmental Laws;
(xiii) Leasing Costs incurred with respect to the Individual
Properties; and
(xiv) all other ongoing expenses which in accordance with cash basis
accounting should be included in Borrower's financial statements as operating
expenses of the Individual Properties (or of an Individual Property).
Notwithstanding the foregoing, Cash Expenses shall not include (w) any Capital
Costs, (x) depreciation, amortization and other non-cash charges, (y) any
extraordinary items not normally considered an operating expense in accordance
with GAAP or (z) Debt Service, Available Cash Payments and other payments in
connection with the Indebtedness.
"Cash Income" means, for any period, all income of Borrower during
-----------
such period from the Permitted Investments or the operation of the Individual
Properties (or of an Individual Property), including, without limitation:
(i) all amounts paid to Borrower by any Person as Rent relating to
the Individual Properties (or an Individual Property);
(ii) business interruption Insurance Proceeds or Condemnation
Proceeds with respect to a temporary Taking paid to Borrower with respect to an
Individual Property; and
(iii) all other amounts which in accordance with cash basis accounting
should be included in Borrower's annual financial statements as operating income
of the Individual Properties (or of an Individual Property).
Notwithstanding the foregoing, Cash Income shall not include (v) any
Condemnation Proceeds or Insurance Proceeds (other than business interruption
Insurance Proceeds or Condemnation Proceeds with respect to a temporary Taking
and, in either such case, only to the extent allocable to such period or other
applicable reporting period), or (w) security deposits received from tenants
except for forfeited security deposits not exceeding the amount then allocated
to and held in the Security Deposit Sub-Account.
"CC Account Agreement" has the meaning provided in Section 2.13(b).
-------------------- ---------------
"Certificate" has the meaning set forth in the Pooling and Servicing
-----------
Agreement.
"Certificateholder" means the Person in whose name a Certificate is
-----------------
registered pursuant to the Pooling and Servicing Agreement.
"Cigna Healthcare" means CIGNA HealthCare of California, Inc., a
----------------
corporation.
-6-
<PAGE>
"Cigna Lease" means the Lease, dated June 8, 1991, between Borrower,
-----------
as lessor, and Cigna Healthcare, as lessee, of the Individual Property known as
the Cigna Healthcare Building in Irwindale, California, as such Lease heretofore
has been or is hereafter modified, amended or supplemented from time to time.
"Cigna Lease Termination Fees" means Lease Termination Fees relating
----------------------------
to the termination of the Cigna Lease.
"Cigna Replacement Lease" means a renewal, extension or replacement of
-----------------------
the Cigna Lease between Borrower and Cigna Healthcare or another unaffiliated
third party on terms (including, without limitation, any guarantee(s) thereof)
satisfactory to Lender in its sole discretion and to become effective after the
stated expiration date or earlier termination of the Cigna Lease.
"Cigna Replacement Lease Leasing Costs" means Leasing Costs relating
-------------------------------------
to an executed Cigna Replacement Lease.
"Cigna Replacement Lease Reserve Amount" means, with respect to any
--------------------------------------
Current Month, the sum of (a) the aggregate amount of the Cigna Lease
Termination Fees received by Borrower during such Current Month and all prior
months, and (b) the aggregate amount of the Cigna Replacement Lease Reserve
Monthly Installment for such Current Month and all prior months.
"Cigna Replacement Lease Reserve Funding Termination Date" means the
--------------------------------------------------------
earlier to occur of (a) November 1, 2004 and (b) the first day of the month
immediately following the month during which (i) all tenant improvements
required under the terms of the Cigna Replacement Lease are satisfactorily
completed and (ii) all Cigna Replacement Lease Leasing Costs are paid in full,
each as demonstrated by Borrower with copies of paid invoices, lien releases and
such other documentation as may be reasonably required by Lender or its
designee.
"Cigna Replacement Lease Reserve Monthly Installment" means (a) with
---------------------------------------------------
respect to any Current Month prior to November 1998, $0, (b) with respect to any
Current Month after October 1998 but prior to the Cigna Replacement Lease
Reserve Funding Termination Date, $6,500, and (c) with respect to the Current
Month commencing on the Cigna Replacement Lease Reserve Funding Termination Date
and all subsequent Current Months, $0.
"Cigna Replacement Lease Reserve Sub-Account" means the Sub-Account of
-------------------------------------------
the Cash Collateral Account established and maintained pursuant to Section 2.12
------------
relating to the payment of Cigna Replacement Lease Leasing Costs.
"Closing Date" means May 24, 1996.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and as it
----
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
-7-
<PAGE>
"Collateral" means, collectively, the Land, Improvements, Equipment,
----------
Rents, Accounts, General Intangibles, Instruments, Inventory, Money, Permits (to
the full extent assignable) and all Proceeds, all whether now owned or hereafter
acquired, and all other property which is or hereafter may become subject to a
Lien in favor of Lender as security for the Loan.
"Collateral Security Instrument" means any right, document or
------------------------------
instrument, other than a Mortgage, given as security for the Loan (including,
without limitation, the Assignments of Leases and the Assignments of
Agreements), as same may be supplemented, amended, extended or modified from
time to time.
"Collection Account" has the meaning provided in Section 2.12(a).
------------------ ---------------
"Collection Account Bank" means Tokai Bank of California and any
-----------------------
successor bank hereafter selected by Borrower and approved by Lender in
accordance with the terms hereof.
"Condemnation Proceeds" has the meaning provided in Section 2.12(i).
--------------------- ---------------
"Control" or "control" has the meaning provided in the definition of
------- -------
"Affiliate."
"Corporate Trust Office" means the principal office of the Trustee at
----------------------
which at any particular time its corporate trust business shall be principally
administered.
"Current Month" has the meaning provided in Section 2.12(h).
------------- ---------------
"Custodial Account" has the meaning provided in Section 2.12(g)(i).
----------------- ------------------
"Day" or "day" means any calendar day (unless otherwise specified).
--- ---
"Debt Service" means, for any period, the Monthly Installment Amount
------------
and any other principal and/or interest payments (other than any Available Cash
Payment) that would be due and payable in accordance with this Agreement, the
Note and the other Loan Documents during such period.
"Debt Service Coverage Ratio" means for any period (and calculated
---------------------------
either for an Individual Property or for the Individual Properties as a whole)
the quotient obtained by dividing Net Cash Flow for the specified period by the
Imputed Debt Service for such period. All calculations of Debt Service Coverage
Ratios shall be made by Borrower, subject to verification by Lender and an
accounting firm acceptable to Lender (any "Big Six" accounting firm being deemed
acceptable to Lender).
"Debt Service Payment Sub-Account" means the Sub-Account of the Cash
--------------------------------
Collateral Account established and maintained pursuant to Section 2.12 relating
------------
to the payment of Debt Service and Available Cash Payments.
-8-
<PAGE>
"Deed of Trust Trustee" means each of the trustees, if any, under the
---------------------
Mortgages.
"Default" means the occurrence of any event which, but for the giving
-------
of notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 7.14.
------------------ ------------
"Default Rate" means the per annum interest rate equal to the lesser
------------
of (i) the Maximum Amount or (ii) (A) the sum of 5% plus the Base Interest Rate
prior to the Rate Adjustment Date or (B) the sum of 5% plus the Revised Interest
Rate on or after the Rate Adjustment Date.
"Defaulting Tenant" means, as at any date of determination, any tenant
-----------------
that (i) has filed a bankruptcy petition or has had a bankruptcy petition filed
against it unless such tenant has accepted its Lease, or (ii) is in default for
two or more monthly payments of base rent required to be paid by it under its
Lease.
"Defeasance Date" has the meaning provided in Section 7.30.
--------------- ------------
"Defeasance Deposit" means an amount equal to the total cost incurred
------------------
or to be incurred in the purchase by Borrower of U.S. Treasuries necessary to
meet the Scheduled Defeasance Payments.
"Defeasance Prohibition Termination Date" means the earlier to occur
---------------------------------------
of (i) the day which is the second anniversary of the Securitization Closing
Date and (ii) the day which is the third anniversary of the Closing Date.
"Eligible Account" means (a) an account maintained with a federal or
----------------
state chartered depository institution or trust company whose (i) commercial
paper, short term-debt obligations or other short-term deposits are rated at
least A-1 or the equivalent by each Rating Agency (or, if not rated by Duff &
Phelps Credit Rating Co. or Fitch Investors Service, L.P., otherwise acceptable
to such Rating Agency as confirmed in writing), if the deposits in such account
are to be held in such account for thirty (30) days or less, or (ii) long-term
unsecured debt obligations are rated at least AA- or the equivalent by each
Rating Agency (or, if not rated by Duff & Phelps Credit Rating Co. or Fitch
Investors Service, L.P., otherwise acceptable to such Rating Agency as confirmed
in writing), if the deposits in such account are to be held in such account for
more than thirty (30) days, or (b) a segregated trust account maintained with
the trust department of a federal or state chartered depository institution or
trust company acting in its fiduciary capacity which institution or trust
company is subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 C.F.R. (S) 9.10(b).
"Engineer" means (i) an engineer who prepared an Engineering Report
--------
described on Exhibit D attached hereto or (ii) any reputable Independent
---------
engineer licensed as such in the applicable state.
-9-
<PAGE>
"Engineering Reports" means the property condition reports with
-------------------
respect to each Individual Property delivered to Lender in connection with the
Loan, as described on Exhibit D attached hereto, and any amendments or
---------
supplements thereto delivered to Lender.
"Environmental Claim" means any written request for information by a
-------------------
Governmental Authority, or any written notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment, demand or other
written communication by any Person or Governmental Authority alleging or
asserting liability with respect to Borrower or any Individual Property, whether
for damages, contribution, indemnification, cost recovery, compensation,
injunctive relief, investigatory response, remedial or cleanup costs, damages to
natural resources, personal injuries, fines or penalties arising out of, based
on or resulting from (i) the presence, Use or Release into the environment of
any Hazardous Substance originating at or from, or otherwise affecting, an
Individual Property, (ii) any fact, circumstance, condition or occurrence
forming the basis of any violation, or alleged violation, of any Environmental
Law by Borrower or otherwise affecting an Individual Property or (iii) any
alleged injury or threat of injury to health, safety or the environment by
Borrower or otherwise affecting an Individual Property.
"Environmental Condition" shall mean any condition with respect to the
-----------------------
Environment, whether or not yet discovered, at, on or under the Individual
Properties, which could or does result in any Environmental Damages.
"Environmental Damages" shall mean all claims, judgments, damages
---------------------
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, costs and expenses of investigation and defense of any
Environmental Claim which are incurred by Lender or Borrower in respect of the
Individual Properties as a result of (i) the existence of Hazardous Materials
at, on, under or off the Individual Properties, or (ii) the violation or
threatened violation of any Environmental Law by Borrower or any of its Tenants.
"Environmental Laws" means any and all applicable federal, state,
------------------
local and foreign laws, rules or regulations, any judicial or administrative
orders, decrees or judgments thereunder, and any permits, approvals, licenses,
registrations, filings and authorizations, in each case as in effect as of the
date hereof and as amended from time to time or as hereafter enacted or adopted,
relating to the protection of human health or the environment, or the Release or
threatened Release of Hazardous Substances into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata or otherwise relating to the
Use of Hazardous Substances.
"Environmental Reports" means the environmental audit reports with
---------------------
respect to each Individual Property delivered to Lender in connection with the
Loan, as described on Exhibit E attached hereto, and any amendments or
---------
supplements thereto delivered to Lender.
"Equipment" means, with respect to Borrower, all fixtures, appliances,
---------
machinery, furniture, furnishings, decorations, tools and supplies now owned or
hereafter acquired, including, but not limited to, any building equipment,
including, but not limited to, all heating, lighting, incinerating, waste
removal and power equipment, engines, pipes, tanks,
-10-
<PAGE>
motors, conduits, switchboards, security and alarm systems, plumbing, lifting,
cleaning, fire prevention, fire extinguishing, refrigeration, ventilating and
communications apparatus, air cooling and air conditioning apparatus,
escalators, elevators, ducts and compressors, materials and supplies, and all
other machinery, apparatus, equipment, fixtures and fittings now owned or
hereafter acquired by Borrower, any portion thereof or any appurtenances
thereto, together with all additions, replacements, parts, fittings,
accessions, attachments, accessories, modifications and alterations of any of
the foregoing, to the extent relating to Borrower's Individual Property,
provided, however, that, with respect to any items which are leased and not
- -------- -------
owned by Borrower, the Equipment shall include the leasehold interest only of
Borrower, together with any options to purchase any of said items and any
additional or greater rights with respect to such items which Borrower may
hereafter acquire.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business that is a
---------------
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Borrower is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the
Code and the lien created under Section 302(f) of ERISA and Section 412(n) of
the Code, described in Section 414(m) or (o) of the Code of which Borrower is a
member.
"Event of Default" has the meaning set forth in Section 6.1.
---------------- -----------
"Exchange Act" means the Securities and Exchange Act of 1934, as
------------
amended.
"Finder" has the meaning provided in Section 7.21.
------ ------------
"Fiscal Year" means the 12-month period ending on December 31 of each
-----------
year or such other fiscal year of Borrower as Borrower may select from time to
time with the prior consent of Lender (which consent shall not be unreasonably
withheld).
"Fund" has the meaning provided in the definition of "Permitted
----
Investments."
"GAAP" means generally accepted accounting principles in the United
----
States of America as of the date of the applicable financial report.
"General Intangibles" means all intangible personal property of
-------------------
Borrower arising out of or directly relating to Borrower's Individual Properties
(other than Accounts, Rents, Instruments, Inventory, Money and Permits),
including, without limitation, things in action, settlements, judgments,
contract rights, rights to performance (including, without limitation, rights
under warranties), refunds of real estate taxes and assessments and other rights
to payment of Money, copyrights, trademarks and patents now existing or
hereafter in
-11-
<PAGE>
existence. In addition to the foregoing, the term "General Intangibles" shall
include the meaning such term has in the New York Uniform Commercial Code.
"General Partner" means G&L Medical Inc. a Delaware corporation.
---------------
"Governmental Authority" means any national or federal government, any
----------------------
state, regional, local or other political subdivision thereof with jurisdiction
and any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
---------
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock of any corporation, or an agreement to purchase, sell or lease (as
lessee or lessor) property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank to open a letter of credit for the benefit of
another Person, but excluding endorsements for collection or deposit in the
ordinary course of business. The terms "Guarantee" and "Guaranteed" used as a
--------- ----------
verb shall have a correlative meaning.
"Hazardous Substance" means, collectively, (i) any petroleum or
-------------------
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in
----
drinking water, and lead-based paint, the presence, generation, use,
transportation, storage or disposal of which (x) is regulated or could lead to
liability under any Environmental Law or (y) is subject to notice or reporting
requirements under any Environmental Law, (ii) any chemicals or other materials
or substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," toxic substances,"
"toxic pollutants," "contaminants," "pollutants" or words of similar import
under any Environmental Law and (iii) any other chemical or any other material
or substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"Impositions" means all taxes (including, without limitation, all ad
-----------
valorem, sales (including those imposed on lease rentals), use, single business,
gross receipts, value added, intangible transaction privilege, privilege,
license or similar taxes), assessments (including, without limitation, to the
extent not discharged prior to the date hereof, all assessments for public
improvements or benefits, whether or not commenced or completed within the term
of the Mortgage), ground rents, water, sewer or other rents and charges,
excises, levies, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), and all other governmental charges,
in each case whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of every character in respect of an Individual Property, including
any Rents and Accounts (including all interest and penalties thereon), which at
any time prior to, during or in respect of the term hereof may be assessed
-12-
<PAGE>
or imposed on or in respect of or be a Lien upon (i) Borrower (including,
without limitation, all income, franchise, single business or other taxes
imposed on Borrower for the privilege of doing business in the jurisdiction in
which such Individual Property, or any other collateral delivered or pledged to
Lender in connection with the Loan, is located) or Lender, (ii) an Individual
Property, or any other collateral delivered or pledged to Lender in connection
with the Loan, or any part thereof or any Rents therefrom or any estate, right,
title or interest therein, or (iii) any occupancy, operation, use or possession
of, or sales from, or activity conducted on, or in connection with such
Individual Property or the leasing or use of such Individual Property or any
part thereof, or the acquisition or financing of the acquisition of such
Individual Property by Borrower. Nothing contained in this Agreement shall be
construed to require Borrower to pay any tax, assessment, levy or charge imposed
on Lender or its designee or any Certificateholder in the nature of a franchise,
capital levy, estate, inheritance, succession, income or net revenue tax.
"Improvements" means, with respect to each Individual Property, all
------------
buildings, structures and improvements of every nature whatsoever now or
hereafter situated on the Land, including, but not limited to, any and all
hotels, shopping centers, office buildings, power plants, apartment buildings,
houses, garages, carports, warehouses, utility sheds, workrooms, swimming pools,
tennis courts, sidewalks, parking areas, drives, retaining walls, fences,
gates, grating, terracing and other improvements and appurtenances thereto, and
any and all additions, alterations and betterments now or hereafter situated,
placed or constructed upon the Land or any part thereof, and to the extent of
Borrower's interest therein, all gas and electric fixtures, radiators, heaters,
engines and machinery, boilers, ranges, elevators and motors, plumbing and
heating fixtures, carpeting and other floor coverings, water heaters, awnings
and storm sashes, and cleaning apparatus which are or shall be attached to the
Land or said buildings, structures or improvements.
"Imputed Debt Service" means for any period (and calculated either for
--------------------
an Individual Property based on its Allocated Loan Amount or for the Individual
Properties as a whole based on the Principal Indebtedness then outstanding) the
aggregate amount of principal and interest payments (excluding for purposes of
such calculations for the Individual Properties, as a whole, any Scheduled
Defeasance Payments) that would be due and payable during the applicable
period calculated using a debt constant of 10.464% per annum for the Principal
Indebtedness.
"Indebtedness" means the Principal Indebtedness, together with all
------------
accrued and unpaid interest thereon and all other obligations and liabilities
due or to become due to Lender pursuant hereto, under the Note or in accordance
with any of the other Loan Documents, and all other amounts, sums and expenses
paid by or payable to Lender hereunder or pursuant to the Note or any of the
other Loan Documents.
"Indemnified Parties" has the meaning provided in Section 7.26.
------------------- ------------
"Indemnity Agreement" shall mean the Indemnity Agreement in the form
-------------------
of Exhibit U, dated as of the Closing Date, among Borrower, REIT, Limited
---------
Partner and Lender, as modified and supplemented and in effect from time to
time.
-13-
<PAGE>
"Independent" means, when used with respect to any Person, a Person
-----------
who (i) does not have any direct financial interest or any material indirect
financial interest in such Person or in any Affiliate of such Person, and (ii)
is not connected with such Person or any Affiliate of such Person as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"Independent Director" has the meaning provided in Section
-------------------- -------
4.1(O)(xvi).
- -----------
"Individual Property" means the Land, the Improvements and the
-------------------
Equipment encumbered by a Mortgage. All of the "Individual Properties"
collectively comprise the Mortgaged Property. The Individual Properties are
described on Exhibit F attached hereto.
---------
"Instruments" means all instruments, chattel paper, documents or other
-----------
writing obtained by Borrower from or in connection with the operation of
Borrower's Individual Properties evidencing a right to the payment of Money,
including, without limitation, all notes, drafts, acceptances, documents of
title, and policies and certificates of insurance, including, but not limited
to, liability, hazard, rental and credit insurance, guarantees and securities,
now or hereafter received by Borrower or in which Borrower has or acquires an
interest pertaining to the foregoing. In addition to the foregoing,
"Instruments" shall include the meaning such term has in the New York Uniform
Commercial Code.
"Insurance Proceeds" has the meaning provided in Section 2.12(i).
------------------ ---------------
"Insurance Requirements" means all material terms of any insurance
----------------------
policy required pursuant to this Agreement, a Mortgage and all material
regulations and then current standards applicable to or affecting the applicable
Individual Property or any part thereof or any use or condition thereof, which
may, at any time, be recommended by the Board of Fire Underwriters, if any,
having jurisdiction over such Individual Property, or such other body exercising
similar functions.
"Interest Accrual Period" means, with respect to a Payment Date, the
-----------------------
period commencing on and including the 11th day of the month preceding the month
in which such Payment Date occurs (or, in the case of the first Payment Date,
the Closing Date) and ending on and including the 10th day of the month in which
such Payment Date occurs; provided, however, that no Interest Accrual Period
-------- -------
shall extend beyond the Maturity Date.
"Interim Servicing Agreement" means an Interim Servicing Agreement
---------------------------
entered into by and between Lender and any Person designated by Lender with
respect to the servicing of the Loan, as the same may be modified, amended or
supplemented from time to time.
"Inventory" means all goods now owned or hereafter acquired by
---------
Borrower intended for sale or lease, or to be furnished under contracts of
service by Borrower in connection with its Individual Property, including,
without limitation, all inventories of food, beverages and other comestibles
held by Borrower for sale or use at or from Borrower's Individual Properties,
and all other such goods, wares, merchandise and materials and supplies of every
nature held by Borrower for sale to or for consumption by tenants or guests of
-14-
<PAGE>
Borrower's Individual Properties and others, and all such other goods returned
to or repossessed by Borrower. In addition to the foregoing, the term
"Inventory" shall include the meaning such term has in the New York Uniform
Commercial Code.
"Investment" in any Person shall mean: (a) the acquisition (whether
----------
for cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person; and (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance, loan or
extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies purchased in the ordinary course of
business) or Guarantee of, or other contingent obligation with respect to, Other
Indebtedness or other liability (including the Indebtedness) of such Person and
(without duplication) any amount committed to be advanced, lent or extended to
such Person.
"Land" has the meaning provided in the Mortgages.
----
"Late Payment Premiums" has the meaning provided in Section 2.5(d).
--------------------- --------------
"Lease Termination Fees" means any Rents constituting termination
----------------------
fees, rejection damages or buy-out fees (or any award by any court in
satisfaction or lieu thereof) received by Borrower on or after the Closing Date
in connection with the termination of any Lease, whether prior to, on or after
the stated expiration thereof.
"Leases" means all leases and other agreements or arrangements
------
affecting the use or occupancy of all or any portion of Borrower's Individual
Properties now in effect or hereafter entered into (including, without
limitation, lettings, subleases, licenses, concessions, tenancies and other
occupancy agreements covering or encumbering all or any portion of Borrower's
Individual Properties), together with any guarantees, supplements, amendments,
modifications, extensions and renewals of the same, and all additional
remainders, reversions and other rights and estates appurtenant thereto.
"Leasing Costs" means, with respect to the Mortgaged Property, costs
-------------
incurred by Borrower in connection with tenant improvements and lease
commissions paid to third parties with respect to executed Leases with
unaffiliated parties.
"Leasing Reserve Amount" means, with respect to any Current Month, the
----------------------
sum of (a) $525,000 and (b) the aggregate amount, determined with respect to
each Terminated Lease (other than the Cigna Lease, if such Lease becomes a
Terminated Lease), equal to the excess, if any, of (i) the aggregate amount of
the Lease Termination Fees received by Borrower with respect to such Terminated
Lease during such Current Month and all prior months, over (ii) the aggregate
amount of the funds transferred to Borrower during such Current Month and all
prior months from the Leasing Reserve Sub-Account pursuant to Section
-------
2.12(g)(iv) for payment of Leasing Costs relating to a renewal, extension or
- -----------
replacement of such Terminated Lease.
-15-
<PAGE>
"Leasing Reserve Sub-Account" means the Sub-Account of the Cash
---------------------------
Collateral Account established and maintained pursuant to Section 2.12 relating
------------
to the payment of Leasing Costs.
"Legal Requirements" means all governmental statutes, laws, rules,
------------------
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting either an applicable Individual Property or
any part thereof or the construction, use, alteration or operation thereof, or
any part thereof, enacted and in force as of the relevant date, and all Permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting such Individual
Property or any part thereof, including, without limitation, any which may (i)
require repairs, modifications or alterations in or to such Individual Property
or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
"Lender" has the meaning provided in the first paragraph of this
------
Agreement.
"Letter of Credit" has the meaning provided in Section 2.15.
---------------- ------------
"Letter of Instruction" has the meaning provided in Section 2.12(b).
--------------------- ---------------
"Lien" means any mortgage, deed of trust, lien (statutory or other),
----
pledge, hypothecation, assignment, preference, priority, security interest or
any other encumbrance or charge on or affecting an Individual Property or any
portion thereof or Borrower, or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
Uniform Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanic's, materialmen's and other similar liens and encumbrances.
"Limited Partner" shall mean G&L Realty Partnership, L.P., a Delaware
---------------
limited partnership.
"Loan" has the meaning provided in the Recitals hereto.
----
"Loan Amount" has the meaning provided in the Recitals hereto.
-----------
"Loan Documents" means this Agreement, the Note, the Mortgages, the
--------------
Assignments of Leases, the Assignments of Agreements and all other agreements,
instruments, certificates and documents delivered by or on behalf of Borrower or
any Affiliate to evidence or secure the Loan or otherwise in satisfaction of the
requirements of this Agreement, the Mortgages or the other documents listed
above.
"Loss Proceeds" has the meaning provided in Section 2.12(i).
------------- ---------------
"Losses" has the meaning provided in Section 7.26.
------ ------------
-16-
<PAGE>
"MAI" shall mean a Member of the Appraisal Institute.
---
"Management Agreement" means the Property Management Agreement in the
--------------------
form of Exhibit G, dated as of May 6, 1996, between Limited Partner and
---------
Borrower, as modified, amended and supplemented and in effect from time to time.
"Manager" means, with respect to an Individual Property, the manager
-------
of such Individual Property identified on Exhibit G, or any permitted successor
---------
or assignee, as manager of an Individual Property or all of the Individual
Properties, as the case may be.
"Material Adverse Effect" means a material adverse effect upon (i) the
-----------------------
business or the financial position or results of operation of Borrower, (ii) the
ability of Borrower to perform, or of Lender to enforce, any of the Loan
Documents or (iii) the value of (x) the Collateral taken as a whole or (y) any
Individual Property.
"Material Lease" means a Lease covering 3,000 square feet or more of
--------------
gross leasable area in any Individual Property.
"Maturity Date" means August 11, 2021 or such earlier date resulting
-------------
from acceleration.
"Maximum Amount" means the maximum rate of interest designated by
--------------
applicable Legal Requirements.
"Money" means all moneys, cash, rights to deposit or savings accounts,
-----
credit card receipts or other items of legal tender obtained from or for use in
connection with the operation of Borrower's Individual Properties.
"Month" or "month" means any calendar month (unless otherwise
----- -----
specified).
"Monthly Installment Amount" has the meaning specified in Section
-------------------------- -------
2.5(b), as adjusted pursuant to the last sentence thereof.
- ------
"Monthly Statement" has the meaning provided in Section 2.12(h)(ii).
----------------- -------------------
"Mortgage" means, with respect to an Individual Property, a first
--------
priority Deed of Trust, Assignment of Rents, Security Agreement, Financing
Statement and Fixture Filing, in the form attached hereto as Exhibit H, dated as
---------
of the Closing Date, granted by Borrower to Deed of Trust Trustee for the
benefit of Lender with respect to such Individual Property, as same may
hereafter from time to time be supplemented, amended, modified or extended by
one or more written agreements supplemental thereto, but shall exclude any such
instrument released by Lender pursuant to Section 2.11, and "Mortgages" means
------------
all such instruments collectively.
"Mortgaged Property" means all the Individual Properties encumbered
------------------
by the Mortgages then outstanding.
-17-
<PAGE>
"Multiemployer Plan" means a multiemployer plan defined as such in
------------------
Section 3(37) of ERISA to which contributions have been made by Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"NACC" has the meaning specified in Section 7.30(d).
---- ---------------
"Net Cash Flow" means for any trailing 12 month period (and calculated
-------------
either for an Individual Property or for the Individual Properties as a whole)
the excess, if any, of Operating Income for such period over Operating Expenses
for such period, adjusted as follows: (i) income derived from signed, non-
cancelable Leases in place as of the date of the calculation shall be included;
(ii) deduction shall be made for (x) income derived from Leases in effect during
some or all of the covered period but terminated as of the date of the
calculation and (y) income derived from a Defaulting Tenant for the period for
which such calculation is being made; (iii) the Capital Reserve Amount shall be
deducted (to the extent such amount has not been included in Operating
Expenses); (iv) deduction shall be made for management fees equal to the greater
of (x) actual management fees paid pursuant to the Management Agreement and (y)
4% of Operating Income (to the extent such costs have not been included in
Operating Expenses); (v) amounts allocated to the Leasing Reserve Sub-Account
for such period pursuant to Section 2.12(h)(i)(5) shall be deducted (to the
---------------------
extent not included in Operating Expenses); and (vi) amounts allocated to the
Cigna Replacement Lease Reserve Sub-Account for such period pursuant to Section
-------
2.12(h)(i)(6) shall be deducted (to the extent not included in Operating
- -------------
Expenses). Additional adjustments shall be made if required by Lender to reflect
reasonable provisions for market vacancies and similar factors which would
materially impact historical cash flow.
"Net Proceeds" means (i) either (x) the purchase price (at foreclosure
------------
or otherwise) actually received by Lender from a third party purchaser with
respect to one or more Individual Properties as a result of the exercise by
Lender of its rights, powers, privileges and other remedies after the occurrence
of an Event of Default or (y) in the event that Lender is the purchaser at
foreclosure of one or more of such Individual Properties, the fair market value
of such Individual Properties, as determined by Lender in good faith, or, at
Borrower's request and expense, an MAI appraiser, in either case less (ii) all
reasonable costs and expenses, including, without limitation, all Deed of Trust
Trustee's and attorneys' fees and disbursements and any closing costs, brokerage
fees, sheriff's or marshall's commissions or the like, if applicable, incurred
by Lender in connection with the exercise of such remedies; provided, however,
-------- -------
that such costs and expenses shall not be deducted to the extent such amounts
previously have been added to the Indebtedness in accordance with the terms of
the Mortgages or applicable law.
"New Note" has the meaning provided in Section 7.30(d).
-------- ---------------
"Note" means and refers to the promissory note, in the form attached
----
hereto as Exhibit I, dated the Closing Date, made by Borrower to Lender pursuant
---------
to this Agreement, as such note may be modified, amended, supplemented,
extended or consolidated, and any note(s) issued in exchange therefor or in
replacement thereof.
-18-
<PAGE>
"Officer's Certificate" means a certificate delivered to Lender by
---------------------
Borrower which is signed by an authorized officer of the General Partner of
Borrower.
"Operating Expenses" means, for any period, all expenditures by
------------------
Borrower required to be expensed under GAAP during such period in connection
with the ownership, operation, maintenance, repair or leasing of the Individual
Properties (or of an Individual Property), including, without limitation:
(i) expenses in connection with the cleaning, repair and maintenance
of the Individual Properties (or of an Individual Property);
(ii) wages, benefits, payroll taxes, uniforms, insurance costs and all
other related expenses for employees of Borrower or any Affiliate engaged in the
repair, operation and maintenance of the Individual Properties (or of an
Individual Property);
(iii) any management fees and expenses incurred with respect to the
Individual Properties (or of an Individual Property);
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item and
overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions (other than income taxes);
(vii) business interruption, liability, casualty and fidelity
insurance premiums (which, in the case of any policies covering more than one
Individual Property, shall be allocated among the Individual Properties pro rata
in proportion to the insured value of the Individual Properties covered by such
policies);
(viii) legal, accounting and other professional fees and expenses
incurred in connection with the ownership and operation of the Individual
Properties (or of an Individual Property) including, without limitation,
collection costs and expenses;
(ix) costs and expenses of security and security systems provided to
and/or installed and maintained with respect to the Individual Properties (or an
Individual Property);
(x) trash removal and exterminating costs and expenses;
(xi) advertising and marketing costs;
(xii) costs of environmental audits and monitoring, environmental
remediation work or any other expenses incurred with respect to compliance with
Environmental Laws; and
-19
<PAGE>
(xiii) all other ongoing expenses which in accordance with GAAP should
be included in Borrower's annual financial statements as operating expenses of
the Individual Properties (or of an Individual Property).
Notwithstanding the foregoing, Operating Expenses shall not include (w) any
Capital Costs or Leasing Costs, (x) depreciation, amortization and other non-
cash charges, (y) any extraordinary items not normally considered an operating
expense in accordance with GAAP or (z) Debt Service, Available Cash Payments and
other payments in connection with the Indebtedness. Operating Expenses shall be
calculated on the accrual basis of accounting and in accordance with GAAP.
"Operating Income" means, for any period, all regular ongoing income
----------------
of Borrower during such period from the Permitted Investments or the operation
of the Individual Properties (or of an Individual Property), including, without
limitation:
(i) all amounts payable to Borrower by any Person as Rent relating to
the Individual Properties (or an Individual Property);
(ii) business interruption proceeds; and
(iii) all other amounts which in accordance with GAAP are included in
Borrower's annual financial statements as operating income of the Individual
Properties (or of an Individual Property).
Notwithstanding the foregoing, Operating Income shall not include (v) any
condemnation or insurance proceeds (other than business interruption proceeds or
condemnation proceeds with respect to a temporary taking and, in either such
case, only to the extent allocable to such period or other applicable reporting
period), (w) any proceeds resulting from the sale, exchange, transfer, financing
or refinancing of all or any portion of one or more Individual Properties, (x)
any Rent attributable to a Lease prior to the date on which the actual payment
of Rent is required to be made thereunder or any Lease termination payment, (y)
any item of income otherwise includable in Operating Income but paid directly to
a Person other than Borrower or (z) security deposits received from tenants
until forfeited. Operating Income shall be calculated on the accrual basis of
accounting and in accordance with GAAP.
"Other Indebtedness" means, with respect to any Person, (i) all
------------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all indebtedness of such Person evidenced by
a note, bond, debenture or similar instrument, (iii) the face amount of all
letters of credit issued for the account of such Person, and, without
duplication, all unreimbursed amounts drawn thereunder, and (iv) all
indebtedness of such Person secured by a Lien on any property owned by such
Person whether or not such indebtedness has been assumed, excluding however, in
---------
each case, the Indebtedness.
"Parent Entities" has the meaning provided it in Section 4.1(A).
--------------- --------------
-20-
<PAGE>
"Partnership Agreement" shall mean that certain Agreement of Limited
---------------------
of G&L Medical Partnership, L.P., dated as of May 7, 1996, between General
Partner and Limited Partner, as modified, amended and supplemented from time to
time.
"Payment Date" means, for each month, the eleventh day of such month
------------
or if, in any such case, such day is not a Business Day, the first Business Day
following such day. The first Payment Date shall be June 11, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
under ERISA, or any successor thereto.
"Permits" means, with respect to an Individual Property, all licenses,
-------
permits, allocations, authorizations, approvals and certificates used in
connection with the ownership, operation, use or occupancy of such Individual
Property, including, without limitation, building permits, business licenses,
state health department licenses (including all permits and licenses relating to
surgical operations), food service licenses, liquor licenses, licenses to
conduct business and all such other permits, licenses and rights, obtained from
any Governmental Authority or private Person concerning ownership, operation,
use or occupancy of such Individual Property (including without limitation any
permits, licenses and rights necessary for the storage and use of any Hazardous
Substance in connection with the operation, use or occupancy of such Individual
Property by the tenants thereof).
"Permitted Encumbrances" has the meaning provided it in Section 5.6.
---------------------- -----------
"Permitted Investments" means any one or more of the following
---------------------
obligations or securities payable on demand or having a scheduled maturity on or
before the Business Day preceding the date upon which the funds in the Cash
Collateral Account are required to be drawn, and having at all times the
required ratings, if any, provided for in this definition, unless each Rating
Agency shall have confirmed in writing to Lender that a lower rating would not,
in and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Certificates:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by Standard & Poor's Rating Group, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move
-21-
<PAGE>
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this clause
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by Standard & Poor's Rating Group, must not
have an "r" highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(iv) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
Duff & Phelps Credit Rating Co. or Fitch Investors Service, L.P., otherwise
acceptable to such Rating Agency as confirmed in writing that such investment
would not, in and of itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to the Certificates); provided, however,
that the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (B) if
rated by Standard & Poor's Rating Group, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances issued
by, any bank or trust company, savings and loan association or savings bank, the
short term obligations of which are rated in the highest short term rating
category by each Rating Agency (or, if not rated by any Rating Agency other than
Standard & Poor's Rating Group, otherwise acceptable to such Rating Agency or
Agencies, as applicable, as confirmed in writing that such investment would not,
in and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Certificates); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by
Standard & Poor's Rating Group, must not have an "r" highlighter affixed to
their rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
-22-
<PAGE>
(vi) debt obligations with maturities of not more than 365 days and
rated by each Rating Agency (or, if not rated by any Rating Agency other than
Standard & Poor's Rating Group, otherwise acceptable to such Rating Agency or
Agencies, as applicable, as confirmed in writing that such investment would not,
in and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Certificates) in its highest long-term unsecured
rating category; provided, however, that the investments described in this
clause must (A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by Standard & Poor's Rating Group, must
not have an "r" highlighter affixed to their rating, (C) if such investments
have a variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move proportionately
with that index, and (D) such investments must not be subject to liquidation
prior to their maturity;
(vii) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that is rated by each Rating Agency (or, if not
rated by any Rating Agency other than Standard & Poor's Rating Group, otherwise
acceptable to such Rating Agency or Agencies, as applicable, as confirmed in
writing that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates) in its highest short-term unsecured debt rating; provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by Standard & Poor's Rating Group, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(viii) the Federated Prime Obligation Money Market Fund (the "Fund")
----
so long as the Fund is rated "AAA" by each Rating Agency (or, if not rated by
any Rating Agency other than Standard & Poor's Rating Group, otherwise
acceptable to such Rating Agency or Agencies, as applicable, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
the Certificates);
(ix) any other demand, money market or time deposit, demand obligation
or any other obligation, security or investment, provided that each Rating
Agency has confirmed in writing to Lender, that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to the Certificates; and
(x) such other obligations as are acceptable as Permitted Investments
to each Rating Agency, as confirmed in writing to Lender, that such obligations
would not, in and of itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to the Certificates;
-23-
<PAGE>
provided, however, (i) that, in the judgment of Lender, such obligation or
- -------- -------
security continues to qualify as a "cash flow investment" pursuant to Code
Section 860G(a)(6) earning a passive return in the nature of interest and (ii)
that no obligation or security shall be a Permitted Investment if (A) such
obligation or security evidences a right to receive only interest payments or
(B) the right to receive principal and interest payments on such obligation or
security are derived from an underlying investment that provides a yield to
maturity in excess of 120% of the yield to maturity at par of such underlying
investment.
"Person" means any individual, corporation, partnership, joint
------
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Plan" means an employee benefit or other plan established or
----
maintained by Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Pooling and Servicing Agreement" means the Pooling and Servicing
-------------------------------
Agreement entered into by and among Lender, as depositor, any Person designated
by Lender to service the Loan, as servicer, and Trustee, as trustee, on the
Securitization Closing Date.
"Prepayment Date" means August 11, 2006.
---------------
"Principal Indebtedness" means the Loan Amount, initially, as adjusted
----------------------
by each increase or decrease in the principal amount of the Loan outstanding,
whether as a result of prepayment or otherwise.
"Principal Office" means the principal office of Lender, located at 2
----------------
World Financial Center, New York, New York 10281 or any other office designated
as such in writing by Lender.
"Proceeds" means all proceeds, Rents, profits, products, Accounts,
--------
chattel paper, deposit accounts, Instruments, Equipment, Inventory, consumer
goods, farm products, documents, General Intangibles and other proceeds whether
cash or non-cash, movable or immovable, tangible or intangible (including
Insurance Proceeds and Condemnation Proceeds) from the Collateral, including,
without limitation, those from the sale, exchange, transfer, collection, loss,
damage, disposition, substitution or replacement of any of the Collateral and
all income, gain, credit, distributions and similar items from or with respect
to the Collateral. In addition to the foregoing, "Proceeds" shall also include
the meaning as such term has in the New York Uniform Commercial Code.
"Proceeds Deficiency" has the meaning provided in the definition of
-------------------
"Allocated Loan Amount".
"Rate Adjustment Date" means August 11, 2006.
--------------------
-24-
<PAGE>
"Rating Agencies" means at least two of Fitch Investors Service, L.P.,
---------------
Duff & Phelps Credit Rating Co. and Standard & Poor's Rating Group or any
successor thereto, and any other nationally recognized financial rating agency
which may hereafter be engaged by Lender, or its designees, to rate the
Certificates.
"REIT" means G&L Realty Corp., a Maryland corporation.
----
"Recourse Distributions" has the meaning provided in Section 7.14.
---------------------- ------------
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Substances through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Release Price" has the meaning provided in Section 2.7(a).
------------- --------------
"REMIC" means a "real estate mortgage investment conduit" for federal
-----
income tax purposes.
"REMIC Trust" means a trust fund created pursuant to the Pooling and
-----------
Servicing Agreement or that portion thereof for which a REMIC election is made
under the Code.
"Rents" means, with respect to each Individual Property, all rents
-----
(whether denoted as base rent, advance rent, minimum rent, percentage rent,
additional rent or otherwise), issues, income, royalties, profits, revenues,
proceeds, bonuses, deposits (whether denoted as security deposits or
otherwise), termination fees, rejection damages, buy-out fees and any other fees
made or to be made in lieu of rent, any award made hereafter to Borrower in any
court proceeding involving any tenant, lessee, licensee or concessionaire under
any of the Leases in any bankruptcy, insolvency or reorganization proceedings in
any state or federal court, and all other payments, rights and benefits of
whatever nature from time to time due under the Leases, including, without
limitation, (i) rights to payment earned under the Leases, (ii) any payments or
rights to payment with respect to conference facilities, dining or bar
facilities, parking facilities or other facilities in any way contained within
or associated with such Individual Property, and (iii) all other income,
consideration, issues, accounts, profits or benefits of any nature arising from
the possession, use and operation of such Individual Property.
"Required Available Cash Payment" means the amount of the Available
-------------------------------
Cash Payment that will be payable to Lender on the next Payment Date.
"Required Debt Service Payment" means the amount of the Debt Service,
-----------------------------
excluding any Scheduled Defeasance Payments pursuant to Section 7.30 hereof,
------------
that will be payable to Lender on the next Payment Date.
"Revised Interest Rate" means the greater of (a) the sum of (i) the
---------------------
Base Interest Rate and (ii) 2%, and (b) the sum of (i) the Treasury Rate and
(ii) 2%.
-25-
<PAGE>
"Scheduled Defeasance Payments" means:
-----------------------------
(a) with respect to a defeasance of the Loan in whole pursuant to
Section 2.6, payments on or prior to, but as close as possible to, (i) each
- -----------
scheduled Payment Date after the Defeasance Date through and including the
Payment Date immediately preceding the Prepayment Date, in amounts equal to the
scheduled payments due on such Payment Dates under this Agreement, and (ii) the
Prepayment Date, of the unpaid principal balance of the Loan and any accrued and
unpaid interest thereon; or
(b) with respect to any defeasance of the Loan in part (with
respect to any Individual Property) pursuant to Section 2.6, including, without
-----------
limitation, in connection with a Transfer of any Individual Property or any
interest therein pursuant to Section 2.7(a), payments on or prior to, but as
--------------
close as possible to, (i) each scheduled Payment Date after the Defeasance Date
through and including the Payment Date immediately preceding the Prepayment
Date, in amounts equal to the portion of the scheduled payments due on such
Payment Dates allocated to the amount of principal so defeased, and (ii) the
Prepayment Date, of the amount of the principal so defeased and any accrued and
unpaid interest thereon.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securitization" has the meaning provided in Section 2.14.
-------------- ------------
"Securitization Closing Date" means the date on which the Pooling and
---------------------------
Servicing Agreement is executed and delivered and the Securitization is
effected.
"Security Agreement" has the meaning provided in Section 7.30(a).
------------------ ---------------
"Security and Pledge Agreement" shall mean the Security and Pledge
-----------------------------
Agreement in the form of Exhibit N, dated as of the Closing Date, between
---------
Borrower and Lender, as modified and supplemented and in effect from time to
time.
"Security Deposit Notice" has the meaning provided in Section 2.12(a).
----------------------- ---------------
"Security Deposit Sub-Account" means the Sub-Account of the Cash
----------------------------
Collateral Account established and maintained pursuant to Section 2.12 relating
------------
to security deposits under the Leases.
"Sub-Account" has the meaning provided in Section 2.12(d).
----------- ---------------
"Subsidiary" shall mean, with respect to any Person, (i) any
----------
corporation of which at least a sufficient number of the outstanding shares of
stock having by the terms thereof ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more of
the Subsidiaries or by such Person and one or more of the Subsidiaries or (ii)
any
-26-
<PAGE>
partnership in which such Person owns 50% or more of the interest in such
partnership. "Wholly-Owned Subsidiary" shall mean, with respect to any Person.
-----------------------
any such corporation of which all of such shares, other than directors'
qualifying shares, are so owned or controlled.
"Successor Borrower" has the meaning specified in Section 7.30(d).
------------------ ---------------
"Survey" means an American Land Title Association certified title
------
survey of an Individual Property prepared by a registered Independent surveyor
satisfactory to Lender and the company issuing the Title Insurance Policy for
that Individual Property.
"Taking" means a taking or voluntary conveyance during the term hereof
------
of all or part of an Individual Property, or any interest therein or right
accruing thereto or use thereof, as the result of, or in settlement of, any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting an Individual Property or any portion thereof whether or not the same
shall have actually been commenced.
"Tax Adjusted Issue Price" has the meaning specified in the definition
------------------------
of "Tax Fair Market Value."
"Tax Fair Market Value" means the fair market value of an Individual
---------------------
Property, and (x) shall not include the value of any personal property or other
property that is not an "interest in real property" within the meaning of
Treasury Regulation (S)(S)1.860G-2 and 1.856-3(c), and (y) shall be reduced by
the "adjusted issue price" (within the meaning of Code (S)1272(a)(4)) (the "Tax
---
Adjusted Issue Price") of any indebtedness, other than the Loan, secured by
- --------------------
a Lien affecting the Individual Property, which Lien is prior to or on a parity
with the Liens created under the Mortgage.
"Terminated Lease" means any Lease that is terminated on or after the
----------------
Closing Date, whether or not such termination is effected (a) by Borrower or the
lessee or tenant thereunder, (b) in compliance with the terms and conditions
thereof, or (c) occurs prior to, on or after the stated expiration thereof.
"Title Insurance Policies" means the loan policies of title insurance
------------------------
in form acceptable to Lender issued by Chicago Title Company with respect to
each Individual Property and insuring the liens in favor of Lender created by
the Mortgage, subject only to the Permitted Encumbrances for that Individual
Property and containing such endorsements and affirmative assurances as Lender
shall reasonably require.
"Total Security Deposit Amount" has the meaning provided in Section
----------------------------- -------
2.15(a).
- -------
"Transaction Costs" means all costs and expenses paid or payable by
-----------------
Borrower relating to the Transactions, including, without limitation, the
Finder's fee ($540,000), legal fees and accounting fees and the costs and
expenses described in Section 7.24.
------------
"Transactions" means each of the transactions contemplated by the Loan
------------
Documents.
-27-
<PAGE>
"Transfer" means any transfer, sale, assignment or conveyance of an
--------
Individual Property or any portion thereof.
"Treasury Rate" shall mean, as of the Rate Adjustment Date, the yield,
-------------
calculated by linear interpolation (rounded to the nearest 1/1000th of 1 percent
(i.e., 0.001%)) of the yields of United States Treasury Constant Maturities with
terms (one longer and one shorter) most nearly approximating that of noncallable
United States Treasury obligations having maturities as close as possible to
August 11, 2021, as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Lender.
"Trustee" means any Person appointed as trustee under the Pooling and
-------
Servicing Agreement or its successor in interest.
"U.S. Treasuries" has the meaning provided in Section 7.30(a).
--------------- ---------------
"UCC Searches" has the meaning specified in Section 3.1(G).
------------ --------------
"Use" means, with respect to any Hazardous Substance, the generation,
---
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous Substance or transportation to or from the property of
such Person of such Hazardous Substance.
"Wholly-Owned Subsidiary" has the meaning specified in the definition
-----------------------
of "Subsidiary."
"Withdrawn Allocated Amount" has the meaning specified in the
--------------------------
definition of "Allocated Loan Amount."
"Year" or "year" means any calendar year (unless otherwise specified).
---- ----
ARTICLE II
GENERAL TERMS
-------------
Section 2.1 Amount of the Loan. On the Closing Date, subject to the
------------------
terms and conditions of this Agreement, Lender shall lend to Borrower the Loan
Amount. After any Principal Indebtedness is repaid, Lender shall have no
obligation to readvance the amount repaid.
Section 2.2 Use of Proceeds. Proceeds of the Loan shall be used for
---------------
the following purposes: (a) to repay existing indebtedness on the Mortgaged
Property in order to obtain the release of all Liens securing the same, and all
related costs and expenses of such repayment, (b) to fund the Sub-Accounts
required under this Agreement, and (c) to pay to the Finder the Finder's fee and
to pay or reimburse all other Transaction Costs. Any proceeds in
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<PAGE>
excess of the amounts described in clauses (a), (b) and (c) may be used by
---------------- ---
Borrower for any lawful purpose.
Section 2.3 Security for the Loan. The Note and Borrower's
---------------------
obligations hereunder and under the other Loan Documents shall be secured by (a)
the Mortgages, (b) the Assignments of Leases, (c) the Assignments of Agreements
and (d) the security interests and Liens granted in this Agreement and in the
other Loan Documents.
Section 2.4 Borrower's Note. (a) Borrower's obligation to pay the
---------------
principal of and interest on the Loan shall be evidenced by the Note, duly
executed and delivered by Borrower. The Note shall be payable as to principal
and interest as specified in this Agreement, with a final maturity on the
Maturity Date. All outstanding Indebtedness shall be paid by Borrower on the
Maturity Date.
(b) Lender is hereby authorized, at its option, (i) to endorse on
a schedule attached to the Note (or on a continuation of such schedule attached
to the Note and made a part thereof) an appropriate notation evidencing the date
and amount of each payment of principal and interest in respect thereof, and/or
(ii) to record the Allocated Loan Amounts and such payments in its books and
records. Such schedule and/or such books and records, as the case may be, shall,
absent manifest error, constitute prima facie evidence of the accuracy of the
information contained therein.
Section 2.5 Principal and Interest. (a) Interest on the Loan and the
----------------------
Note shall accrue at a rate per annum equal to (i) the Base Interest Rate on the
Principal Indebtedness and any other Indebtedness (except as provided in Section
-------
2.5(d) below) commencing upon the Closing Date and continuing through and
- ------
including the day prior to the Rate Adjustment Date and (ii) the Revised
Interest Rate on the Principal Indebtedness, any Accrued Interest and any other
Indebtedness (except as provided in Section 2.5(d) below) commencing upon the
--------------
Rate Adjustment Date and continuing through the Maturity Date; provided,
--------
however, that the Required Debt Service Payment shall not be reamortized (or
- -------
recalculated) as a result of the Revised Interest Rate. For each Interest
Accrual Period, interest shall be computed on the actual number of days elapsed,
based on a 360-day year (i.e., interest for each day during which any part of
the Loan is outstanding shall be computed at said rate divided by 360).
(b) Commencing with the Payment Date on June 11, 1996, and
continuing on the Payment Date on July 11, 1996, all interest accrued on the
Note during the related Interest Accrual Period shall be payable. Commencing
with the Payment Date on August 11, 1996, and continuing on each and every
Payment Date thereafter through and including July 11, 2006, the principal of
and interest on the Note shall be payable in equal monthly installments of
$172,647.97 (as adjusted from time to time, the "Monthly Installment Amount").
--------------------------
Upon a prepayment (but not a defeasance) pursuant to Section 2.6 or 2.7, the
----------- ---
amount of the Monthly Installment Amount shall be recalculated to equal the
amount of the equal monthly installments of principal and interest which would
be necessary to amortize fully the Loan over the remaining term to the Maturity
Date calculated based upon (i) each Interest Accrual Period during such
remaining term consisting of exactly thirty (30)
-29-
<PAGE>
days and (ii) interest continuing to accrue on the Loan and the Note during such
remaining term at the Base Interest Rate.
(c) Commencing with the Payment Date on August 11, 2006, and
continuing on each and every Payment Date thereafter, the principal of and
interest on the Note shall be payable in monthly installments equal to the sum
of (i) the Monthly Installment Amount, and (ii) the amount of Available Cash
attributable to the Mortgaged Property for the month preceding the month in
which such Payment Date occurs in excess of such Monthly Installment Amount.
The Available Cash Payment shall be applied, first, to the Principal
-----
Indebtedness until reduced to zero, second, to Additional Interest accrued
------
during the Interest Accrual Period related to the Payment Date on which such
payment is made, and third, to the Accrued Interest, if any; provided, however,
----- -------- -------
that, notwithstanding the foregoing, any such application shall be in accordance
with the terms of Section 2.8 to the extent a different application would result
-----------
thereunder. To the extent the Available Cash Payment is insufficient to fully
pay any such Additional Interest on any Payment Date, such Additional Interest
shall be deferred and added to any Additional Interest previously deferred
pursuant to this sentence and remaining unpaid (collectively, the "Accrued
-------
Interest"). The entire outstanding principal balance of the Loan (including,
- --------
without limitation, any unpaid Additional Interest and Accrued Interest),
together with all accrued but unpaid interest thereon, shall be due and payable
to Lender on the Maturity Date.
(d) Upon the occurrence of an Event of Default, the Principal
Indebtedness and any other Indebtedness will bear interest at the Default Rate
from the date such Event of Default occurred until such Event of Default is
cured. In addition, a late payment premium (the "Late Payment Premium") of five
--------------------
percent (5%) of any principal or interest (other than Additional Interest or
Accrued Interest) payment or any other amount payable under the Loan Documents
not paid on the Payment Date or due date, respectively, therefor shall be due
with any such late payment. Notwithstanding any other provision hereof to the
contrary, except in the case of a failure by Borrower to pay to Lender any
remaining Available Cash after repayment in full of the Principal Indebtedness,
the failure by Borrower to pay Accrued Interest or Additional Interest on any
Payment Date shall not be deemed an Event of Default hereunder.
(e) Notwithstanding any other provision hereof to the contrary,
if Borrower pays the entire outstanding principal balance of the Loan together
with all accrued but unpaid interest calculated at the Base Interest Rate
thereon and any other amounts required to be paid by Borrower under this
Agreement or the other Loan Documents on or before the Payment Date which is six
(6) months after the Rate Adjustment Date, (i) all accrued but unpaid Accrued
Interest will be forgiven by Lender and (ii) all Additional Interest and Accrued
Interest theretofore paid to Lender by Borrower first will be applied to reduce
the payment to be made by Borrower necessary to pay the entire outstanding
principal balance of the Loan and all accrued but unpaid interest thereon or any
other amounts required to be paid by Borrower under this Agreement, and
thereafter will be refunded to Borrower.
Section 2.6 Voluntary Prepayment; Defeasance. The Loan may not be
--------------------------------
prepaid in whole or in part during the period commencing on the Closing Date and
continuing
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<PAGE>
through and including the day immediately preceding the Prepayment Date.
Notwithstanding the foregoing, during the period commencing after the Defeasance
Prohibition Termination Date and continuing through and including the day
immediately preceding the Prepayment Date. Borrower may defease the Loan in
whole or in part (with respect to any Individual Property) as provided in
Section 7.30. On or after the Prepayment Date, Borrower may voluntarily prepay
- ------------
the Loan in whole or in part without premium or penalty by payment of
immediately available funds without defeasance. In addition, the Loan may also
be prepaid as described in Section 2.7. Notwithstanding any other provision
-----------
hereof, prepayments of the Loan shall only be permitted on Payment Dates.
Section 2.7 Mandatory Prepayment: Defeasance. (a) Borrower may
--------------------------------
Transfer any Individual Property or any interest therein only at any time after
the Defeasance Prohibition Termination Date; provided, however, that (i) no
-------- -------
Default or Event of Default shall have occurred and be continuing, (ii) the Debt
Service Coverage Ratio of the remaining Individual Properties (considered as a
whole) immediately after such Transfer would not be less than the greater of (A)
the Debt Service Coverage Ratio of all Individual Properties (including the
Individual Property to be transferred) (considered as a whole) calculated
immediately prior to the Transfer and (B) the Debt Service Coverage Ratio of all
Individual Properties (including the Individual Property to be transferred)
(considered as a whole) calculated as of the Closing Date, (iii) Lender shall
have received an Officer's Certificate certifying that the Principal
Indebtedness, after deducting the Release Price, will not, on the related
Defeasance Date (or after a prepayment, the date of such prepayment), exceed
125% of the sum of the Tax Fair Market Values of the remaining Individual
Properties as of the Securitization Closing Date, (iv) Lender shall have
received from Borrower financial statements, calculations and other backup
information with respect to the matters in clauses (ii) and (iii) above, all in
------------ -----
form and substance reasonably satisfactory to Lender and accompanied by an
Officer's Certificate stating that such statements, calculations and information
are true, correct and complete in all material respects, and (v) upon the date
of the consummation of any such Transfer (which must be the Defeasance Date, if
prior to the Prepayment Date, or the Prepayment Date or another Payment Date, if
on or after the Prepayment Date). Borrower shall defease or, on or after the
Prepayment Date, prepay a principal portion of the Loan in an amount equal to
125% of the Allocated Loan Amount for such Individual Property (the "Release
-------
Price") in connection with a defeasance of the Loan in part pursuant to Section
- ------ -------
2.6 and Section 7.30 or a prepayment in part of the Loan after the Prepayment
- --- ------------
Date pursuant to Section 2.6; provided, however, that there shall be credited
----------- -------- -------
against such Release Price the amount of any principal prepaid pursuant to
Section 2.6 prior to the Transfer of the particular Individual Property which
- -----------
was not credited against the Release Price of another Individual Property.
(b) If Borrower is required by Lender under the provisions of a
Mortgage to prepay the Loan or any portion thereof in the event of damage,
destruction or a Taking of an Individual Property, Borrower shall prepay a
portion of the Loan (such prepayment to be applied to the Allocated Loan Amount
for such Individual Property) such that the principal amount prepaid together
with (x) interest thereon to the immediately succeeding Payment Date, if such
payment is not made on a Payment Date, or (y) accrued interest thereon, if such
payment is made on a Payment Date, exhausts the Insurance Proceeds
-31-
<PAGE>
or the Condemnation Proceeds available for such prepayment by advancing the Loss
Proceeds from the Cash Collateral Account.
(c) Upon prepayment of the Loan in full, Borrower shall pay to
Lender, in addition to the amounts specified in Section 2.6 or this Section 2.7,
----------- -----------
as applicable, any other amounts then due and payable to Lender pursuant to the
Loan Documents. All prepayments made pursuant to Section 2.6 or this Section 2.7
----------- -----------
shall be applied in accordance with the provisions of Section 2.8.
-----------
Section 2.8 Application of Payments. All proceeds (including any Net
-----------------------
Proceeds) of any payment or repayment, including prepayments and Available Cash
Payments, of the Loan shall be applied to pay: first, any reasonable out-of-
-----
pocket costs and expenses of Lender (including the fees and charges of the Bank)
arising as a result of such repayment; second, any accrued and unpaid interest
------
at the Base Interest Rate then payable with respect to the Loan or the portion
thereof being repaid; third, the outstanding principal amount of any Required
-----
Debt Service Payments theretofore required to be paid by Borrower; fourth, any
------
accrued and unpaid interest at the Default Rate then payable with respect to the
Loan; fifth, any accrued and unpaid Late Payment Premiums then payable with
-----
respect to the Loan; sixth, the outstanding principal amount of the Loan;
-----
seventh, currently accruing Additional Interest; eighth, Accrued Interest; and
- ------- ------
ninth, any other amounts due and owing under this Agreement and the other Loan
- -----
Documents. Any partial prepayment of principal made pursuant to Section 2.5(c)
--------------
from Available Cash Payments shall be applied to principal payments thereafter
required in the inverse order of their maturity and the Required Debt Service
Payment shall not be changed. Notwithstanding the foregoing, following the
occurrence and during the continuance of an Event of Default, all proceeds
(including any Net Proceeds) of any payment or repayment, including prepayments
and Available Cash Payments, of the Loan shall be applied to pay any amounts
payable under this Agreement and the other Loan Documents in the order
determined by Lender in its sole discretion.
Section 2.9 Method and Place of Payment. (a) Except as otherwise
---------------------------
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 12:00 noon, New York City
time, on the date when due and shall be made in lawful money of the United
States of America in federal or other immediately available funds to an account
specified to Borrower by Lender in writing, and any funds received by Lender
after such time shall, for all purposes hereof, be deemed to have been paid on
the next succeeding Business Day.
(b) All payments made by Borrower hereunder, or by Borrower under
the other Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
Section 2.10 Taxes. All payments made by Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority (other than taxes imposed on the net income of Lender).
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<PAGE>
Section 2.11 Release of Collateral. (a) Notwithstanding any other
---------------------
provision of this Agreement or any other Loan Document, upon any defeasance of
the Loan in part (with respect to an Individual Property) pursuant to Section
-------
2.6 or any Transfer of any Individual Property or any interest therein by
- ---
Borrower in accordance with Section 2.7(a) (whether in connection with a
--------------
defeasance of the Loan in part prior to the Prepayment Date, or a partial
prepayment of the Loan on or after the Prepayment Date, pursuant to Section
-------
2.6), Lender shall, simultaneously with receipt of the Defeasance Deposit or the
- ---
payment described in clause (v) of such Section 2.7(a), whichever is applicable,
--------------
release the Lien of the Mortgage and the related Assignment of Leases,
Assignment of Agreements and UCC-1 financing statements and any other Liens in
favor of Lender relating to such Individual Property and shall release to
Borrower any portion of the Accounts relating to such Individual Property.
(b) If Lender (i) receives Loss Proceeds with respect to any
Individual Property (A) in the event of a Taking or casualty affecting 100% of
such Individual Property or (B) in an amount equal to or exceeding the sum of
the Allocated Loan Amount for such Individual Property and accrued and unpaid
interest thereon and (ii) applies such Loss Proceeds to reduce the Indebtedness
in accordance with Section 2.7(b), Lender shall simultaneously with such
--------------
application release the Lien of the Mortgage and related Assignment of Leases,
Assignment of Agreements and UCC-1 financing statements and any other Liens in
favor of Lender relating to such Individual Property and shall release to
Borrower any portion of the Accounts relating to such Individual Property.
(c) Upon (i) repayment of the Loan and all other amounts due
hereunder and under the other Loan Documents in full in accordance with the
terms hereof and thereof or (ii) defeasance of the Loan in whole as described in
Section 7.30, Lender shall, as promptly as reasonably possible after such
- ------------
repayment or defeasance, release its Liens with respect to all Collateral,
provided, however, that Lender shall have no obligation to release any Lien with
- -------- -------
respect to Collateral on or prior to the Defeasance Prohibition Termination Date
except as provided in Section 2.11(b).
---------------
Section 2.12 Central Cash Management.
-----------------------
(a) Collection Account. Borrower hereby acknowledges and agrees,
------------------
that all of the Rents (including security deposits from tenants), and all of the
Money and Proceeds received from Accounts derived from the Individual
Properties, shall be utilized (i) to pay all amounts to become due and payable
under the Note by funding the Debt Service Payment Sub-Account to the extent
required pursuant to Section 2.12(h)(i)(3), (ii) to fund the Basic Carrying
---------------------
Costs Sub-Account to the extent required pursuant to Section 2.12(h)(i)(1),
---------------------
(iii) to fund the Capital Reserve Sub-Account to the extent required pursuant to
Section 2.12(h)(i)(4), (iv) to fund the Security-Deposit Sub-Account to the
- ---------------------
extent required pursuant to Section 2.12(h)(i)(2), (v) to fund the Leasing
---------------------
Reserve Sub-Account to the extent required pursuant to Section 2.12(h)(i)(5),
-------------
(vi) to fund the Cigna Replacement Lease Reserve Sub-Account to the extent
required pursuant to Section 2.12(h)(i)(6), and (vii) to pay all Operating
---------------------
Expenses. Borrower shall open and maintain at the Collection Account Bank a
demand deposit account (the "Collection Account"). The Collection Account shall
------------------
be assigned a separate and unique identification number by the Collection
Account Bank and shall be
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<PAGE>
opened and maintained in the name "G&L Medical Partnership, L.P., as Debtor, and
Nomura Asset Capital Corporation, as Secured Party, pursuant to the Mortgage
Loan Agreement dated as of May 24, 1996". Borrower shall notify all tenants to
pay Rent to the Collection Account by delivering to each tenant a notice (the
"Tenant Letter") in substantially the form attached as Exhibit J. All payments
------------- ---------
constituting Rent (including security deposits from tenants) or made with
respect to Accounts received by Borrower or a Manager shall be endorsed and
deposited, within one Business Day after receipt thereof, directly into the
Collection Account. All security deposits shall be payable to the Manager for
the applicable Individual Property. Each Manager shall collect all security
deposits with respect to the Individual Property managed by it and shall endorse
all checks and deposit all such funds within one Business Day after receipt
thereof, directly into the Collection Account and concurrently therewith shall
give a written notice to Lender or its designee of the amount of security
deposits deposited into the Collection Account and the tenant(s) and Individual
Property(ies) to which they relate (the "Security Deposit Notice"); provided,
----------------------- --------
however, that such funds representing security deposits held by Manager on the
- -------
Closing Date or received by the Manager or Borrower as security deposits after
the Closing Date need not be deposited into the Collection Account if and to the
extent a Letter of Credit is delivered to Lender in lieu thereof in accordance
with Section 2.15 hereof. Borrower may designate a new financial institution to
------------
serve as Collection Account Bank hereunder as provided in Section 2.13(k).
---------------
Borrower shall have no right of withdrawal from the Collection Account.
(b) Cash Collateral Account. Pursuant to the Letter of
-----------------------
Instruction delivered to the Collection Account Bank (the "Letter of
---------
Instruction") in substantially the form attached hereto as Exhibit K. Borrower
- ----------- ---------
has authorized and directed the Collection Account Bank to transfer on a daily
basis all funds in excess of the minimum balance required by the Collection
Account Bank deposited in the Collection Account to account no. 677526808 at the
Chicago, Illinois branch of the Bank entitled "Nomura Asset Capital Corporation,
as Secured Party, pursuant to a Mortgage Loan Agreement dated as of May 24, 1996
between G&L Medical Partnership, L.P. and Nomura Asset Capital Corporation" (the
"Cash Collateral Account"). Lender may elect to change the financial institution
-----------------------
at which the Cash Collateral Account shall be maintained; provided, however,
-------- -------
that Lender shall give Borrower and the Collection Account Bank not fewer than
30 days' prior notice of each change and the financial institution to which the
Cash Collateral Account may be transferred shall be subject to Borrower's
reasonable approval. The Cash Collateral Account shall at all times be an
Eligible Account. Lender has established the Cash Collateral Account in the name
of Lender or its designee, and the Cash Collateral Account shall be under the
sole dominion and control of Lender or its designee. Borrower shall have no
right of withdrawal in respect of the Cash Collateral Account.
(c) Parking Receipts. On or before the 15th day of June 1996 and
----------------
the 15th day of each month thereafter until the Maturity Date, Borrower shall
deposit all parking receipts generated by the Individual Properties during the
immediately preceding month into the Collection Account and concurrently
therewith shall give a written notice to Lender or its designee of the amount of
parking receipts deposited into the Collection Account and the Individual
Property(ies) to which they relate.
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<PAGE>
(d) Establishment of Sub-Accounts. The Cash Collateral Account
-----------------------------
shall contain the Debt Service Payment Sub-Account, the Basic Carrying Costs
Sub-Account, the Capital Reserve Sub-Account, the Security Deposit Sub-Account,
the Leasing Reserve Sub-Account and the Cigna Replacement Lease Reserve Sub-
Account, each of which accounts (individually, a "Sub-Account" and collectively,
the "Sub-Accounts") shall be an Eligible Account to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Agreement.
(e) Permitted Investments. Upon the request of Borrower which
---------------------
request may be made one time per month, Lender shall direct the Bank to invest
and reinvest any balance in the Cash Collateral Account from time to time in
Permitted Investments as instructed by Borrower; provided, however, that (i) if
-------- -------
Borrower fails to so instruct Lender, or upon the occurrence of an Event of
Default, Lender may direct the Bank to invest and reinvest such balance in
Permitted Investments as Lender shall determine in its sole discretion, (ii) the
maturities of the Permitted Investments on deposit in the Cash Collateral
Account shall, to the extent such dates are ascertainable, be selected and
coordinated to become due not later than the day before any disbursements from
the applicable Sub-Accounts must be made, (iii) all such Permitted Investments
shall be held in the name and be under the sole dominion and control of Lender
or its designee, and (iv) no Permitted Investment shall be made unless Lender or
its designee shall retain a perfected first priority Lien in such Permitted
Investment securing the Indebtedness and all filings and other actions necessary
to ensure the validity, perfection, and priority of such Lien have been taken.
It is the intention of the parties hereto that the entire amount deposited in
the Cash Collateral Account (or as much thereof as Lender may reasonably arrange
to invest) shall at all times be invested in Permitted Investments, and that the
Cash Collateral Account shall be a so-called "zero balance" account. All funds
in the Cash Collateral Account that are invested in a Permitted Investment are
deemed to be held in the Cash Collateral Account for all purposes of this
Agreement and the other Loan Documents. Neither Lender nor any of its agents,
including its designee, shall have any liability for any loss in investments of
funds in the Cash Collateral Account that are invested in Permitted Investments
(unless invested contrary to Borrower's request prior to an Event of Default)
and no such loss shall affect Borrower's obligation to fund, or liability for
funding, the Cash Collateral Account and each Sub-Account, as the case may be.
Borrower agrees that Borrower shall include all such earnings on the Cash
Collateral Account as income of Borrower for federal and applicable state tax
purposes.
(f) Interest on Accounts. All interest paid or other earnings on
--------------------
the Permitted Investments made hereunder shall be deposited into the Cash
Collateral Account and shall be subject to allocation and distribution like any
other monies deposited therein.
(g) Payment of Debt Service, Available Cash Payments, Basic
-------------------------------------------------------
Carrying Costs, Capital Costs, Leasing Costs and Cigna Replacement Lease Leasing
- --------------------------------------------------------------------------------
Costs. Not later than three Business Days before each Payment Date during the
- -----
term of the Loan, Lender or its designee shall deliver to Borrower a certificate
in the form attached hereto as Exhibit L, setting forth whether sufficient funds
---------
exist in the Cash Collateral Account to fund the Debt Service Payment Sub-
Account, the Basic Carrying Costs Sub-Account, the Capital Reserve Sub-Account,
the Leasing Reserve Sub-Account and the Cigna Replacement Lease
-35-
<PAGE>
Reserve Sub-Account in the required amounts. If the funds in the Cash Collateral
Account then allocated to the Sub-Accounts are less than the amount of funds
which are required to be on deposit therein on such Payment Date, Borrower shall
be obligated to deposit funds (in addition to Rents, Money and Proceeds received
from Accounts), on or before one Business Day prior to the Payment Date, into
the Cash Collateral Account in the amount of such deficiency. Borrower's
obligation to deposit funds into the Cash Collateral Account as described in
the immediately preceding sentence is an absolute obligation of Borrower and is
not contingent upon Lender or its designee delivering a certificate to Borrower
as described above or upon the timeliness or accuracy of such certificate, and
any failure by Borrower to make any such deposit shall be an Event of Default
hereunder.
(i) Payment of Debt Service and Available Cash Payments. At
---------------------------------------------------
or before 12:00 noon, New York City time, on each Payment Date during the term
of the Loan, Lender or its designee shall transfer from the Debt Service Payment
Sub-Account an amount equal to the Required Debt Service Payment and Required
Available Cash Payment, if any, for such Payment Date to the account of Lender
or its designee established under the Interim Servicing Agreement or, if after
the Securitization Closing Date, under the Pooling and Servicing Agreement
(either of such accounts, the "Custodial Account"). Borrower shall be deemed to
-----------------
have timely made the Required Debt Service Payment and Required Available Cash
Payment, if any, pursuant to Section 2.9 regardless of the time Lender or its
-----------
designee makes such transfer as long as sufficient funds are then on deposit in
the Debt Service Payment Sub-Account.
(ii) Payment of Basic Carrying Costs. At least ten (10)
-------------------------------
Business Days prior to the due date of any Basic Carrying Cost and not more
frequently than once each month, Borrower shall notify Lender or its designee in
writing and request that Lender or its designee pay such Basic Carrying Cost on
behalf of Borrower on or prior to the due date thereof. Together with each such
request, Borrower shall furnish Lender or its designee with copies of bills and
other documentation as may be reasonably required by Lender or its designee to
establish that such Basic Carrying Cost is then due. Lender or its designee
shall make such payments on behalf of Borrower out of the Basic Carrying Cost
Sub-Account before same shall be due to the extent that there are funds
available in the Basic Carrying Cost Sub-Account and Lender or its designee have
received appropriate documentation to establish the amount(s) due and the due
date(s). To the extent insurance costs have been prepaid by Borrower, Borrower
shall provide evidence satisfactory to Lender or its designee that such
insurance costs have been prepaid, at which time Lender or its designee shall
reimburse to Borrower the amount prepaid by Borrower.
(iii) Payment of Capital Costs. Not more frequently than
------------------------
once each month and provided that no Event of Default has occurred and is
continuing, upon Borrower's written request Lender or its designee shall
transfer funds to Borrower then allocated to the Capital Reserve Sub-Account for
payment of Capital Costs. Together with each such request, Borrower shall
furnish Lender or its designee with copies of bills and such other documentation
as may be reasonably required by Lender or its designee to establish that such
Capital Costs are then due.
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<PAGE>
(iv) Payment of Leasing Costs. Not more frequently than once
------------------------
each month and provided that no Event of Default has occurred and is continuing,
upon Borrower's written request Lender or its designee shall transfer funds to
Borrower then allocated to the Leasing Reserve Sub-Account for payment of
Leasing Costs other than Cigna Replacement Lease Leasing Costs (except as
provided below in subparagraph (v) of this Section 2.12(g)). Together with each
---------------- ---------------
such request, Borrower shall furnish Lender or its designee with copies of bills
and such other documentation as may be reasonably required by Lender or its
designee to establish that such Leasing Costs are then due.
(v) Payment of Cigna Replacement Lease Leasing Costs. After
------------------------------------------------
the stated expiration date or earlier termination of the Cigna Lease and not
more frequently than once each month thereafter, and provided that no Event of
Default has occurred and is continuing, upon Borrower's written request Lender
or its designee shall transfer funds to Borrower then allocated to the Cigna
Replacement Lease Reserve Sub-Account for payment of Cigna Replacement Lease
Leasing Costs. Together with each such request, Borrower shall furnish Lender or
its designee with copies of bills and such other documentation as may be
reasonably required by Lender or its designee to establish that such Cigna
Replacement Lease Leasing Costs are then due. To the extent that the funds then
allocated to the Cigna Replacement Lease Reserve Sub-Account are insufficient to
pay such Cigna Replacement Lease Leasing Costs, upon Borrower's written request
Lender or its designee shall transfer funds to Borrower then allocated to the
Leasing Reserve Sub-Account for payment of such Cigna Replacement Lease Leasing
Costs in excess of the funds then allocated to the Cigna Replacement Lease
Reserve Sub-Account. Following (A) completion of any tenant improvements
required under the terms of the Cigna Replacement Lease and (B) payment in full
of any Cigna Replacement Lease Leasing Costs, upon Borrower's written request
Lender or its designee shall transfer to Borrower any remaining funds then
allocated to the Cigna Replacement Lease Reserve Sub-Account. Together with such
request, Borrower shall furnish Lender and Lender or its designee with copies of
paid invoices, lien releases and such other documentation as may be reasonably
required by Lender or its designee to establish that (x) all such tenant
improvements have been satisfactorily completed and (y) all such Cigna
Replacement Lease Leasing Costs have been paid in full.
(h) Funding of Sub-Accounts.
-----------------------
(i) Upon the Closing Date, Borrower shall deposit into the
Cash Collateral Account an amount equal to the Leasing Reserve Amount and Lender
or its designee shall allocate such funds to the Leasing Reserve Sub-Account. In
each month (or portion thereof) occurring during the term of the Loan (each
month or portion thereof, the "Current Month"), commencing upon the Closing Date
-------------
and continuing until the day immediately prior to the Prepayment Date, all funds
then in the Collection Account in excess of the minimum balance required by the
Collection Account Bank shall be transferred to the Cash Collateral Account
pursuant to the Letter of Instruction, and Lender or its designee shall allocate
funds then on deposit in the Cash Collateral Account among the Sub-Accounts as
follows and in the following priority:
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<PAGE>
(1) first, to the Basic Carrying Costs Sub-Account,
-----
Until (A) an amount equal to the Basic Carrying Costs Monthly Installment for
the Current Month has been allocated to the Basic Carrying Costs Sub-Account and
(B) amounts required to pay the Basic Carrying Costs due in the next succeeding
Current Month are being held in the Basic Carrying Costs Sub-Account;
(2) second, to the Security Deposit Sub-Account, an
------
amount equal to the amount of security deposits deposited in the Collection
Account as set forth in a Security Deposit Notice and which have theretofore not
been transferred to the Security Deposit Sub-Account;
(3) third, to the Debt Service Payment Sub-Account,
-----
until an amount equal to the Required Debt Service Payment for the Payment Date
occurring in the month following the Current Month has been allocated to the
Debt Service Payment Sub-Account;
(4) fourth, to the Capital Reserve Sub-Account, until
------
an amount equal to the Capital Reserve Monthly Installment for the Current
Month has been allocated to the Capital Reserve Sub-Account;
(5) fifth, to the Leasing Reserve Sub-Account, until an
-----
amount equal to the Leasing Reserve Amount has been allocated to the Leasing
Reserve Sub-Account; and
(6) sixth, to the Cigna Replacement Lease Reserve
-----
Sub-Account, until an amount equal to the Cigna Replacement Lease Reserve
Amount has been allocated to the Cigna Replacement Lease Reserve Sub-Account;
provided, however, Lender or its designee shall not allocate such amount to the
- -------- -------
Cigna Replacement Lease Reserve Sub-Account with respect to the Current Month
commencing on the Cigna Replacement Lease Reserve Funding Termination Date or
any subsequent Current Month.
Provided that (i) no Event of Default has occurred and is continuing and (ii)
Lender has received all financial information described in Section 5.1 for the
-----------
most recent periods for which the same are due, Lender agrees that in each
Current Month any amounts deposited into or remaining in the Cash Collateral
Account after the minimum amounts set forth in clauses (1), (2), (3), (4), (5)
----------- --- --- --- ---
and (6) above have been satisfied with respect to the Current Month and any
---
periods prior thereto shall be disbursed by wire transfer once a week in the
then-Current Month to the following account: Account Number 092-507645 at Tokai
Bank of California, or such other account that Borrower may request. Borrower
shall use any funds distributed to Borrower (or to Manager) pursuant to the
foregoing first to pay all Operating Expenses and then for any purpose,
including, without limitation, to pay dividends or make other distributions. If
an Event of Default has occurred and as long as it is continuing, if so elected
by Lender, any amounts deposited into or remaining in the Cash Collateral
Account after Lender or its designee has (i) allocated minimum amounts as
hereinabove provided, and (ii) allocated amounts required to pay any Operating
Expenses approved by Lender or its designee shall be held for the account of
Lender and may be withdrawn by Lender to be
-38-
<PAGE>
applied to pay any amounts payable under this Agreement and the other Loan
Documents in the order determined by Lender in its sole discretion.
(ii) No more than 60 days and no less than 30 days before
the beginning of the partial year beginning August 1, 2006 and ending December
31, 2006, and each year thereafter, Borrower shall deliver to Lender an annual
Cash Expense budget (the "Cash Budget") setting forth the projected Cash
-----------
Expenses (the "Budgeted Cash Expense") for each month of the upcoming year.
---------------------
Lender then shall have 30 days in which to approve or disapprove the proposed
Cash Budget, which approval shall not be unreasonably withheld. Upon approval of
the Cash Budget, Borrower on the fifth day of each month thereafter shall
deliver to Lender or its designee a statement (the "Monthly Statement") setting
-----------------
forth the calculations of Available Cash, Cash Expenses and Cash Income for the
prior month. The Monthly Statement shall also set forth the amount of the
Required Debt Service Payment and Required Available Cash Payment due on the
next Payment Date, which Required Available Cash Payment shall be based on the
amount of Available Cash determined by using the lower of actual Cash Expenses
or Budgeted Cash Expenses set forth in a Cash Budget approved by Lender. In the
event no Cash Budget has been approved by Lender, Budgeted Cash Expenses for any
month shall be deemed to be the amount actually spent in the same month in the
prior year.
In each Current Month during the term of the Loan,
commencing upon the Prepayment Date and continuing until the day immediately
prior to the Maturity Date, all funds then in the Collection Account in excess
of the minimum balance required by the Collection Account Bank shall be
transferred to the Cash Collateral Account pursuant to the Letter of
Instruction, and Lender or its designee shall allocate funds then on deposit in
the Cash Collateral Account among the Sub-Accounts as set forth above in
subsection (i) of this Section 2.12(h), but, with respect to the allocation to
- -------------- ---------------
the Debt Service Payment Sub-Account, in the amount of the Required Debt Service
Payment and Required Available Cash Payment as set forth in the Monthly
Statement. Provided that (i) no Event of Default has occurred and is continuing
and (ii) Lender has received all financial information described in Section 5.1
-----------
for the most recent periods for which the same are due, Lender agrees that in
each Current Month any amounts deposited into or remaining in the Cash
Collateral Account after the minimum amounts set forth in clauses (1), (2), (3),
----------- --- ---
(4), (5) and (6) of subsection (i) of this Section 2.12(h) have been satisfied
- --- --- --- -------------- ---------------
with respect to the Current Month and any periods prior thereto (but in no event
more than the lesser of the Cash Expenses or Budgeted Cash Expenses for the
month preceding the Current Month) shall be disbursed by wire transfer once a
month in the then-Current Month to the following account: Account Number 092-
507645 at Tokai Bank of California, or such other account that Borrower may
request. Borrower shall use any funds distributed to Borrower (or to Manager)
pursuant to the foregoing to pay all Cash Expenses. If an Event of Default has
occurred and as long as it is continuing, if so elected by Lender, any amounts
deposited into or remaining in the Cash Collateral Account after Lender or its
designee has (i) allocated minimum amounts as hereinabove provided and (ii)
allocated amounts required to pay any Cash Expenses approved by Lender, shall be
held for the account of Lender and may be withdrawn by Lender to be applied to
pay any amounts payable under this Agreement and the other Loan Documents in
-39-
<PAGE>
the order determined by Lender in its sole discretion. Any remaining balance in
the Cash Collateral Account after Lender or its designee has allocated and
distributed amounts as hereinabove provided shall be held for the account of
Lender and shall be paid to Lender to prepay the principal amount of the Loan in
accordance with Sections 2.6 and 2.8.
------------ ---
(iii) If, on any Payment Date, the balance in the Debt
Service Payment Sub-Account is insufficient to make the payment of Required Debt
Service Payment and Required Available Cash Payment, if any, then a Default
shall exist hereunder, and Lender may (but shall not be obligated to) direct
Lender or its designee to withdraw funds from the Basic Carrying Costs Sub-
Account, the Capital Reserve Sub-Account, the Leasing Reserve Account or the
Cigna Replacement Lease Reserve Sub-Account to pay such deficiency. In the event
that Lender elects to apply the proceeds of any such Sub-Account to pay any
Required Debt Service Payment and Required Available Cash Payment, if any,
Borrower shall, upon demand, repay to Lender the amount of such withdrawn funds
to replenish such Sub-Account and the Late Payment Premium applied to such
funds, and if Borrower shall fail to repay such amounts within five days after
such withdrawal, an Event of Default shall exist hereunder, which Event of
Default shall not be cured unless and until Borrower repays such amount or all
Sub-Accounts have again been fully funded from Rents, Money or Proceeds received
from Accounts. Lender may, at its sole option, replenish such Sub-Account out of
available Rents, Money or Proceeds received from Accounts in subsequent months
which Borrower would have otherwise been entitled to receive.
(i) Loss Proceeds. In the event of a casualty or Taking with
-------------
respect to an Individual Property, unless pursuant to the Mortgages the
proceeds, net of Borrower's reasonable collection costs approved by Lender,
received under any insurance policy required to be maintained by Borrower
("Insurance Proceeds") or the proceeds, net of Borrower's reasonable collection
------------------
costs approved by Lender, in respect of any Taking ("Condemnation Proceeds"), as
---------------------
the case may be, are to be made available to Borrower for restoration, Lender
and Borrower shall cause all such Insurance Proceeds or Condemnation Proceeds
(collectively, "Loss Proceeds") to be paid directly to the Cash Collateral
-------------
Account whereupon Lender or its designee, as the case may be, shall apply same
to reduce the Indebtedness in accordance with Section 2.7(b). If Lender agrees
--------------
or is required pursuant to the provisions hereof or of the Mortgages to make
Loss Proceeds available for restoration, (i) all Insurance Proceeds received in
respect of business interruption coverage and (ii) any Condemnation Proceeds
received in connection with a temporary Taking shall be maintained in the Cash
Collateral Account, to be applied by Lender in the same manner as Rent received
from Manager with respect to the operation of such Individual Property;
provided, further, that in the event that the Insurance Proceeds of any such
- -------- -------
business interruption insurance policy or Condemnation Proceeds of such
temporary Taking are paid in a lump sum in advance, Lender shall hold such
Insurance Proceeds or Condemnation Proceeds in a segregated interest-bearing
escrow account at the Bank, shall estimate, in Lender's reasonable discretion,
the number of months required for Borrower to restore the damage caused by the
casualty to such Individual Property or that such Individual Property will be
affected by such temporary Taking, as the case may be, shall divide the
aggregate business interruption Insurance Proceeds or Condemnation Proceeds in
connection with such temporary Taking by such number of months, and shall
disburse from
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<PAGE>
such escrow account into the Cash Collateral Account each month during the
performance of such restoration or pendency of such temporary Taking such
monthly installment of said Insurance Proceeds or Condemnation Proceeds. In the
event that Insurance Proceeds or Condemnation Proceeds are to be applied toward
restoration, Lender shall hold such funds in a segregated interest-bearing
escrow account at the Bank and shall disburse same in accordance with the
provisions of the Mortgages. If any Loss Proceeds are received by Borrower, such
Loss Proceeds shall be received in trust for Lender, shall be segregated from
other funds of Borrower, and shall be forthwith paid to the Cash Collateral
Account or paid to Lender to hold in a segregated interest-bearing escrow
account, in each case to be applied or disbursed in accordance with the
foregoing, except as provided to the contrary in Section 2.03 of the Mortgages.
------------
Any Loss Proceeds made available to Borrower for restoration in accordance
herewith, to the extent not used by Borrower in connection with, or to the
extent they exceed the cost of such restoration, shall be deposited into the
Cash Collateral Account, whereupon Lender or its designee, as the case may be,
shall apply the same to reduce the Allocated Loan Amount applicable to the
affected Individual Property in accordance with Section 2.7(b). Notwithstanding
--------------
anything to the contrary herein or in any Mortgage, Loss Proceeds will not be
made available to Borrower for restoration unless Borrower furnishes Lender with
an opinion of outside counsel reasonably acceptable to Lender that any REMIC
formed pursuant to the Securitization will not fail to maintain its REMIC status
for federal income tax purposes as a result of making the Loss Proceeds
available to Borrower for restoration.
(j) Payment of Basic Carrying Costs. Except to the extent that
-------------------------------
Lender is obligated to pay Basic Carrying Costs from the Basic Carrying Costs
Sub-Account pursuant to the terms of Section 2.12(g), Borrower shall pay all
---------------
Basic Carrying Costs with respect to Borrower and each Individual Property in
accordance with the provisions of the Mortgages, subject, however, to Borrower's
rights to contest payment of same in accordance with the Mortgages. Borrower's
obligation to pay (or cause Lender to pay) Basic Carrying Costs pursuant to this
Agreement shall include, to the extent permitted by applicable law, Impositions
resulting from future changes in law which impose upon Lender or any Deed of
Trust Trustee an obligation to pay any property taxes or other Impositions or
which otherwise adversely affect Lender's or the Deed of Trust Trustee's
interests. (In the event such a change in law prohibits Borrower from assuming
liability for payment of any such Imposition, Borrower shall prepay a portion of
the Loan equal to the Allocated Loan Amount with respect to the affected
Individual Property, such prepayment to be applied to the Allocated Loan Amount
for such Individual Property together with (x) interest thereon to the
immediately succeeding Payment Date or (y) accrued interest thereon, if such
prepayment is made on a Payment Date. Such prepayment shall be made on the date
that is 120 days after such change in law and failure to pay such amounts on the
date due shall be an Event of Default.) All funds deposited in the Cash
Collateral Account relating to the Basic Carrying Costs shall be held by Lender
pursuant to the provisions of this Agreement and shall be applied in payment of
the foregoing charges when and as payable, provided that no Event of Default
shall have occurred and be continuing. Should an Event of Default occur, the
proceeds on deposit in the Basic Carrying Costs Sub-Account may be applied by
Lender in payment of any Basic Carrying Costs for all or any portion of the
Mortgaged Property as Lender in its sole discretion may determine; provided,
--------
however, that, after the Securitization Closing Date,
- -------
-41-
<PAGE>
Lender shall not apply the proceeds of the Basic Carrying Costs Sub-Account as
aforesaid unless Lender receives notice from its designee as servicer of the
Loan or becomes aware that its designee as servicer of the Loan shall not be
advancing such shortfall pursuant to the terms of the Pooling and Servicing
Agreement: and provided, further, that no such application shall be deemed to
-------- -------
have been made by operation of law or otherwise until actually made by Lender as
herein provided.
(k) Security Deposit Sub-Account. Borrower shall have no right of
----------------------------
withdrawal from the Security Deposit Sub-Account except that, prior to the
occurrence of an Event of Default or Lender or its designee's receipt of notice
thereof given by Lender. Borrower may withdraw funds from the Security Deposit
Sub-Account to refund or apply security deposits as required by the Leases or
by applicable Legal Requirements, and, after the occurrence of an Event of
Default or the delivery of such notice, Lender, on written request from Borrower
with appropriate supporting materials, will direct the Bank to release funds
from the Security Deposit Sub-Account to refund security deposits as required by
the Leases or by applicable Legal Requirements.
(l) The Bank's Reliance. The Bank may rely and shall be protected
-------------------
in acting or refraining from acting upon any written notice, instruction or
request furnished to it hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties. The Bank may rely on
notice from Lender as to the occurrence of an Event of Default.
Section 2.13 Security Agreement.
------------------
(a) Pledge of Accounts. To secure the full and punctual payment
------------------
and performance of all of the Indebtedness, Borrower hereby sells, assigns,
conveys, pledges and transfers to Lender and grants to Lender a first and
continuing security interest in and to, the following property, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (collectively, the "Account Collateral"):
------------------
(i) all of Borrower's right, title and interest in the
Collection Account and all Money, if any, from time to time deposited or held in
the Collection Account:
(ii) all of Borrower's right, title and interest in the Cash
Collateral Account (including, without limitation, all Sub-Accounts) and all
Money and Permitted Investments, if any, from time to time deposited or held in
the Cash Collateral Account (including, without limitation, all Sub-Accounts);
(ii) all of Borrower's right, title and interest in the
Parking Account and all Money, if any, from time to time deposited or held in
the Parking Account:
(iii) all interest, dividends, Money, Instruments and other
property from time to time received, receivable or otherwise payable in respect
of, or in exchange for, any of the foregoing; and
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<PAGE>
(iv) to the extent not covered by clauses (i), (ii) (iii) or
----------- ---- -----
(iv) above, all proceeds (as defined under the Uniform Commercial Code of the
- ---
applicable jurisdiction) of any or all of the foregoing.
(b) Instructions and Agreements. Borrower has submitted to the
---------------------------
Collection Account Bank a Letter of Instruction and the Collection Account Bank
has executed and returned the acknowledgment of instructions and notice that is
a part of the Letter of Instruction. Borrower, Lender and the Bank have executed
and delivered that certain Cash Collateral Account Agreement dated as of the
date hereof (the "CC Account Agreement"), the form of which is attached hereto
--------------------
as Exhibit M. Borrower agrees that prior to the payment in full of the
---------
Indebtedness, the CC Account Agreement shall be irrevocable by Borrower without
the prior written consent of Lender. The Cash Collateral Account shall be
subject to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other banking authority or
Governmental Authority, as may now or hereafter be in effect and the rules,
regulations and procedures of the Bank relating to demand deposit accounts from
time to time in effect. All statements relating to the Cash Collateral Account
shall be issued by Bank as provided in the CC Account Agreement.
(c) Financing Statements: Further Assurances. Borrower has
----------------------------------------
executed and delivered to Lender for filing a financing statement or statements
in connection with the Account Collateral in the form required to properly
perfect Lender's security interest in the Account Collateral to the extent that
it may be perfected by such a filing. Borrower agrees that at any time and from
time to time, at the expense of Borrower, Borrower shall promptly execute and
deliver all further instruments, and take all further action, that Lender may
reasonably request, in order to perfect and protect the pledge and security
interest granted or purported to be granted hereby, or to enable Lender to
exercise and enforce Lender's rights and remedies hereunder, with respect to any
Account Collateral.
(d) Transfers and Other Liens. Borrower agrees that it will not
-------------------------
sell or otherwise dispose of any of the Account Collateral other than pursuant
to the terms hereof, or create or permit to exist any Lien upon or with respect
to all or any of the Account Collateral, except for the Lien granted to Lender
under this Agreement.
(e) Lender's Right to Perform. If Borrower fails to perform any
-------------------------
covenant or obligation contained in this Agreement and such failure shall
continue for a period of five Business Days after Borrower's receipt of written
notice thereof from Lender or its designee, Lender may, but shall have no
obligation to, itself perform, or cause performance of, such covenant or
obligation, and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender upon demand.
(f) Lender's Reasonable Care. Beyond the exercise of reasonable
------------------------
care in the custody thereof, Lender shall not have any duty as to any Account
Collateral or any income thereon in its possession or control or in the
possession or control of any agents for or of Lender, or the preservation of
rights against any Person or otherwise with respect thereto, Lender shall be
deemed to have exercised reasonable care in the custody of the Account
Collateral in its or its designee's possession if the Account Collateral is
accorded treatment
-43-
<PAGE>
substantially equal to that which Lender accords its own property, it being
understood that Lender or its designee shall not be liable or responsible for
(i) any loss or damage to any of the Account Collateral, or for any diminution
in value thereof from a loss of, or delay in Lender's or its designee's
acknowledging receipt of any wire transfer from the Collection Account Bank, or
(ii) any loss, damage or diminution in value by reason of the act or omission of
Lender or its designee, or Lender's or its designee's agents, employees or
bailees, except to the extent that such loss or damage or diminution in value
results from Lender's or its designee's gross negligence or willful misconduct
or the gross negligence or willful misconduct of any such agent, employee or
bailee of Lender or its designee.
(g) Remedies. The rights and remedies provided in this Section
-------- -------
2.13 are cumulative and may be exercised independently or concurrently, and are
- ----
not exclusive of any other right or remedy provided at law or in equity. No
failure to exercise or delay by Lender in exercising any right or remedy
hereunder or under the Loan Documents shall impair or prohibit the exercise of
any such rights or remedies in the future or be deemed to constitute a waiver or
limitation of any such right or remedy or acquiescence therein.
(h) No Waiver. Every right and remedy granted to Lender under
---------
this Agreement or by law may be exercised by Lender at any time and from time to
time, and as often as Lender may deem it expedient. Any and all of Lender's
rights with respect to the pledge and security interest granted hereunder shall
continue unimpaired, and Borrower shall be and remain obligated in accordance
with the terms hereof notwithstanding (i) any proceeding of Borrower under the
United States Bankruptcy Code or any bankruptcy, insolvency or reorganization
laws or statutes of any state, (ii) the release or substitution of Account
Collateral at any time, or of any rights or interests therein or (iii) any
delay, extension of time, renewal, compromise or other indulgence granted by
Lender or its designee in the event of any Default with respect to the Account
Collateral or otherwise hereunder. No delay or extension of time by Lender in
exercising any power of sale, option or other right or remedy hereunder, and no
notice or demand which may be given to or made upon Borrower by Lender or its
designee, shall constitute a waiver thereof, or limit, impair or prejudice
Lender's right, without notice or demand, to take any action against Borrower or
to exercise any other power of sale, option or any other right or remedy.
(i) Lender Appointed Attorney-In-Fact. Borrower hereby
---------------------------------
irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence and during the continuation of an Event of Default, to execute,
acknowledge and deliver any instruments and to exercise and enforce every right,
power, remedy, option and privilege of Borrower with respect to the Account
Collateral, and do in the name, place and stead of Borrower, all such acts,
things and deeds for and on behalf of and in the name of Borrower with respect
to the Account Collateral, which Borrower could or might do or which Lender may
deem necessary or desirable to more fully vest in Lender the rights and remedies
provided for herein with respect to the Account Collateral and to accomplish the
purposes of this Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest.
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<PAGE>
j) Continuing Security Interest; Termination. This Section 2.13
----------------------------------------- ------------
shall create a continuing pledge of and security interest in the Account
Collateral and shall remain in full force and effect until payment in full of
the Indebtedness. Upon payment in full of the Indebtedness, Borrower shall be
entitled to the return, upon its request and at its expense, of such of the
Account Collateral as shall not have been sold or otherwise applied pursuant to
the terms hereof, and Lender or its designee shall execute such instruments and
documents as may be reasonably requested by Borrower to evidence such
termination and the release of the pledge and lien hereof, provided, however,
-------- -------
that Borrower shall pay on demand all of Lender's or its designee's expenses in
connection therewith.
(k) Replacement of the Collection Account Bank. As long as no
------------------------------------------
Event of Default shall have occurred and be continuing, Borrower shall have the
right at any time to designate a successor Collection Account Bank to hold the
Collection Account upon 30 days' prior written notice to Lender, and Lender's
approval of the successor, which approval shall not be unreasonably withheld or
delayed. In the event that the rating of long-term unsecured debt obligations of
the Collection Account Bank issued by a Rating Agency is withdrawn or reduced to
a rating of BBB or lower, Borrower shall be obligated to promptly select a new
Collection Account Bank and, upon approval of such selection by Lender or its
designee, to establish and maintain the Collection Account previously held at
such Collection Account Bank at said successor. Any successor selected hereunder
shall be a financial institution capable of offering Eligible Accounts of the
types described in clauses (a) and (b) of the definition of "Eligible Accounts."
No such designation shall become effective until Borrower has (i) delivered to
the successor Collection Account Bank a written letter of instructions
substantially equivalent to the Letter of Instruction and (ii) delivered to
Lender or its designee evidence satisfactory to Lender that such instructions
have been delivered to the successor Collection Account Bank and acknowledged by
such successor's execution of an acknowledgment of instructions and notice
substantially in the form included in the Letter of Instruction and such
financing statements as may be necessary or appropriate have been prepared,
executed and delivered to a filing agency.
Section 2.14 Securitization. Borrower hereby acknowledges that Lender,
--------------
any of its Affiliates. its successors or assigns, may securitize the Loan
through the issuance of the Certificates, which will be rated by the Rating
Agencies (the "Securitization"). Borrower agrees that it will cooperate fully
--------------
with Lender and the Rating Agencies in connection with the Securitization,
including, but not limited to, by: (a) entering into nonmaterial amendments to
the Loan Documents to the extent required by the Rating Agencies or otherwise in
connection with the Securitization, which amendments will not affect the
interest rate, amortization or maturity of the Loan; (b) assisting in the
preparation of offering documents describing the Loan and the Securitization in
a manner that satisfies the requirements of applicable federal and state
securities laws, by (without limitation) (i) providing such information as may
be requested in connection therewith and (ii) acting reasonably and promptly in
connection with its review and approval of the relevant portions of the offering
documents; (c) causing to be rendered, at Borrower's sole cost and expense, such
customary opinion letters as shall be requested by the Rating Agencies,
including, without limitation, an opinion letter from counsel to Borrower, in
form and substance reasonably acceptable to Borrower's counsel and Lender, with
respect to the assignment of the Loan and the Loan Documents to Trustee and a
reliance
-45-
<PAGE>
letter in favor of the Rating Agencies with respect to opinions delivered by
Borrower's counsel on the Closing Date; (d) to the extent it is able to do so,
representing that as of the Securitization Closing Date (i) the Tax Fair Market
Value of each Individual Property is equal to or greater than the Allocated Loan
Amount for such Individual Property and (ii) the Tax Fair Market Value of the
Mortgaged Property is equal to or exceeds the Principal Indebtedness, and
providing Lender with any supporting materials reasonably requested by Lender;
(e) re-making the representations and warranties contained in the Loan Documents
as of the Securitization Closing Date; and (f) obtaining, at Borrower's sole
cost and expense, a comfort letter from a nationally recognized accounting firm
in connection with financial information relating to Borrower or the Mortgaged
Property which is presented in the offering documents. Borrower agrees to pay
its pro rata share of third party fees and expenses incurred by Lender or its
Affiliates in connection with the Securitization, including, but not limited to,
legal fees and disbursements, third-party due diligence expenses, Rating Agency
fees and expenses, the costs of providing appraisals, environmental reports and
engineering reports as required by the Rating Agencies, and any servicing,
Trustee or special servicing fees and expenses, provided, however, that the
-------- -------
expenses to be reimbursed by Borrower shall not exceed $99,000. In connection
with the Securitization, Lender intends to use the Engineering Reports and the
Environmental Reports, updated as necessary due to the age of such Reports, to
the extent permitted by the Rating Agencies. Lender shall provide Borrower with
an itemized bill of the expenses for which it seeks reimbursement from Borrower.
On or prior to the Securitization Closing Date, Borrower shall execute and
deliver to Lender an instrument (in form and substance reasonably satisfactory
to Lender and Borrower) indemnifying and holding Lender and its controlling
Persons and Affiliates harmless against all claims, liabilities, costs, expenses
and damages incurred by Lender and its controlling Persons and Affiliate's
(including, without limitation, all liabilities under the Securities Act, the
Exchange Act and all other applicable federal and state securities laws) as a
direct result of any untrue statement of a material fact contained in such
offering documents based on information provided by, or on behalf of, Borrower
which describes Borrower, the Individual Properties (and the management thereof)
or any aspect of the Loan, or as a result of any untrue statement of material
fact in any of the financial statements of Borrower incorporated into the
offering documents or the failure to include in such financial statements or in
such offering documents any material fact relating to Borrower, the Individual
Properties (and the management thereof) and any aspect of the Loan necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that Borrower shall have had
-------- -------
an opportunity to review the relevant portions of the offering documents.
Section 2.15 Letter of Credit in Lieu of Deposits.
------------------------------------
(a) Notwithstanding the provisions of Section 2.12, the Managers
------------
of the Individual Properties shall not be required to deposit all security
deposits collected by such Managers, within one Business Day after receipt
thereof, directly into the Collection Account for transfer to the Security
Deposit Sub-Account, if and to the extent that Borrower obtains, delivers to
Lender and maintains an irrevocable, standby letter of credit (a "Letter of
---------
Credit" ) (i) issued by a bank or other financial institution acceptable to
- ------
Lender in its sole and absolute discretion, (ii) in form and substance
satisfactory to Lender and its counsel in their sole and
-46-
<PAGE>
absolute discretion, (iii) naming Lender as beneficiary, (iv) with respect to
which neither Borrower nor Borrower's General Partner shall be an account party
or have any other obligation with respect thereto, and (v) in an amount greater
than or equal to the difference of (1) the aggregate amount of all security
deposits delivered by the tenants of the Individual Properties as of the Closing
Date (which amount is deemed by the parties hereto to be $145,340.37 as of the
Closing Date, and which amount may be increased or decreased from time to time
to reflect any increase or decrease in the total of all security deposits
delivered by tenants caused by new tenants replacing existing tenants on or
after the Closing Date or new tenants leasing space in the Individual Properties
which is vacant on the Closing Date) (such aggregate amount shall be hereinafter
referred to as the "Total Security Deposit Amount") minus (2) the balance held
-----------------------------
in the Security Deposit Sub-Account.
(b) Lender will return the Letter of Credit to Borrower, provided
--------
that Borrower deposits immediately available funds into the Security Deposit
- ----
Sub-Account and/or obtains and delivers to Lender a replacement Letter of Credit
(which complies with the terms and provisions of this Section 2.15) in an
------------
amount, either in combination or alone, which is equal to or greater than the
Total Security Deposit Amount.
(c) Lender may draw on the Letter of Credit by sight draft at any
time (i) by stating that an Event of Default has occurred under this Agreement
or (ii) after the thirtieth (30th) day prior to the expiration thereof unless
Borrower has extended the term of the Letter of Credit or replaced it with
another Letter of Credit that complies with the terms and provisions of this
Section 2.15. All amounts drawn on the Letter of Credit shall be deposited into
- ------------
the Security Deposit Sub-Account and shall be deemed for all purposes to a
portion of the Account Collateral.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
Section. 3.1 Conditions Precedent to Effectiveness and Disbursement
------------------------------------------------------
of the Loan. This Agreement shall become effective, and the Loan shall be made,
- -----------
on the date that all of the following conditions shall have been satisfied (or
waived in accordance with Section 7.4):
-----------
(A) Loan Documents.
(i) Mortgage Loan Agreement. Borrower shall have executed
-----------------------
and delivered this Agreement to Lender.
(ii) Note. Borrower shall have executed and delivered to
----
Lender the Note.
(iii) Mortgages. Borrower shall have executed and delivered
---------
the Mortgages to Lender and the Mortgages shall have been filed of record in the
appropriate
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<PAGE>
filing offices in each of the jurisdictions in which the Individual Properties
are located or irrevocably delivered to a title agent for such recordation.
(iv) Assignments of Agreements. Borrower shall have executed
-------------------------
and delivered the Assignments of Agreements to Lender and such documents shall
have been filed of record in the appropriate filing offices in each of the
jurisdictions in which the Individual Properties are located or irrevocably
delivered to a title agent for such recordation.
(v) Assignment of Leases. Borrower shall have executed and
--------------------
delivered the Assignments of Leases to Lender and the Assignments of Leases
shall have been filed of record in the appropriate filing offices in each of the
jurisdictions in which the Individual Properties are located or irrevocably
delivered to a title agent for such recordation.
(vi) CC Account Agreement. Borrower and Bank shall have
--------------------
executed the CC Account Agreement and delivered to Lender a copy thereof,
(vii) Tenant Letters. Borrower shall have executed and
--------------
mailed Tenant Letters to each of its tenants and delivered to Lender a copy
thereof.
(viii) Letter of Instruction. Borrower and the Collection
---------------------
Account Bank shall have executed a Letter of Instruction and delivered to Lender
a copy thereof.
(ix) Financing Statements. Borrower shall have executed and
--------------------
delivered all financing statements specified on Exhibit O attached hereto to
---------
Lender and such financing statements shall have been filed of record in the
appropriate filing offices in each of the jurisdictions in which the Individual
Properties are located and all other appropriate jurisdictions or irrevocably
delivered to a title agent for such recordation.
(B) Opinion of Counsel. Lender shall have received from Gibson,
------------------
Dunn & Crutcher, special counsel to Borrower, its legal opinion in substantially
the form attached hereto as Exhibit P. Such legal opinion will be addressed to
---------
Lender, dated the Closing Date, and in form and substance satisfactory to Lender
and its counsel. Borrower hereby instructs such counsel to deliver to Lender
such opinion addressed to Lender.
(C) Entity Documents. Lender shall have received with respect to
----------------
(i) Borrower (x) its certificate of partnership, as amended, modified or
supplemented to the Closing Date, certified to be true, correct and complete by
the appropriate Secretary of State as of a date not more than 5 days prior to
the Closing Date, (y) its partnership agreement certified by its general partner
to be true, correct and complete as of the Closing Date and (z) good standing
certificates from the Secretaries of State for the State of its formation and
each State in which an Individual Property owned by it is located, each to be
dated a date not more than 10 days prior to the Closing Date, and (ii) General
Partner its certificate of incorporation, as amended, modified or supplemented
to the Closing Date, certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than 5 days
-48-
<PAGE>
prior to the Closing Date, together with good standing certificates from such
Secretary of State and from the Secretaries of State of each other State in
which such entity is required to be qualified to transact business, each to be
dated a date not more than 5 days prior to the Closing Date.
(D) Certified Resolutions. etc. Lender shall have received a
--------------------------
certificate of the secretary or assistant secretary of Borrower dated the
Closing Date, certifying (i) the names and true signatures of its incumbent
officers authorized to sign the applicable Loan Documents, (ii) its by-laws as
in effect on the Closing Date, (iii) the resolutions of its board of directors
approving and authorizing the execution, delivery and performance of all Loan
Documents executed by it, and (iv) that there have been no changes in its
certificate of incorporation since the date of the most recent certification
thereof by the appropriate Secretary of State.
(E) Incumbency. A certificate of the General Partner in respect
----------
of each of the officers (i) who is authorized to sign on its behalf the Loan
Documents to which either is a party and (ii) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with the Loan Documents and the transactions
contemplated thereby (and Lender may conclusively rely on such certificates
until it receives notice in writing from the General Partner to the contrary).
(F) Insurance. Lender shall have received certificates of
---------
insurance demonstrating insurance coverage in respect of each of the Individual
Properties of types, in amounts, with insurers and otherwise in compliance with
the terms, provisions and conditions set forth in this Agreement and the
Mortgages. Such certificates shall indicate that Lender and its designee, if
any, are named as additional insureds as their interests may appear and shall
contain a loss payee endorsement in favor of Lender and its designee with
respect to the property policies required to be maintained under this Agreement
and the Mortgages. All insurance policies required to be maintained hereunder
shall be maintained throughout the term of this Agreement in the types and
amounts required under this Agreement and the Mortgages.
(G) Lien Search Reports. Lender shall have received satisfactory
-------------------
(i.e., showing no Liens other than Permitted Encumbrances) reports of UCC
----
(collectively, the "UCC Searches"), tax lien, judgment and litigation searches
------------
conducted by a search firm acceptable to Lender with respect to the Collateral,
such searches to be conducted in each of the locations set forth on Exhibit Q
---------
attached hereto.
(H) Title Insurance. Policies of title insurance on forms of and
---------------
issued by one or more title companies satisfactory to Lender (the "Title
-----
Companies"), showing fee simple title vested in Borrower and insuring the first
- ---------
priority of the Liens created under the Mortgages in an amount for each
Individual Property equal to not less than the Allocated Loan Amount for such
Individual Property on the date hereof (or, at the option of Lender the total of
the Allocated Loan Amount for all of the Mortgaged Property on the date hereof
subject to a "tying" endorsement reducing such amount by the amount of losses
paid under the policies
-49-
<PAGE>
relating to the other Mortgaged Property), subject only to such defects, liens,
encumbrances, assessments, security interests, restrictions, easements and other
tide exceptions as are satisfactory to Lender, together with, as may be
reasonably required by Lender, such reinsurance schedules and agreements in
respect of all then existing title insurance policies for the Mortgaged Property
in amounts and otherwise in form and substance satisfactory to Lender and
executed by the Title Companies. Such policies shall also contain such
endorsements and affirmative insurance provisions as Lender may reasonably
require. In addition, Borrower shall have paid to the Title Companies all
expenses and premiums of the Title Companies in connection with the issuance of
such policies and an amount equal to the recording and stamp taxes (including
mortgage recording taxes) payable in connection with recording the Mortgages in
the appropriate county land offices.
(I) Budgets; Operating Reports; Financial Statements. Lender
------------------------------------------------
shall have received (i) operating budgets for the Fiscal Year ending December
31, 1996, for the Individual Properties, (ii) historical operating reports for
the Individual Properties for the three years commencing January 1, 1993, and
audited financial statements for Limited Partner for the calendar year 1995, and
(iii) financial statements reflecting the treatment described in the agreed upon
procedures letter between Deloitte & Touche and Borrower.
(J) Environmental Matters. Lender shall have received
---------------------
Environmental Reports, acceptable to Lender, with respect to each of the
Individual Properties, such Environmental Reports to be conducted by Independent
environmental engineers acceptable to Lender.
(K) Consents, Licenses, Approvals, etc. Lender shall have
----------------------------------
received copies of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Borrower, and the
validity and enforceability, of the Loan Documents, and such consents, licenses
and approvals shall be in full force and effect.
(L) Additional Matters. Lender shall have received such other
------------------
Permits, certificates (including certificates of occupancy for each Individual
Property), opinions, documents and instruments (including letters from the
appropriate Governmental Authorities regarding the zoning of each Individual
Property and evidence that utility services are available for each Individual
Property and that each Individual Property is subject to separate tax
assessment) relating to the Loan as may have been reasonably requested by
Lender, and all corporate and other proceedings, all other documents (including,
without limitation, all documents referred to herein and not appearing as
exhibits hereto) and all legal matters in connection with the Loan shall be
satisfactory in form and substance to Lender.
(M) Representations and Warranties. The representations and
------------------------------
warranties herein and in the other Loan Documents shall be true and correct in
all material respects on such date both before and after giving effect to the
making of the Loan.
-50-
<PAGE>
(N) No Default or Event of Defaults. No Default or Event of
-------------------------------
Default shall have occurred and be continuing on such date either before or
after giving effect to the making of the Loan.
(O) No Injunction. No law or regulation shall have been adopted.
-------------
no order, judgment or decree of any Governmental Authority shall have been
issued, and no litigation shall be pending or threatened, which in the good
faith judgment of Lender would enjoin, prohibit or restrain, or impose or result
in the imposition of any material adverse condition upon, the making or
repayment of the Loan or the consummation of the Transactions.
(P) Surveys. Lender shall have received a Survey with respect to
-------
each Individual Property prepared by a licensed or registered land surveyor
satisfactory to Lender, in compliance with the minimum standard detail
requirements for land title surveys adopted by the American Land Title
Association and American Congress on Surveying and Mapping, and certified to
Lender, Borrower, the Title Companies and any other parties requested by Lender
as of a certification date approved by Lender.
(Q) Engineering Reports. Lender shall have received the
-------------------
Engineering Reports, acceptable to Lender, with respect to the Individual
Properties, such Engineering Reports to be prepared by Independent Engineers
acceptable to Lender.
(R) Probable Maximum Loss Studies. Lender shall have received the
-----------------------------
Probable Maximum Loss Studies, acceptable to Lender, with respect to the
potential damage to the Individual Properties in the event of an earthquake.
(S) Contracts. Borrower shall have delivered to Lender a copy of
---------
each material contract and permit affecting the Individual Properties.
(T) Management Agreement. Lender shall have received a copy of
--------------------
the Management Agreement.
(U) Transaction Costs. Borrower shall have paid (or agreed to pay
-----------------
at closing from the proceeds of the Loan) all Transaction Costs for which bills
have been submitted.
(V) Leases: Tenant Estoppels and Agreements. Borrower shall have
---------------------------------------
delivered rent rolls with respect to each of the Individual Properties dated as
of April 30, 1996 and certified as true and correct and, to the extent requested
by Lender, copies of Leases. Borrower shall have also delivered an original
executed tenant estoppel certificate and agreement in substantially the form
attached hereto as Exhibit R with respect to each Material Lease as specified on
---------
Schedule 2 attached hereto and 60% of all other Leases, which tenant estoppel
- ----------
certificates and agreements shall disclose no defaults or other conditions not
disclosed to Lender prior to April 30, 1996 which, in Lender's reasonable
opinion, have or may have a material adverse effect on the Net Cash Flow for the
affected Individual Property.
-51-
<PAGE>
(W) Security Deposit Letter of Credit or Funds Deposit. Borrower
--------------------------------------------------
shall have either (1) delivered a Letter of Credit to Lender in an amount equal
to the Total Security Deposit Amount as of the Closing Date or (2) deposited in
the Cash Collateral Account for allocation to the Security Deposit Sub-Account
immediately available funds, which in the aggregate equal the Total Security
Deposit Amount as of the Closing Date.
(X) Appraisals. Lender shall have received an appraisal of each
----------
of the Individual Properties satisfactory to Lender in its sole discretion
prepared by an Independent MAI appraiser acceptable to Lender.
Section 3.2 Acceptance of Borrowings. The acceptance by Borrower of
------------------------
the proceeds of the Loan shall constitute a representation and warranty by
Borrower to Lender that all of the conditions required to be satisfied under
this Article III in connection with the making of the Loan have been satisfied
-----------
or waived in accordance with Section 7.4.
-----------
Section 3.3 Form of Loan Documents and Related Matters. The Note and
------------------------------------------
all of the certificates, agreements, legal opinions and other documents and
papers referred to in this Article III, unless otherwise specified, shall be
-----------
delivered to Lender, and shall be satisfactory in form and substance to Lender
in its sole discretion (unless the form thereof is prescribed herein).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4. 1 Borrower Representations. Borrower represents and
------------------------
warrants that:
(A) Existence and Rights. Each of the REIT, the Limited Partner,
--------------------
the General Partner (collectively, the "Parent Entities") and Borrower: (a) is a
---------------
corporation or limited partnership duly organized and validly existing under the
laws of the jurisdiction of its incorporation or existence; (b) has all
requisite power, corporate or otherwise, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted and to
execute, deliver and perform any of their respective obligations under this
Agreement or the Loan Documents; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a material
adverse effect on the consolidated financial condition, business, operations or
prospects taken as a whole of the Parent Entities.
(B) Financial Condition. Borrower has delivered to Lender
-------------------
complete and correct copies of (a) the operating reports for the Individual
Properties for the twelve months ended April 30, 1996 and (b) the balance sheet
and related statements of operations, shareholder's equity and cash flows as of
and for the year ended December 31, 1995 for the REIT, all prepared in
accordance with generally accepted accounting principles. Borrower
-52-
<PAGE>
has no liabilities as of the date hereof, except for the Indebtedness, and prior
hereto has had no operations or liabilities. The balance sheet of the REIT at
December 31, 1995 and the statement of operations of the REIT for the year ended
December 31, 1995, fairly present the financial condition of the REIT. On said
dates there were no material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in said balance sheets as at said dates (including but not limited to any
such liabilities. commitments or losses materially affecting any of the
Individual Properties). Since December 31, 1995 there has been no material
adverse change in the financial condition, operations, business or prospects of
the REIT from that set forth in said financial statements as at said date
(including but not limited to any material adverse change in the condition or
prospects of any of the Individual Properties).
(C) Litigation. Except as disclosed in Exhibit S, there are no
---------- ---------
legal or arbitral proceedings or any proceedings by or before any governmental
or regulatory authority or agency, now pending or (to the knowledge of Borrower)
threatened against Borrower which, if adversely determined, could have a
material adverse effect on the consolidated financial condition, operations,
business or prospects taken as a whole of Borrower.
(D) No Breach. None of the execution and delivery of this
---------
Agreement or any other Loan Document to which Borrower is a party, the
consummation of the transactions herein and therein contemplated and compliance
with the terms and provisions hereof and thereof will materially conflict with
or result in a material breach of, or require any consent (except such consents
as have been obtained) under, the Partnership Agreement, or any applicable law
or regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which
Borrower is a party or by which any of them is bound or to which any of them is
subject, or constitute a default under any such agreement or instrument, or
(except for the Lien arising under the Security Documents) result in the
creation or imposition of any Lien upon any of the revenues or assets of
Borrower pursuant to the terms of any such agreement or instrument.
(E) Partnership Action. All action necessary for Borrower to
------------------
execute, deliver and perform its obligations under this Agreement and the other
Loan Documents to which it is a party has been taken; and each of this Agreement
and the other Loan Documents to which Borrower is a party has been duly and
validly executed and delivered by Borrower and constitutes, and the Note when
executed and delivered for value will constitute, its legal, valid and binding
obligation, enforceable in accordance with its terms subject to bankruptcy,
insolvency and equitable principles.
(F) Approvals. No authorizations, approvals or consents of, and
---------
no filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by Borrower of
this Agreement and the other Loan Documents to which it is a party or for the
validity or enforceability thereof,
(G) Use of Loan. Borrower is not engaged principally, or as one
-----------
of its important activities, in the business of extending credit for the
purpose, whether immediate.
-53-
<PAGE>
incidental or ultimate, of buying or carrying margin stock and no part of the
proceeds of the Loan hereunder will be used to buy or carry any margin stock.
(H) ERISA. The Parent Entities, Borrower and the ERISA Affiliate
-----
have fulfilled their respective obligations under the minimum funding-standards
of ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or any Plan or
Multiemployer Plan (other than to make contributions in the ordinary course of
business) and no event or condition has occurred and is continuing as to which
Borrower would be under an obligation to furnish a report to Lender under
Section 5.1.
- -----------
(I) Taxes. Borrower has filed all United States Federal income
-----
tax returns and all other material tax returns (including but not limited to
state and local tax returns) which are required to be filed by it and has paid
all taxes due pursuant to such returns or pursuant to any assessment received by
Borrower; except such taxes which are being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained. The
charges, accruals and reserves on the books of Borrower in respect of taxes and
other governmental charges are, in the opinion of Borrower, adequate.
(J) Investment Company Act. Borrower is not an "investment
----------------------
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
(K) Materials. Borrower has obtained all permits, licenses and
---------
other authorizations which it is required to obtain under all Environmental
Laws. Borrower is in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
In addition, except for violations of Environmental Law and
Environmental Conditions set forth in the reports and other materials described
in Exhibit E hereto:
---------
(i) No Environmental Claim is pending, and no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental entity or other Person with respect to any alleged failure by
Borrower to have any permit, license or authorization required, or to comply
with any Environmental Law, in connection with the conduct of the business of
Borrower or with respect to any generation, treatment, storage, recycling,
transportation, release or disposal, or any release as defined in 42 U.S.C.
(S)9601(22) ("Environmental Release"), of any substance regulated under
---------------------
Environmental Laws, including without limitation, asbestos, polychlorinated
biphenyls ("PCBs"), petroleum products or wastes, or lead (in water or paint)
("Hazardous Materials").
-54-
<PAGE>
(ii) Borrower has not handled any Hazardous Material, other
than as a generator, on any property now or previously owned or leased by
Borrower that has resulted, or may reasonably be expected to result, in an
Environmental Claim: and except to the extent such matters are in compliance
with, and do not require reporting to clean up under applicable laws:
(1) no PCBs are or, to Borrower's knowledge, have been
present at any property now or previously owned or leased by Borrower:
(2) no asbestos is or, to Borrower's knowledge, has
been present at any property now or previously owned or leased by Borrower;
(3) there are and have been no underground storage
tanks for Hazardous Materials, active or abandoned, at any property now or
previously owned or leased by Borrower;
(4) no Environmental Release of Hazardous Materials has
occurred and no such Hazardous Materials are present, at, on or under any
property now or previously owned by Borrower.
(iii) Borrower has not transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed for
------
possible inclusion on the National Priorities List by the Environmental
Protection Agency or CERCUS or on any similar state list or which is the subject
of federal, state or local enforcement actions or, to Borrower's knowledge,
other investigations which may reasonably be expected to lead to Environmental
Claims against Borrower including, but not limited to, personal injury claims.
property damage claims and claims under CERCLA.
(iv) No Hazardous Material generated by Borrower has been
recycled, treated, stored or disposed of and no Environmental Release by
Borrower has occurred at any location other than those listed in Exhibit E
---------
hereto.
(v) No oral or written notification of an Environmental
Release of a Hazardous Material has been filed by or on behalf of Borrower and
no property now or previously owned or leased by Borrower is listed or proposed
for listing on the National Priority List promulgated pursuant to CERCLA, on
CERCUS or on any similar state list of sites requiring investigation or clean-
up.
(vi) There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned or leased by
Borrower, and no government actions have been taken or, to Borrower's knowledge,
are in process which could subject any of such properties to such Liens and
Borrower would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any property owned by it in any deed to such
property.
-55-
<PAGE>
(vii) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of Borrower in relation to any property or facility now or
previously owned or leased by Borrower which have not been provided to Lender.
(L) Subsidiaries, Etc. Borrower has no Subsidiaries or
-----------------
Investments (other than Permitted Investments). Borrower owns, free and clear of
Liens, all such Permitted Investments.
(M) Title. Borrower has good and marketable title to all of the
-----
tangible property and assets reflected as owned by it in the balance sheet
referred to in Section 4.1(B) hereof and good and valid leasehold interests in
--------------
all properties held under lease, and none of such properties or assets will be
subject to any Lien (other than the Liens arising under the Security Documents
and Liens permitted under Section 5.6 hereof). Borrower has good title to all of
-----------
the Collateral reflected as owned in the balance sheet of Borrower referred to
in Section 4.1(B) hereof, free and clear of all Liens, other than the Lien
--------------
arising under the Security Documents and other Liens permitted under Section
-------
5.6, such other Liens in that they are not substantial in amount, do not in any
- ---
case materially detract from the value of the property subject thereto or
materially impair the operation of Borrower and have not arisen other than in
the ordinary course of business of Borrower.
(N) Partnership Agreement. The Partnership Agreement is in full
---------------------
force and effect and has not been modified or amended in any respect.
(O) Single-Purpose Entity. Borrower hereby represents and
---------------------
warrants to, and covenants with, Lender that as of the date hereof and until
such time as the Debt shall be paid in full:
(i) Borrower does not own and will not own any asset or
property other than (A) the Individual Properties, and (B) incidental personal
property necessary for the ownership or operation of the Individual Properties.
(ii) Borrower will not engage in any business other than the
ownership, management and operation of the Individual Properties and Borrower
will conduct and operate its business as presently conducted and operated.
(iii) Borrower will not enter into any contract or agreement
with any affiliate of the Borrower, any constituent party of Borrower or any
affiliate of any constituent party, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than any such party.
(iv) Borrower has not incurred and will not incur any Other
Indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation) other than the Indebtedness and Other
Indebtedness permitted under Section 5.7. Except as permitted under Section 5.6
----------- -----------
and Section 5.7(B), no Other
--------------
-56-
<PAGE>
Indebtedness other than the Indebtedness may be secured (subordinate or pari
----
passu) by the Individual Properties.
- -----
(v) Borrower has not made and will not make any loans or
advances to any third party (including any affiliate or constituent party), and
shall not acquire obligations or securities of its affiliates.
(vi) Borrower is and will remain solvent and Borrower will
pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due.
(vii) Borrower has done or caused to be done and will do all
things necessary to observe partnership formalities and preserve its existence,
and Borrower will not, nor will Borrower permit any constituent party to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, trust or other organizational documents of
Borrower or such constituent party without the prior written consent of Lender.
(viii) Borrower will maintain all of its books, records,
financial statements and bank accounts separate from those of its affiliates and
any constituent party and Borrower will file its own tax returns. Borrower shall
maintain its books, records, resolutions and agreements as official records.
(ix) Borrower will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any affiliate of Borrower or any constituent party of Borrower),
shall correct any known misunderstanding regarding its status as a separate
entity, shall conduct business in its own name, shall not identify itself or any
of its affiliates as a division or part of the other and shall maintain and
utilize separate stationery, invoices and checks.
(x) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(xi) Neither Borrower nor any constituent party will seek or
effect the liquidation, dissolution, winding up, liquidation, consolidation or
merger, in whole or in part, of the Borrower.
(xii) Borrower will not commingle the funds and other assets
of Borrower with those of any affiliate or constituent party or any other
Person.
(xiii) Borrower has and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or constituent party
or any other Person.
(xiv) Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any other Person.
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(xv) General Partner is a corporation whose sole asset is
its interest in Borrower and General Partner will at all times comply, and will
cause Borrower to comply, with each of the representations, warranties, and
covenants contained in this Section 4.1(O) as if such representation, warranty
--------------
or covenant was made directly by such General Partner.
(xvi) Borrower shall at all times cause there to be at least
one duly appointed member of the board of directors (an "Independent Director")
-----------------------
of General Partner of Borrower reasonably satisfactory to Lender who shall not
have been at the time of such individual's appointment, and may not have been at
any time during the preceding five years (i) a shareholder of, or an officer,
director, partner or employee of, Borrower or any of its shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to, Borrower or any
of its shareholders, subsidiaries or affiliates, (iii) a person or other entity
controlling or under common control with any such shareholder, partner supplier
or customer, or (iv) a member of the immediate family of any such shareholder,
officer, director, partner, employee, supplier or customer of any other director
of Borrower. As used herein, the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting
securities, by contract or otherwise.
(xvii) Borrower shall not cause or permit the board of
directors of the general partner of Borrower to take any action which, under the
terms of any certificate of incorporation, by-laws or any voting trust agreement
with respect to any common stock, requires a vote of the board of directors of
the general partner of Borrower unless at the time of such action there shall be
at least one member who is an Independent Director.
(xviii) Borrower shall conduct its business so that the
assumptions made with respect to Borrower in that certain opinion letter dated
the Closing Date delivered by Gibson, Dunn & Crutcher in connection with the
Loan shall be true and correct in all respects.
(P) Restricted Activities. The Partnership Agreement provides
---------------------
that Borrower may not engage in any business activity other than activities
necessary, appropriate, suitable or convenient to (i) acquiring, owning,
operating, leasing, refinancing and selling or otherwise disposing of the
Mortgaged Property and any properties which have been released from the Lien of
the Security Documents, and (ii) borrowing Other Indebtedness that is not
prohibited under Section 5.7, and (iii) giving security for the Loan, and (iv)
-----------
entering into, or modifying, contractual arrangements for the management of the
Mortgaged Property and any properties which have been released from the Liens of
the Security Documents.
(Q) Employees. Borrower has no employees.
---------
(R) Solvency. None of the transactions contemplated by the Loan
--------
Documents will be or have been made with an actual intent to hinder, delay or
defraud any present or future creditors of Borrower, and Borrower is not and
will not be rendered insolvent by such transactions or will have received fair
and reasonably equivalent value in
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good faith for the grant of the Liens created by the Security Documents.
Borrower is able to pay its debts as they become due, including contingent
obligations reasonably likely to become due. Borrower's assets do not and,
immediately following the transactions contemplated by this Agreement, will not
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted.
(S) Delinquent Property Liens. Except for claims which are not
-------------------------
material in amount or which constitute or are permitted by Section 5.6, there is
-----------
no delinquent tax, sewer rent, water charge, assessment or other outstanding
charge against any of Borrower's Mortgaged Property; and, except as shown in the
title policies, there are no mechanic's or similar Liens or, to Borrower's
knowledge, claims for overdue payment for work performed by or on behalf of
Borrower, labor or material affecting Borrower or the Mortgaged Property which
are or could become Liens prior to, or equal with, the Liens of the Mortgages
except as previously disclosed in writing to Lender, there are no mechanics, or
similar Liens or claims affecting the Mortgaged Property which have not been
insured or endorsed over by the title insurance companies issuing the title
policies.
(T) Insurance. Each Individual Property is covered by insurance
---------
of the type and in the amounts and provided by the carriers required by this
Agreement and the Mortgage encumbering such Individual Property.
(U) Lien Priority. The Mortgages will constitute valid,
-------------
subsisting and enforceable first Liens and perfected security interests on the
Mortgaged Property owned by Borrower, including all buildings and fixtures which
constitute part of such Mortgaged Property under applicable law, and all
additions, alterations and replacements made at any time with respect to the
foregoing, subject only to Liens permitted under Section 5.6 hereof.
-----------
(V) Improvements. Except as disclosed in the surveys or title
------------
policies delivered to Lender hereunder, all improvements comprising a portion of
any Individual Property lie wholly within the boundary and building restriction
lines of such Individual Property and no improvements on adjoining properties
encroach upon any Individual Property in any respect.
(W) Casualty; Condemnation. The Mortgaged Property is free of
----------------------
material damage and waste and there is no proceeding pending or, to the best of
Borrower's knowledge, threatened, for the total or partial taking of any
Individual Property owned by Borrower and no Event of Loss has occurred with
respect to any Individual Property.
(X) Zoning and Other Laws. Each Individual Property owned by
---------------------
Borrower and the use and operation thereof, separate and apart from any other
properties, constitutes a legal use under applicable zoning regulations and
complies in all material respects with all applicable requirements of law and
all applicable insurance requirements.
(Y) Leases. Borrower has made available to Lender a correct and
------
complete copy of each Lease and sublease relating to the Mortgaged Property
owned by Borrower required under this Agreement as of the Closing Date and all
amendments thereto.
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The information regarding such Leases and subleases contained in Schedule 2 is
----------
correct and complete in all material respects as of the date set forth thereon
and such Schedule lists all amendments to the Leases and subleases as of the
date hereof. Except as set forth on Schedule 2, as of the Closing Date each
----------
such Lease or sublease relating to the Mortgaged Property is unmodified and in
full force and effect and Borrower is not, and, to Borrower's knowledge, no
Tenant is in default under any Lease relating to the Mortgaged Property (other
than any defaults which, if uncured, would not have a material adverse effect on
the value, utility or legality of the applicable Individual Property).
(Z) Contracts. Schedule 3 sets forth a description of each
--------- ----------
contract or other agreement and management agreement (including all amendments
thereto) to which Borrower, the Parent Entities or any Affiliate thereof is a
party which is material to the use and operation of any Individual Property
owned by Borrower as of the Closing Date other than any such contract or
agreement which may be terminated on thirty days, or less notice and without
any material penalty and the information set forth in such Schedule is correct
and complete in all material respects as of the date hereof. A correct and
complete copy of each contract or other agreement and management agreement
(including all such amendments) specified on Schedule 3 has been provided to
----------
Lender and each thereof is unmodified (except as set forth on Schedule 3) and in
----------
full force and effect and neither Borrower nor, to Borrower's knowledge, any
other party to any thereof is in default thereunder (other than any defaults
which, if uncured, would not have a material adverse effect on the value,
utility or legality of the applicable Individual Property). Borrower has made
available to Lender a correct and complete copy of each material agreement
between Borrower and any Tenant or guarantor of a Tenant of Borrower relating to
the Mortgaged Property owned by Borrower as of the Closing Date and all
amendments thereto as set forth on Schedule 3 and the information regarding
----------
such agreements contained in Schedule 3 is correct and complete in all material
----------
respects as of the date set forth therein and such Schedule lists all amendments
to each such agreement as of the date set forth therein. Except as set forth on
Schedule 3, each of such agreements is unmodified and in full force and effect
- ----------
and Borrower is not, and, to Borrower's knowledge, no other party is in default
under any such agreement (other than any defaults which, if uncured, would not
have a material adverse effect on the value, utility or legality of the
applicable Individual Property) and Borrower has no knowledge of the existence
of any other such agreements with respect to the Mortgaged Property.
(AA) Permits. There has been issued in respect of each Individual
-------
Property all material permits and governmental approvals necessary or required
to own, operate, use and occupy such Individual Property in the manner currently
operated, including any required permits relating to Hazardous Substances, other
than any such permit or approval which, if not obtained, would not have a
material adverse effect on the value, utility or legality of such Individual
Property or the obligations of the Tenant under any Lease affecting such
Individual Property. Each such permit is in full force and effect and Borrower
has not received any notice of violation or revocation thereof. No other permits
are required from any governmental entity in order to operate such Individual
Property as it is now operated.
(AB) Utilities and Public Access. Each Individual Property has
---------------------------
adequate rights of access to public ways and is served by adequate water, sewer,
sanitary
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sewer and storm drain facilities. To Borrower's best knowledge, after reviewing
the survey(s) required by this Agreement, all public utilities necessary or
convenient to the full use and enjoyment of each Individual Property are located
in the public right-of-way abutting the premises, and all such utilities are
connected so as to serve such Individual Property without passing over other
property. Borrower has not received any notice of actual or threatened
reduction or curtailment of any utility service now supplied to any Individual
Property owned by Borrower. All roads necessary for the full utilization of each
Individual Property for its current purpose have been completed and dedicated to
public use and accepted by all Governmental Authorities.
(AC) Certificates of Occupancy. Borrower has not received any
-------------------------
notice of actual or threatened cancellation or suspension of any certificate of
occupancy for any portion of any Individual Property owned by Borrower and all
such certificates of occupancy are in full force and effect.
(AD) Assessments. (a) Borrower has not received any notice of
-----------
actual or threatened special assessments or reassessments of any Individual
Property owned by Borrower which is not reflected on financial information
previously provided to Lender and which would have a material adverse effect on
the financial condition, operations, business or prospects of Borrower; and (b)
Borrower shall not suffer, permit or initiate the joint assessment of any
Individual Property (i) with any other real property constituting a separate tax
lot, and (ii) with any portion of the Individual Property which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Individual Property as a single lien. Each Individual
Property is comprised of one (1) or more parcels, each of which, to Borrower's
best knowledge, after reviewing any survey required hereby constitutes a
separate tax lot and none of which constitutes a portion of any other tax lot.
(AE) Conditions of Properties. Except as set forth in the
------------------------
Engineering Reports, the buildings, structures and improvements included on or
within each of the Individual Properties owned by Borrower are structurally
sound and in good repair, and all mechanical, electrical, heating, air
conditioning, drainage, sewer, water and plumbing systems are in proper working
order.
(AF) Tenant Estoppels. Borrower has delivered to Lender correct
----------------
and complete copies of all Tenant estoppel certificates dated on or after 90
days before the date hereof which Borrower has in its possession with respect
the Leases relating to Mortgaged Property owned by Borrower as of the Closing
Date.
(AG) Environmental Reports/Appraisals. Borrower has delivered to
--------------------------------
Lender correct and complete copies of all environmental audits, appraisals and
market studies respecting the Mortgaged Property owned by Borrower as of the
Closing Date which Borrower has in its possession.
(AH) No Bankruptcy Filing. Borrower is not contemplating either
--------------------
the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the
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<PAGE>
liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it.
(AI) Full and Accurate Disclosure. No statement of fact made by
----------------------------
or on behalf of Borrower in this Agreement or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, any Individual Property or the business, operations or
condition (financial or otherwise) of Borrower.
(AJ) Enforceability. The Note, each Mortgage and each other Loan
--------------
Document executed by Borrower in connection therewith, including without
limitation any Security Document, is original, and each is the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, subject to bankruptcy. insolvency and equitable principles. Such Note
and each such Mortgage and the other Loan Documents executed by Borrower are, as
of the date hereof, not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, nor will
the operation of any of the terms of the Note, each such Mortgage and other Loan
Documents executed by Borrower, or the exercise of any right thereunder, render
the Mortgage unenforceable against Borrower, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, and Borrower has not asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.
(AK) ADA Compliance. Except as disclosed in the Engineering
--------------
Reports, each Individual Property complies with the Americans with Disabilities
Act ("ADA") in all material respects.
---
(AL) Not Foreign Person. Borrower is not a "foreign person"
------------------
within the meaning of 51445(f)(3) of the Code.
(AM) Flood Zones. To the best knowledge of Borrower, after review
-----------
of the survey of the Individual Property, the Improvements on each Individual
Property are not located in a Flood hazard area as defined by the Federal
Insurance Administration.
Section 4.2 Survival of Representations. Borrower agrees that all of
---------------------------
the representations and warranties of Borrower set forth in Section 4.1 and
-----------
elsewhere in this Agreement and in the other Loan Documents are made as of the
Closing Date (except as expressly otherwise provided) and shall survive the
delivery of the Note and making of the Loan and continue for as long as any
amount remains owing to Lender under this Agreement, the Note or any of the
other Loan Documents; provided, however, that the representations set forth in
-------- ------- ----
Section 4.1(K) shall survive in perpetuity. All representations, warranties,
- --------------
covenants and agreements made in this Agreement or in the other Loan Documents
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
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<PAGE>
ARTICLE V
COVENANTS
---------
Borrower covenants and agrees that, from the Closing Date and until
payment in full of the Indebtedness (or with respect to a particular Individual
Property, the earlier release of its Mortgage):
Section 5.1 Financial Statements. Borrower shall deliver or cause
--------------------
to be delivered to Lender and/or Lender or its designee:
(A) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each Fiscal Year of Borrower,
unaudited consolidated statements of income, retained earnings and changes in
financial position (or of cash flow, as the case may be) of Borrower for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period, and the related consolidated balance sheet as at the end
of such period, setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding period in the preceding Fiscal Year,
accompanied by a certificate of a senior financial officer of General Partner of
Borrower, which certificate shall state that said financial statements fairly
present the consolidated financial condition and results of operations, as the
case may be, of Borrower in accordance with generally accepted accounting
principles, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments):
(B) as soon as available and in any event within 90 days after
the end of each Fiscal Year of Borrower, consolidated statements of income,
retained earnings and changes in financial position (or of cash flow, as the
case may be) of Borrower for such year and the related consolidated balance
sheets as at the end of such year, setting forth in each case in comparative
form the corresponding consolidated figures for the preceding Fiscal Year, and
audited by independent certified public accountants of recognized national
standing:
(C) as soon as possible, and in any event within ten days after
Borrower or General Partner believes or has reason to believe that any of the
events or conditions specified below with respect to any Plan or Multiemployer
Plan have occurred or exist, a statement signed by a senior financial officer of
the REIT setting forth details respecting such event or condition and the action
if any, which the Parent Entities, Borrower or any ERISA Affiliate proposes to
take with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by the Parent Entities, Borrower or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section 412 of the Code
or Section 302 of ERISA shall be a reportable
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<PAGE>
event regardless of the issuance of any waivers in accordance with Section
412(d) of the Code):
(ii) the distribution or filing under Section 4041 of ERISA
of a notice of intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Parent Entities, Borrower or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by the Parent
Entities, Borrower or any ERISA Affiliate under Section 4201 or 4204 of ERISA
from a Multiemployer Plan, or the receipt by the Parent Entities, Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that
it intends to terminate or has terminated under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Parent Entities, Borrower or any ERISA Affiliate
to enforce Section 515 of ERISA, which proceeding is not dismissed within 30
days;
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if Borrower
or an ERISA Affiliate fails to timely provide security to the Plan in accordance
with the provisions of said Sections; and
(vii) the imposition of a Lien or a security interest in
connection with a Plan.
(D) promptly after Borrower knows or has reason to know that any
Default has occurred, a written notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that Borrower has taken and proposes to
take with respect thereto;
(E) as soon as available but in any event within 45 days after
the end of each quarterly fiscal period of each Fiscal Year of Borrower, a
report (certified by a senior officer of General Partner of Borrower) setting
forth for each Individual Property: (i) a profit and loss statement and income
statement, (ii) a detailed statement of operations in accordance with GAAP
(including an analysis on a month-to-month and year-to-date basis showing and
explaining any variance between the results of actual operations and the
projected results of operations), (iii) the status of leasing and other matters
relating to such Individual Property, and (iv) a detailed calculation of
Operating Income, Operating Expenses, Net Cash Flow and, for all periods after
the Prepayment Date, the Available Cash for such Individual Property;
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(F) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each Fiscal Year of Borrower (i)
operating statements showing occupancy rates for each Individual Property and
(ii) for each Individual Property a written statement setting forth the names of
all Tenants, the terms of their respective tenancies and agreements, the spaces
occupied, the rental amount (gross and per square foot), any security paid by
each Tenant, options for renewal, rental during renewal term, cancellation
provisions, Tenant improvement costs, and such other relevant information with
respect to each Individual Property as requested by Lender, in each case
certified by a senior officer of General Partner of Borrower;
(G) as soon as available and in any event within 15 days after the
end of each month (i) a written statement certified by a senior officer of
General Partner of Borrower showing occupancy rates for each Individual
Property, (ii) copies of the current rent rolls certified by a senior officer of
General Partner of Borrower for each Individual Property, and (iii) a list of
all new Leases entered into by Borrower in the last month for each Individual
Property including a written statement setting forth the names of all new
Tenants, the terms of their respective tenancies and agreements, the spaces
occupied, the rental amount (gross and per square foot), any security paid by
each Tenant, options for renewal, rental during renewal term, cancellation
provisions, Tenant improvement costs, and such other relevant information with
respect to each new Lease as requested by Lender, in each case certified by a
senior officer of General Partner of Borrower; and
(H) from time to time such other information regarding the business,
affairs or financial condition of the Parent Entities, Borrower (including,
without limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) and such additional statements,
reports, projections, budget and other information regarding the Collateral as
Lender may reasonably request.
Section 5.2 Litigation, Etc. Borrower will promptly give to Lender
---------------
and Lender or its designee notice of (a) all legal or arbitral proceedings, and
of all proceedings by or before any governmental or regulatory authority or
agency, and any material development in respect of such legal or other
proceeding affecting Borrower, except proceedings which, if adversely
determined, would not have a material adverse effect on the consolidated
financial condition, operations, business or prospects taken as a whole of
Borrower and (b) of any proposal by any public authority to acquire any
Individual Property of Borrower or any portion thereof. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other governmental authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the Loan Documents and,
in connection therewith, permit Lender, at its election, to participate (without
any power to bind Borrower) in any such proceedings.
Section 5.3 Partnership Existence, Etc. Borrower will preserve and
--------------------------
maintain its corporate or partnership existence (as the case may be) and all of
its material rights, privileges and franchises; comply with the requirements of
all applicable laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements would materially and
adversely affect the consolidated financial condition,
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<PAGE>
operations, business or prospects taken as a whole of Borrower; pay and
discharge all taxes, assessments and governmental charges or levies imposed on
it or on its income or profits or on any of its property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained; maintain
all of its properties used or useful in its business in good working order and
condition, ordinary wear and tear excepted; and permit representatives of
Lender, during normal business hours and upon reasonable prior notice, to
examine, copy and make extracts from its books and records, to inspect its
properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by Lender.
Section 5.4 Insurance. Borrower will keep insured by financially
---------
sound and reputable insurers all property of a character usually insured by
corporations or partnerships engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations or partnerships, which insurance shall be
in amounts and coverages not less than, and issued by insurers meeting at least
the standards, as more particularly provided in this Agreement and the
Mortgages. Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any insurance proceeds lawfully or equitably payable in connection
with each Individual Property, and Lender shall be reimbursed for any expenses
incurred in connection therewith (including attorneys' fees and disbursements,
and the payment by Borrower of the expense of an appraisal on behalf of Lender
in case of a fire or other casualty affecting such Individual Property or any
part thereof) out of such insurance proceeds, all as more specifically provided
in the Mortgages.
Section 5.5 Prohibition of Fundamental Changes. Borrower will not
----------------------------------
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution). Borrower will not acquire any business or assets from, or capital
stock of, or be a party to any acquisition of, any Person except for purchases
of inventory and other assets to be sold or used in the ordinary course of
business. Except as permitted in Section 2.7(a), Borrower will not convey, sell,
--------------
Transfer or otherwise dispose of the Collateral without the prior written
consent of Lender. Borrower will not lease all or a substantial part of any
Individual Property without the prior written consent of Lender except for any
space leases for uses consistent with the current use of space within the
Individual Property in the ordinary course of Borrower's business. Borrower
will not convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial part of its
business or assets, whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, but excluding (i) any inventory
or other assets sold or disposed of in the ordinary course of business, (ii)
obsolete or worn-out property, tools or equipment no longer used or useful in
its business so long as the amount thereof sold in any single fiscal year by
Borrower shall not have a fair market value in excess of $200,000 in aggregate,
or (iii) Mortgaged Property sold or Transferred in compliance with Section
-------
2.7(a) hereof.
- ------
Section 5.6 Limitation on Liens. Borrower will not create, incur,
-------------------
assume or suffer to exist any Lien upon any of its property (including, without
limitation, the Mortgaged
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Property), assets or revenues, whether now owned or hereafter acquired, except
the following Liens to the extent they do not materially and adversely affect
the operation of any of the Individual Properties or Borrower's ability to repay
the Indebtedness (collectively, "Permitted Encumbrances"):
----------------------
(A) Liens imposed by any governmental authority for taxes,
assessments or charges not yet delinquent or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of Borrower, in accordance with GAAP;
(B) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are junior and subordinate to the Mortgages and which are not overdue for a
period of more than 30 days or which are being contested in good faith and by
appropriate proceedings;
(C) any mechanic's and materialmen's Liens deleted from the
exceptions to, or affirmatively insured against collection with respect to, the
Individual Property under the applicable Title Insurance Policies;
(D) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation;
(E) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(F) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Borrower;
(G) Liens arising under the Loan Documents; and
(H) any extension, renewal or replacement of the foregoing,
provided, however, that the Liens permitted hereunder shall not be spread to
cover any additional Indebtedness or property (other than a substitution of like
Property).
Section 5.7 Other Indebtedness. Borrower will not create, incur or
------------------
suffer to exist any Other Indebtedness except:
(A) Other Indebtedness consisting of trade accounts payable not
more than 30 days past due incurred in the ordinary course of business (other
than for borrowed money) in an aggregate principal amount not exceeding $200,000
at any time; and
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(B) Other Indebtedness secured by Liens permitted under Section
-------
5.6 hereof.
- ---
Section 5.8 Investments. Borrower will not make or permit to remain
-----------
outstanding any Investments except the Cash Collateral Account, the Collection
Account and the account described in Section 2.12(h)(i) with banks and
------------------
Permitted Investments.
Section 5.9 Payments. Borrower will not make any distribution to
--------
its partners at any time that a Default shall have occurred and be continuing.
Section 5.10 Change In Business.
------------------
(A) Borrower shall not cease to be a single-purpose entity
complying with the terms of Section 4.1(0), or make any material change in the
--------------
scope or nature of its business objectives, purposes or operations, or undertake
or participate in activities other than the continuance of its present business,
or violate any of the provisions of the Partnership Agreement or amend the
Partnership Agreement.
(B) Borrower (i) will keep its own separate financial
statements, books and records, maintain its own bank accounts, keep its funds or
other assets separate from the funds or other assets of the Parent Entities and
all other Persons to the extent necessary to maintain a legal existence separate
and apart from the Parent Entities and any Affiliate of the Parent Entities,
(ii) will fund from its own assets (including its initial working capital
reserve) all of its activities, expenses and liabilities, (iii) will pay its own
operating expenses and liabilities from its own funds and will be adequately
capitalized for such business purpose, (iv) will observe all customary
procedures and formalities, (v) will in all dealings with the public, act under
its own name and as a separate and distinct entity, and will not identify itself
an being a division or a part of any of the Parent Entities or any other Person
or identify the Parent Entities or any other Person as being a division or a
part of Borrower, and (vi) will have at all times since their formation and will
continue to be adequately capitalized in light or the nature of their respective
businesses.
Section 5.11 Transactions with Affiliates. Except as expressly
----------------------------
permitted by this Agreement, Borrower will not directly or indirectly: (a)
make any Investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any assets to an Affiliate; (c) merge into or consolidate
with or purchase or acquire assets from an Affiliate; or (d) enter into any
other transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an
Affiliate); provided that Borrower may enter into and comply with the Management
Agreement and make any distributions to the Parent Entities unless otherwise
prohibited herein.
Section 5.12 Use of Proceeds. Borrower will use the proceeds of the
---------------
Loan hereunder as provided in Section 2.2 subject to compliance with the terms
-----------
and provisions hereof and all applicable legal and regulatory requirements;
provided, however, that Lender shall not have any responsibility as to the use
- -------- -------
of any of such proceeds.
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Section 5.13 Modifications of Certain Documents. Borrower will not
----------------------------------
consent to any modification, supplement or waiver of any of the provisions of
the Partnership Agreement or any of the Leases or the Management Agreement or
terminate any Lease or the Management Agreement without the prior written
consent of Lender, except modifications, waivers or supplements of Leases which
would not result in a material adverse affect on (a) the rights and remedies of
Lender hereunder or under the other Loan Documents, (b) the consolidated
financial condition, business, prospects, Property or rights of Borrower or (c)
the value of use of any Individual Property.
Section 5.14 Subsidiaries. Borrower shall not form or acquire any
-----------
Subsidiaries without the prior written consent of Lender.
Section 5.15 Property Management. Borrower shall cause each of the
-------------------
Individual Properties to be managed pursuant to the Management Agreement or by
another Person reasonably acceptable to Lender; provided, however, that (i) the
-------- -------
assignment of any interest in the Management Agreement to a Person that is not
an Affiliate of Borrower or the appointment of any manager in respect of any
Individual Property that is not an Affiliate of Borrower (unless such
appointment is an appointment of an agent made pursuant to the Management
Agreement) shall require the prior written consent of Lender (not to be
unreasonably withheld or delayed) and (ii) in the event that either (a) there
shall have occurred and be continuing an Event of Default or (b) the Debt
Service Coverage Ratio for the Individual Properties as a whole for any
continuous twelve (12) month period shall be less than 1.15, Lender may instruct
Borrower to remove the manager of any or all Individual Properties and designate
a replacement property manager selected by Lender and willing to manage the
Individual Properties for total annual fees not to exceed (in the reasonable
opinion of Lender) then current market rates, and Borrower shall so remove the
property manager and appoint such replacement. If such option is exercised by
Lender after there shall have occurred and be continuing an Event of Default,
the subsequent cure of such Event of Default shall not affect or impair Lender's
right to instruct Borrower to so remove the property manager and appoint such
replacement. If such option is exercised by Lender, the replacement property
management company shall be selected by Lender, and if Lender deems appropriate
the senior manager(s) thereof shall have had not less than five (5) years
experience in the management of properties in the nature of the Individual
Property. The property management agreement for such replacement property
manager shall (unless an Event of Default shall have occurred) be reasonably
acceptable to Borrower and shall in any event be reasonably acceptable to
Lender. Borrower shall not, without the prior written consent of Lender, enter
into any property management agreement concerning the Mortgaged Property (other
than the Management Agreement), and, in any event, any property management
agreement in respect of any Individual Property shall contain a provision
permitting such agreement to be terminated as contemplated above. Borrower
hereby appoints Lender as Borrower's attorney-in-fact to take all actions
necessary to terminate the Management Agreement, remove the manager of any or
all Individual Properties, and designate a replacement property manager in the
manner set forth above.
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Section 5.16 Environmental Matters.
---------------------
(A) Borrower shall, at its sole cost and expense, comply in all
material respects with all Environmental Laws applicable to the Mortgaged
Property and shall ensure that all operations, businesses and activities
conducted thereon are in material compliance with all Environmental Laws.
(B) Borrower shall, at its sole cost and expense, comply in all
material respects with and shall cause all Tenants of the Mortgaged Property to
comply in all material respects with all recommendations of certified asbestos
inspectors acceptable to Lender and all Environmental Laws relating to asbestos
or asbestos-containing materials.
(C) If Borrower shall receive any notice or other communication
relating to any Environmental Claim with respect to any Individual Property
concerning any actual, alleged, suspected or threatened violation of or
liability under any Environmental Laws or any Environmental Condition, or that
any representation or warranty herein relating to Hazardous Materials is not or
is no longer accurate in any material respect, including, without limitation,
any notice or other communication from any governmental authority concerning any
actual or threatened Environmental Claim, then Borrower shall deliver to Lender,
within ten (10) days after receipt of such notice or communication, a written
description of such violation, liability, or actual or threatened event or
condition. Receipt of such notice shall not be deemed to create any obligation
on the part of Lender to defend or otherwise respond to such notification.
Borrower shall promptly take all actions necessary to defend such notification
of Environmental Claim or clean up or remedy such Environmental Condition in
compliance with all Environmental Laws.
(D) Upon Lender's reasonable request, Borrower shall, at its
sole cost and expense, take all actions necessary to ensure that there is no
Hazardous Material at, on or under the Mortgaged Property in quantities or
concentrations other than those permitted by governmental authorities
responsible for enforcing applicable Environmental Laws. Borrower shall
reasonably promptly provide to Lender copies of all environmental site
assessments or environmental audit reports, or updates of such assessments or
reports that are generated in connection with the above activities. Borrower's
obligations hereunder shall arise upon the reasonable request of Lender, taking
into account all of the circumstances, including the conducting of tests in the
past and with due regard to the likelihood of finding Hazardous Materials on the
Mortgaged Property regardless of whether any governmental authority has taken or
threatened any action with respect to the presence of any Hazardous Materials
at, on, under or from the applicable Individual Property. If Borrower fails to
discharge any of its obligations hereunder, Lender shall have the right, but not
the obligation, in its reasonable discretion, at Borrower's sole cost and
expense, to take such reasonable actions that Lender reasonably deems necessary
or advisable, including, without limitation, the removal or cleanup of any
Hazardous Materials at, on, under or from the Mortgaged Property. Borrower
grants Lender and its employees, contractors and agents an irrevocable and non-
exclusive license, subject to the rights of Tenants and upon reasonable prior
notice, to enter upon the Mortgaged Property to conduct such activities in
accordance with the preceding sentence. All
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reasonable costs and expenses incurred by Lender under this subsection shall be
due and payable by Borrower on demand.
(E) Following and during the continuance of an Event of
Default, Borrower shall permit Lender to enter upon the Mortgaged Property at
any reasonable time, at Borrower's sole cost and expense, to conduct an
inspection of such Mortgaged Property, to determine compliance with all
applicable Environmental Laws and to take any and all other actions that Lender
deems reasonably necessary or advisable, including, without limitation, the
removal or cleanup of any Hazardous Materials in quantities or concentrations
which violate applicable Environmental Laws at, on or under the applicable
Individual Property. Following and during the continuance of an Event of
Default, Borrower grants Lender and its employees, contractors and agents an
irrevocable and nonexclusive license, subject to the rights of Tenants, to enter
upon the Mortgaged Property and to perform such tests on the Mortgaged Property
necessary to conduct such reviews and investigations in accordance with the
preceding sentence. All reasonable costs and expenses incurred by Lender under
this subsection shall be due and payable by Borrower on demand.
(F) Borrower shall not cause, nor permit or suffer the existence
or the commission by Borrower, its agents, contractors, invitees, Tenants or any
other person of any material violation of any applicable Environmental Laws at,
on or under any of the Mortgaged Property.
Section 5.17 Change in Business. Borrower will not enter into any
------------------
line of business other than the ownership and operation of any Individual
Property, or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business.
Section 5.18 Perform Loan Documents. Borrower shall observe, perform
----------------------
and satisfy all the terms, provisions, covenants and conditions of, and shall
pay when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by Borrower.
Section 5.19 ADA Compliance. Except as disclosed in the Engineering
--------------
Reports. Borrower shall cause the Individual Properties to comply with the ADA
in all material respects.
Section 5.20 Insurance Standards. Notwithstanding any other provision
-------------------
to the contrary in the Mortgages or the Loan Documents, the insurance coverage
described in Section 2.03 of the Mortgages: (i) will be maintained by Borrower
------------
with companies approved by Lender and licensed to do business in all states
where the Individual Properties are located, with a claims paying ability rating
of "AA" (or the equivalent) or better by each of the Rating Agencies or
otherwise acceptable to Lender in its sole discretion; (ii) shall name Lender
and its successors and/or assigns as their interest may appear as the mortgagee;
(iii) shall contain a non-contributory standard mortgagee clause and a
mortgagee's loss payable endorsement, or their equivalents, naming Lender as the
person to which all payments made by such insurance company shall be paid; (iv)
shall contain a waiver of subrogation against Lender; (v) shall be
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maintained throughout the term of this Agreement without cost to Lender; (vi)
shall be assigned and certified copies thereof delivered to Lender; (vii) shall
contain such provisions as Lender deems reasonably necessary or desirable to
protect its interest including, without limitation, endorsements providing that
neither Borrower, Lender nor any other party shall be a co-insurer under said
policies and that Lender shall receive at least thirty (30) days prior written
notice of any modification, reduction or cancellation of any of the policies;
and (viii) otherwise shall be approved by Lender in the exercise of its
reasonable judgment as to amounts, form, risk coverage, deductibles, loss payees
and insureds. Borrower shall pay the premiums for such policies as the same
become due and payable and shall furnish to Lender evidence of the renewal of
each of the policies with receipts for the payment of the insurance premiums or
other evidence of such payment reasonably satisfactory to Lender (provided,
however, that Borrower is not required to furnish such evidence of payment to
Lender in the event that such insurance premiums have been paid pursuant to
Section 2.12(g)(ii) hereof). If Borrower does not furnish such evidence and
- ------------------
receipts at least thirty (30) days prior to the expiration of any expiring
policy, then Lender may procure, but shall not be obligated to procure, such
insurance and pay the insurance premiums therefor, and Borrower agrees to
reimburse Lender for the cost of such insurance premiums promptly on demand.
Within fifteen (15) days after request by Lender, Borrower shall obtain such
increases in the amounts of coverage required hereunder as may be reasonably
requested by Lender, taking into consideration changes in the value of money
over time, changes in liability laws, changes in prudent customs and practices,
and the like. In the event that Borrower satisfies the requirements under this
Section 5.20 through the use of a policy covering more than the Individual
- ------------
Properties. Borrower shall provide evidence satisfactory to Lender that the
insurance premiums for the Individual Properties covered by such policy are
separately allocated under such policy and payment of such allocation shall
continue such policy as to the Individual Properties notwithstanding any other
payment of premiums, or, if no such allocation is available at any time during
the term of this Agreement, Lender shall have the right to increase the Basic
Carrying Costs Monthly Installments, as applicable, in an amount sufficient to
purchase a non-blanket Policy covering the Individual Properties from insurance
companies which qualify under this Agreement.
ARTICLE VI
DEFAULTS
Section 6.1 Event of Default. The occurrence of one or more of the
----------------
following events shall be an "Event of Default" hereunder:
----------------
(i) if on any Payment Date the funds in the Cash Collateral
Account are insufficient to pay the Required Debt Service Payment and Required
Available Cash Payment, if any, due on such Payment Date;
(ii) if Borrower fails to pay the outstanding Indebtedness on the
Maturity Date;
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(iii) if on the date any payment of a Basic Carrying Cost would
become delinquent, the funds in the Cash Collateral Account are insufficient to
make such payment;
(iv) the occurrence of the event identified in Sections
--------
2.12(g), 2.12(h), or 2.12(i) or otherwise identified in this Agreement as
- ------- ------- -------
constituting an "Event of Default";
(v) if Borrower fails to pay any other amount payable pursuant
to this Agreement or any other Loan Document when due and payable in accordance
with the provisions hereof or thereof, as the case may be, and such failure
continues for 15 days after Lender delivers written notice thereof to Borrower;
(vi) if any representation or warranty made herein or in any
other Loan Document, or in any report, certificate, financial statement or other
Instrument, agreement or document furnished by Borrower in connection with this
Agreement, the Note or any other Loan Document executed and delivered by
Borrower, shall be false in any material respect as of the date such
representation or warranty was made;
(vii) if Borrower or General Partner makes an assignment for the
benefit of creditors;
(viii) if a receiver, liquidator or trustee shall be appointed
for Borrower or General Partner, or if Borrower or General Partner shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or General Partner, or if any proceeding for the dissolution or
liquidation of Borrower or General Partner shall be instituted; provided,
--------
however, that if such appointment, adjudication, petition or proceeding was
- ------- ----
involuntary and not consented to by Borrower or General Partner, as the case may
be, upon the same not being discharged, stayed or dismissed within 60 days, or
if Borrower or General Partner shall generally not be paying its debts as they
become due;
(ix) if (A) Borrower attempts to delegate its obligations or
assign its rights under this Agreement, any of the other Loan Documents or any
interest herein or therein except as provided in Section 7.30 or (B) if any
------------
provision of Section 5.2 or 5.5 is violated;
----------- ---
(x) if any provision of (i) the Partnership Agreement of
Borrower or (ii) the certificate of incorporation or the by-laws of Borrower,
affecting the purpose for which such entity is formed is amended or modified in
any material respect which may adversely affect Lender or its designee, or if
Borrower or General Partner or any of their partners or stockholders,
respectively, fails to perform or enforce the provisions of such organizational
documents or attempts to dissolve Borrower or General Partner, or if Borrower or
General Partner breaches any of its representations, warranties or covenants set
forth in Sections 4.1(O) or 5.11;
--------------- ----
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(xi) if an Event of Default as defined or described in the
Note, the Mortgages or any other Loan Document occurs, whether as to Borrower or
any Individual Property or all or any portion of the Mortgaged Property;
(xii) if Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement, the Note, the
Mortgages or the other Loan Documents, for ten days after notice to Borrower
from Lender or its successors or assigns, in the case of any Default which can
be cured by the payment of a sum of money (other than Events of Default pursuant
to clauses (i), (ii), (iii) and (iv) above as to which no grace period is
----------- ---- ----- ----
applicable, or pursuant to clause (v) above as to which a 15-day grace period is
----------
applicable as described therein), or for 30 days after notice from Lender or its
successors or assigns, in the case of any other Default (unless otherwise
provided herein or in such other Loan Document); provided, however, that if such
-------- -------
non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30 day period and provided further that Borrower shall have
commenced to cure such Default within such 30 day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30 day period shall
be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, but in no event shall such
period exceed 120 days after the original notice from Lender;
(xiii) if an event or condition specified in Section 5.1(C) shall
--------------
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
Borrower or any ERISA Affiliate shall incur or in the opinion of Lender shall be
reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC
(or any combination of the foregoing) which would constitute, in the
determination of Lender, a Material Adverse Effect;
(xiv) if Borrower cannot make the representations specified in
Section 2.14(d) in connection with the Securitization or if the representations
- ---------------
specified in Section 2.14(d) made in connection with the Securitization shall be
---------------
false as of the Securitization Closing Date, unless (x) REMIC status of any
REMIC formed in connection with the Securitization is maintained or regained due
to corrective actions taken by Borrower within any applicable cure period under
the Code or otherwise, and (y) Borrower furnishes Lender with an opinion of
outside counsel reasonably acceptable to Lender stating that each REMIC Trust
qualifies as a REMIC for federal income tax purposes; or
(xv) if, at any time prior to the repayment of the Indebtedness
in full, General Partner and/or Limited Partner (a) fails to remain a Wholly-
Owned Subsidiary of the REIT, (b) fails to maintain its ownership of its
partnership interest in Borrower in effect on the Closing Date, or (c) conveys,
sells, transfers, pledges, mortgages or otherwise disposes of or encumbers such
partnership interest in Borrower; provided, however, that Limited Partner may
-------- -------
from time to time convey, sell, transfer, pledge, mortgage or otherwise dispose
or encumber limited partnership interests in Borrower aggregating not more than
49.9% of the total partnership interests in Borrower so long as prior to any
such conveyance, sale, transfer, pledge, mortgage, disposal or encumbrance (i)
each Rating Agency shall have theretofore confirmed in writing that such
conveyance, sale, transfer, pledge, mortgage, disposal or encumbrance will not
result in the downgrading, qualification or withdrawal of the ratings
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then assigned to the Certificates, and (ii) Borrower provides to Lender an
opinion of counsel addressed to Lender and satisfactory to Lender and Lender or
its designee in form and substance that any REMIC Trust formed pursuant to the
Securitization will not fail to maintain its REMIC status for federal income tax
purposes as a result of such conveyance, sale, transfer, pledge, mortgage,
disposal or encumbrance;
then, upon the occurrence of any such Event of Default and at any time
thereafter, Lender or its successors or assigns, may, in addition to any other
rights or remedies available to it pursuant to this Agreement, the Note, the
Mortgages and the other Loan Documents, or at law or in equity, take such
action, without notice or demand, as Lender or its successors or assigns, deems
advisable to protect and enforce its rights against Borrower and in and to all
or any portion of the Mortgaged Property, including, without limitation,
declaring the entire Indebtedness to be immediately due and payable and may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and/or the Mortgaged Property, including, without
limitation, all rights or remedies available at law or in equity.
Section 6.2 Remedies. (a) Upon the occurrence of an Event of
--------
Default, all or any one or more of the rights, powers and other remedies
available to Lender against Borrower under this Agreement, the Note, the
Mortgages or any of the other Loan Documents executed by or with respect to
Borrower, or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any portion of the Indebtedness shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to any Individual Property
or all or any portion of the Mortgaged Property. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its sole discretion, to the fullest extent permitted by
law, without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents.
(b) In the event of the foreclosure or other action by Lender to
enforce its remedies in connection with one or more of the Individual Properties
or all or any portion of the Mortgaged Property, whether such foreclosure sale
(or other remedy) yields Net Proceeds in an amount less than, equal to or more
than the Allocated Loan Amount of such Individual Property or Mortgaged
Property, Lender shall apply all Net Proceeds received to repay the Indebtedness
in accordance with Section 2.8, Allocated Loan Amounts shall be adjusted (or not
-----------
adjusted) in accordance with the definition of "Allocated Loan Amount", the
---------------------
Indebtedness shall be reduced to the extent of such Net Proceeds and the
remaining portion of the Indebtedness shall remain outstanding and secured by
the Mortgages and the other Loan Documents, it being understood and agreed by
Borrower that Borrower is liable for the repayment of all the Indebtedness and
that any "excess" foreclosure proceeds are part of the cross-collateralized and
cross-defaulted security granted to Lender pursuant to the Mortgages.
Section 6.3 Remedies Cumulative. The rights, powers and remedies of
-------------------
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other
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Loan Documents executed by or with respect to Borrower, or existing at law or in
equity or otherwise. Lender's rights, powers and remedies may be pursued
singly, concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of any Default or Event of Default shall not be
construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon. Notwithstanding any other
provision of this Agreement, Lender reserves the right to seek a deficiency
judgment or preserve a deficiency claim, in connection with the foreclosure of a
Mortgage on an Individual Property, to the extent necessary to foreclose on
other parts of the Mortgaged Property.
Section 6.4 Certain Waivers. Borrower hereby waives any and all
---------------
rights that it may now or hereafter claim to have under California Civil Code
Section 2954.10 to prepay the Indebtedness upon an acceleration thereof
following the occurrence of an Event of Default without the prepayment of any
charge, fee, penalty or other payment provided for in this Agreement. Borrower
hereby agrees and acknowledges that (i) the foregoing waiver is given after
negotiation between Lender and Borrower and for separate consideration from
Lender to Borrower, the receipt and adequacy of which is hereby acknowledged,
and (ii) Lender would not be willing to enter into this Agreement or make the
Loan to Borrower but for the foregoing waiver by Borrower.
BORROWER:
G&L MEDICAL PARTNERSHIP, L.P.,
a Delaware limited partnership
By: G&L MEDICAL INC.,
a Delaware corporation,
its general partner
By: /s/ Gary Grabel
--------------------------------
Name: Gary Grabel
Title: Executive Vice President
ARTICLE VII
MISCELLANEOUS
-------------
Section 7. 1 Survival. This Agreement and all covenants,
--------
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, the making by Lender of the Loan and the execution, and delivery by
Borrower to Lender of the Note, and shall continue in full force and effect as
long as any portion of the Indebtedness is outstanding and unpaid;
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provided, however, that upon a prepayment with respect to a particular
- -------- ------- ----
Individual Property as described in Section 2.7(a) and upon satisfaction of the
--------------
other conditions set forth in Section 2.11, Borrower shall be released of all
------------
liability under this Agreement (other than any liability with respect to
environmental matters arising under Sections 4.1(K) or 5.16, inclusive, hereof),
--------------- ----
the Mortgages, the applicable Assignment of Lease, and the other Loan Documents
insofar as they concern such Individual Property. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party. All covenants, promises and
agreements in this Agreement contained, by or on behalf of Borrower, shall inure
to the benefit of the respective successors and assigns of Lender. Nothing in
this Agreement or in any other Loan Document, express or implied, shall give to
any Person other than the parties and the holder(s) of the Note, the Mortgages
and the other Loan Documents, and their legal representatives, successors and
assigns, any benefit or any legal or equitable right, remedy or claim hereunder.
Section 7.2 Lender's Discretion. Whenever pursuant to this
-------------------
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole and absolute discretion of Lender and shall be
final and conclusive.
Section 7.3 Governing Law. (a) This Agreement was negotiated by
-------------
Lender in the State of New York, and made by Lender in the State of New York,
and the proceeds of the Note delivered pursuant hereto were disbursed from the
State of New York, which State the parties agree has a substantial relationship
to the parties and to the underlying transaction embodied hereby, and in all
respects, including, without limitation, matters of construction, validity and
performance, this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and performed in such State and any applicable law
of the United States of America, except that at all times the provisions for the
creation, perfection and enforcement of the liens and security interests created
pursuant to the Mortgages and the other Loan Documents shall be governed by and
construed according to the law of the State in which the applicable Individual
Property is located, it being understood that, to the fullest extent permitted
by law of such States, the law of the State of New York shall govern the
validity and the enforceability of all Loan Documents, and the Indebtedness or
obligations arising hereunder or thereunder. To the fullest extent permitted
by law, Borrower hereby unconditionally and irrevocably waives any claim to
assert that the law of any other jurisdiction governs this Agreement and the
Note, and this Agreement and the Note shall be governed by and construed in
accordance with the laws of the State of New York pursuant to (S) 5-1401 of the
New York General Obligations Law.
(b) Any legal suit, action or proceeding against Lender or
Borrower arising out of or relating to this Agreement shall be instituted in any
federal or state court in New York, New York, pursuant to (S) 5-1402 of the New
York General Obligations Law, and Borrower waives any objection which it may now
or hereafter have to the laying of venue of any such suit, action or proceeding,
and Borrower hereby irrevocably submits to the
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jurisdiction of any such court in any suit, action or proceeding. Borrower does
hereby designate and appoint Gibson, Dunn & Crutcher, 200 Park Avenue, New York,
New York 10166, as its authorized agent to accept and acknowledge on its behalf
service of any and all process which may be served in any such suit, action or
proceeding in any federal or state court in New York, New York, and agrees that
service of process upon said agent at said address (or at such other office in
New York, New York as may be designated by Borrower from time to time in
accordance with the terms hereof) with a copy to Borrower at its principal
executive offices, Attention: Gary Grabel, and written notice of said service
of Borrower mailed or delivered to Borrower in the manner provided herein shall
be deemed in every respect effective service of process upon Borrower, in any
such suit, action or proceeding in the State of New York. Borrower (i) shall
give prompt notice to Lender of any changed address of its authorized agent
hereunder, (ii) may at any time and from time to time designate a substitute
authorized agent with an office in New York, New York (which office shall be
designated as the address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to have an office in
New York, New York or is dissolved without leaving a successor.
Section 7.4 Modification, Waiver in Writing. No modification,
-------------------------------
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note or any other Loan Document, or consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to or demand on Borrower shall entitle Borrower to any other or future
notice or demand in the same. similar or other circumstances.
Section 7.5 Delay Not a Waiver. Neither any failure nor any delay
------------------
on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note, or of any other Loan Document, or any
other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 7.6 Notices. All notices, consents, approvals and requests
-------
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answerback
acknowledged), addressed if to Lender at its address set forth on the first page
hereof, Attention: David M. Murdoch, Jr., if to Lender or its designee at
Nomura Asset Capital Corporation, 2 World Financial Center, Building B, New
York, New York
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10281-1198, Attention: Sheryl McAfee, and if to Borrower at its address set
forth on the first page hereof, Attention: Gary Grabel, or at such other
address and Person as shall be designated from time to time by any party hereto,
as the case may be, in a written notice to the other parties hereto in the
manner provided for in this Section 7.6. A notice shall be deemed to have been
-----------
given: in the case of hand delivery, at the time of delivery; in the case of
registered or certified mail, when delivered or the first attempted delivery on
a Business Day: or in the case of expedited prepaid delivery and telecopy, upon
the first attempted delivery on a Business Day. A party receiving a notice which
does not comply with the technical requirements for notice under this Section
-------
7.6 may elect to waive any deficiencies and treat the notice as having been
- ---
properly given.
Section 7.7 TRIAL BY JURY. BORROWER, TO THE FULLEST EXTENT THAT IT
-------------
MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO
OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 7.8 Headings. The Article and Section headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 7.9 Assignment. Lender shall have the right to assign this
----------
Agreement and/or any of the other Loan Documents and the obligations hereunder
to any Person. The parties hereto acknowledge that Lender expects to sell,
transfer and assign this Agreement, the Note, the Mortgages and the other Loan
Documents to Trustee in connection with a Securitization. All references to
"Lender" hereunder shall be deemed to include the successors and assigns of
Lender and the parties hereto acknowledge that actions taken by Lender hereunder
may be taken (x) by Lender or its designee on Lender's behalf (to the extent
provided in the Interim Servicing Agreement) or (y) after the Securitization
Closing Date, by Lender or its designee pursuant to the Pooling and Servicing
Agreement on behalf of Trustee. Following the assignment of this Agreement, the
Note, the Mortgages and the other Loan Documents by Nomura Asset Capital
Corporation ("NACC") in connection with the Securitization, in addition to
----
providing notices to Lender's assignee in accordance with instruments received
from such assignee, Borrower shall continue to send copies of all notices and
other communications (including, without limitation, reports under Section 5.1)
-----------
to NACC at the address set forth in Section 7.6 or to such other address as may
-----------
be designated by NACC pursuant to Section 7.6. Borrower shall not be entitled
-----------
to assign its rights hereunder.
Section 7.10 Severability. Wherever possible, each provision of
------------
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
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Section 7.11 Preferences. Lender shall have no obligation to
-----------
marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the obligations of Borrower pursuant to this Agreement,
the Note or any other Loan Document, Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder. To the extent Borrower
makes a payment or payments to Lender for Borrower's benefit, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 7.12 Waiver of Notice. Borrower shall not be entitled to any
----------------
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 7.13 Remedies of Borrower. In the event that a claim or
--------------------
adjudication is made that Lender or its agents, including, without limitation,
Lender or its designee, has acted unreasonably or unreasonably delayed acting in
any case where by law or under this Agreement, the Note, the Mortgages or the
other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents, including, without limitation, Lender or its designee, shall be
liable for any monetary damages, and Borrower's sole remedies shall be limited
to commencing an action seeking injunctive relief or declaratory judgment. The
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 7.14 Exculpation. Notwithstanding anything herein or in any
------------
other Loan Document to the contrary, except as otherwise set forth in this
Section 7.14 to the contrary, Lender shall not enforce the liability and
- ------------
obligation of Borrower to perform and observe the obligations contained in this
Agreement, the Note, the Mortgages or any of the other Loan Documents executed
and delivered by Borrower by any action or proceeding wherein a money judgment
shall be sought against Borrower or its partners, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding (including, without limitation, to obtain a deficiency judgment)
solely for the purpose of enabling Lender to realize upon (i) Borrower's
interest in the Mortgaged Property, (ii) the Rents and Accounts arising from
the Individual Properties to the extent received by Borrower or a Manager after
the occurrence of an Event of Default (all such Rents and Accounts, the
"Recourse Distributions") and (iii) any other collateral given to Lender under
----------------------
the Loan Documents ((i), (ii) and (iii), collectively, the "Default
-------
Collateral"):
- ----------
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provided, however, that any judgment in any such action or proceeding shall be
- -------- -------
enforceable against Borrower only to the extent of any such Default Collateral.
The provisions of this Section 7.14 shall not, however, (a) impair the validity
------------
of the Indebtedness evidenced by the Note or in any way affect or impair the
Liens of the Mortgages or any of the other Loan Documents or the right of Lender
to foreclose the Mortgages following an Event of Default: (b) impair the right
of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under any of the Mortgages; (c) affect the
validity or enforceability of the Note, the Mortgages or the other Loan
Documents; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of the Assignments of Leases or the
Assignments of Agreements (subject to the nonrecourse provisions thereof) or the
Indemnity Agreement; (f) impair the right of Lender to bring suit for actual
damages, losses and costs resulting from fraud or intentional misrepresentation
by Borrower or any other Person in connection with this Agreement, the Note, the
Mortgages or the other Loan Documents; (g) impair the right of Lender to obtain
the Recourse Distributions received by Borrower, including, without limitation,
the right to proceed against Borrower's partners to the extent any such Recourse
Distributions have actually theretofore been distributed to Borrower's partners;
(h) impair the right of Lender to bring suit with respect to Borrower's
misappropriation of security deposits or Rents collected more than one month in
advance; (i) impair the right of Lender to obtain Insurance Proceeds or
Condemnation Proceeds due to Lender pursuant to the Mortgages; (j) impair the
right of Lender to enforce the provisions of Sections 4.1(K) or 5.16 even after
--------------- ----
repayment in full of the Indebtedness; (k) prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of the
Collateral securing the Note as provided in the Loan Documents; (l) impair the
right of Lender to bring suit with respect to any misapplication of any funds;
or (m) impair the right of Lender to sue for, seek or demand a deficiency
judgment against Borrower solely for the purpose of foreclosing the Mortgaged
Property or any part thereof, or realizing upon the Default Collateral;
provided, however, that any such deficiency judgment referred to in this clause
- -------- ------- ------
(m) shall be enforceable against Borrower only to the extent of any of the
- ---
Default Collateral. The provisions of this Section 7.14 shall be inapplicable to
------------
Borrower if any petition for bankruptcy, reorganization or arrangement pursuant
to federal or state law shall be filed by, consented to or acquiesced in by or
with respect to Borrower, or if Borrower shall institute any proceeding for the
dissolution or liquidation of itself or if Borrower shall make an assignment for
the benefit of creditors, in which event Lender shall have recourse against all
of the assets of Borrower and the interests in Borrower owned by, and the
Recourse Distributions received by, Borrower's partners (but excluding the other
assets of Borrower's partners to the extent Lender would not have had recourse
against such assets other than in accordance with the provisions of this Section
-------
7.14).
- -----
Section 7.15 Exhibits Incorporated. The information set forth on the
---------------------
cover, heading and recitals hereof, and the Exhibits and Schedules attached
hereto, are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.
Section 7.16 Offsets, Counterclaims and Defenses. Any assignee of
-----------------------------------
Lender's interest in and to this Agreement, the Note, the Mortgages and the
other Loan Documents
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shall take the same free and clear of all offsets, counterclaims or defenses
which are unrelated to this Agreement, the Note, the Mortgages and the other
Loan Documents which Borrower may otherwise have against any assignor or this
Agreement, the Note, the Mortgages and the other Loan Documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrower in
any action or proceeding brought by any such assignee upon this Agreement, the
Note, the Mortgages and other Loan Documents and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower.
Section 7.17 No Joint Venture or Partnership. Borrower and Lender
-------------------------------
intend that the relationship created hereunder be solely that of borrower and
lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Mortgaged Property other than that of
mortgagee, beneficiary or lender.
Section 7.18 Waiver of Marshalling of Assets Defense. To the fullest
---------------------------------------
extent Borrower may legally do so, Borrower waives all rights to a marshalling
of the assets of Borrower and Persons with interests in Borrower, and of the
Mortgaged Property, or to a sale in inverse order of alienation in the event of
foreclosure of the interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Individual Property for the
collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender or Deed of Trust Trustee to the payment of
the Indebtedness out of the Net Proceeds of the Individual Property in
preference to every other claimant whatsoever.
Section 7.19 Waiver of Counterclaim. Borrower hereby waives the
----------------------
right to assert a counterclaim, other than compulsory counterclaim, in any
action or proceeding brought against it by Lender or its agents, including,
without limitation, Lender or its designee.
Section 7.20 Conflict: Construction of Documents. In the event of
-----------------------------------
any conflict between the provisions of this Agreement and the provisions of the
Note, the Mortgages or any of the other Loan Documents, the provisions of this
Agreement shall prevail. The parties hereto acknowledge that they were
represented by counsel in connection with the negotiation and drafting of the
Loan Documents and that the Loan Documents shall not be subject to the principle
of construing their meaning against the party which drafted same.
Section 7.21 Brokers and Financial Advisors. Borrower and Lender
------------------------------
hereby represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement except for Nomura Securities
International, Inc. (the "Finder"). Borrower agrees to pay all amounts required
------
to be paid to the Finder pursuant to that certain engagement letter dated May 3,
1996, between Borrower and the Finder. Borrower and Lender hereby agree to
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indemnify and hold the other and Lender or its designee harmless from and
against any and all claims, liabilities, costs and expenses of any kind in any
way relating to or arising from a claim by any Person (other than the Finder)
that such Person acted on behalf of the indemnifying party in connection with
the transactions contemplated herein. The provisions of this Section 7.21 shall
------------
survive the expiration and termination of this Agreement and the repayment of
the Indebtedness.
Section 7.22 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 7.23 Estoppel Certificates. Borrower and Lender each hereby
---------------------
agree at any time and from time to time upon not less than 15 days' prior
written notice by Borrower or Lender to execute, acknowledge and deliver to the
party specified in such notice, a statement, in writing, certifying that this
Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in fall force and effect and
stating the modifications hereto) , and stating whether or not, to the knowledge
of such certifying party, any Default or Event of Default has occurred and is
then continuing, and, if so, specifying each such Default or Event of Default;
provided, however, that it shall be a condition precedent to Lender's obligation
- -------- -------
to deliver the statement pursuant to this Section 7.23, that Lender shall have
------------
received, together with Borrower's request for such statement, an Officer's
Certificate stating that no Default or Event of Default exists as of the date of
such certificate (or specifying such Default or Event of Default).
Section 7.24 Payment of Expenses. Borrower shall, whether or not the
-------------------
Transactions are consummated, pay all Transaction Costs on demand, which shall
include, without limitation, (a) reasonable out-of-pocket costs and expenses of
Lender in connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents and the documents and instruments referred to
therein, (ii) the creation, perfection or protection of Lender's Liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches and filing and recording fees, third party due diligence expenses,
accounting firm fees, costs of the Environmental Reports (and an environmental
consultant), the Engineering Reports and the market studies), (iii) the
negotiation, preparation, execution and delivery of any amendment,
waiver or consent relating to any of the Loan Documents, (iv) the preservation
of rights under and enforcement of the Loan Documents and the documents and
instruments referred to therein, including any restructuring or rescheduling of
the Indebtedness, (b) the reasonable fees, expenses and disbursements of counsel
to Lender in connection with all of the foregoing, provided, however, that such
-------- -------
counsel's fees, expenses and disbursements in connection with the negotiation,
preparation, execution and delivery of the Loan Documents for the origination of
the Loan shall not exceed $80,000, (c) the fees and charges of the Bank, and (d)
reasonable fees, expenses and disbursements of counsel to Lender or its designee
and to Trustee in connection with their review of the Loan Documents and any de
minimis expenses of Lender or its designee and Trustee.
Section 7.25 Bankruptcy Waiver. Borrower hereby agrees that, in
-----------------
consideration of the recitals and mutual covenants contained herein, and for
other good and
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valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, in the event Borrower shall (i) file with any bankruptcy court of
competent jurisdiction or be the subject of any petition under Title 11 of the
U.S. Code, as amended, (ii) be the subject of any order for relief issued under
Title 11 of the U.S. Code, as amended, (iii) file or be the subject of any
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or law relating to
bankruptcy, insolvency or other relief of debtors, (iv) have sought or
consented to or acquiesced in the appointment of any trustee, receiver,
conservator or liquidator or (v) be the subject of any order, judgment or decree
entered by any court of competent jurisdiction approving a petition filed
against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency or other
relief for debtors, the automatic stay provided by the Federal Bankruptcy Code
shall be modified and annulled as to Lender, so as to permit Lender to exercise
any and all of its remedies, upon request of Lender made on notice to Borrower
and any other party in interest but without the need of further proof or
hearing. Neither Borrower nor any Affiliate of Borrower shall contest the
enforceability of this Section 7.25.
------------
Section 7.26 Indemnification. Borrower shall indemnify and hold
---------------
harmless Lender, and each of its directors, officers, employees, attorneys,
agents (including, without limitation, Lender or its designee), successors and
assigns (the "Indemnified Parties"), from and against all damages, liabilities,
-------------------
claims, actions, penalties and fines (collectively and severally, "Losses")
------
assessed against any of them resulting from the claims of any party relating to
or arising out of Borrower's failure to comply with any of the Loan Documents,
except for Losses caused by the gross negligence or willful misconduct of any
Indemnified Party, and reimburse each Indemnified Party for any expenses
(including the reasonable attorneys' fees and disbursements) reasonably incurred
in connection with the investigation of, preparation for or defense of any
actual or threatened claim, action or proceeding arising therefrom (including
any such costs of responding to discovery requests or subpoenas), regardless of
whether Lender or such other Indemnified Party is a party thereto. With
reference to the provisions set forth above in this Section 7.26 for payment by
------------
Borrower of reasonable attorneys' fees incurred by the Indemnified Parties in
any action or claim brought by a third party, Borrower shall diligently defend
such Indemnified Party and diligently conduct such defense, and, provided
Borrower demonstrates to the reasonable satisfaction of the applicable
Indemnified Party its ability to pay for any settlement amount agreed to by
Borrower, Borrower may settle any such action or claim or consent to an entry of
any judgment related thereto without the prior written consent of any
Indemnified Party to the extent such judgment or claim is for the payment of
money. If the Indemnified Party desires to engage separate counsel, it may do so
at its own expense; provided, however, that such limitation on the obligation of
-------- -------
Borrower to pay the fees of separate counsel for such Indemnified Party shall
not apply if such Indemnified Party has retained such separate counsel because
of a reasonable belief (based upon reasonable inquiry) that Borrower is not
diligently defending in and/or not diligently conducting the defense and so
notifies Borrower. The Loan shall not be considered to have been paid in full
unless all obligations of Borrower under this Section 7.26 shall have been fully
------------
performed (except for contingent indemnification
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obligations for which no claim has actually been made pursuant to this
Agreement). This Section 7.26 shall survive repayment in full of the Loan.
------------
Section 7.27 Entire Agreement. This Agreement, together with the
----------------
Exhibits and Schedules hereto and the other Loan Documents, constitutes the
entire agreement among the parties hereto with respect to the Loan, the Exhibits
and Schedules hereto and the other Loan Documents.
Section 7.28 Cross Collateralization. Without limitation of any
-----------------------
other right or remedy provided to Lender in this Agreement or any of the other
Loan Documents, Borrower covenants and agrees that upon the occurrence of an
Event of Default, (i) Lender shall have the right to pursue all of its rights
and remedies in one proceeding, or separately and independently in separate
proceedings which it, as Lender, in its sole and absolute discretion, shall
determine from time to time, (ii) Lender is not required to either marshall
assets, sell Collateral in any inverse order of alienation, or be subjected to
any "one action" or "election of remedies" law or rule, (iii) the exercise by
Lender of any remedies against any Collateral will not impede Lender from
subsequently or simultaneously exercising remedies against any other Collateral,
(iv) all Liens and other rights, remedies and privileges provided to Lender in
this Agreement and in the other Loan Documents or otherwise shall remain in full
force and effect until Lender has exhausted all of its remedies against the
Collateral and all Collateral has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Loan and (v) its Individual Properties
shall be security for the performance of all obligations of Borrower hereunder.
Section 7.29 Confidentiality. Borrower shall keep, and shall cause
---------------
its Affiliates, partners, employees, legal counsel and other advisors to keep,
the terms of this Agreement, the Loan and the other Loan Documents strictly
confidential and will not, directly or indirectly, disclose such terms without
Lender's prior written consent, unless required to make such disclosure by law
or in connection public reporting requirements, if such material would
customarily be disclosed in connection with such public reporting.
Section 7.30 Defeasance. (a) If, prior to the Prepayment Date,
----------
Borrower elects to defease the Loan in whole or in part (with respect to any
Individual Property) pursuant to Section 2.6. including, without limitation, in
-----------
connection with a Transfer of such Individual Property or any interest therein
pursuant to Section 2.7(a), Borrower shall defease the Loan in compliance with
--------------
the following conditions precedent:
(i) the delivery by Borrower of not less than 30 days' prior
written notice to Lender specifying a regularly scheduled Payment Date (the
"Defeasance Date") on which the Defeasance Deposit is to be made and the
---------------
principal amount is to be defeased;
(ii) the payment to Lender of all scheduled interest and
principal payments due and unpaid on the Defeasance Date;
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(iii) with respect to defeasance of the Loan in whole pursuant
to Section 2.6 only, the payment to Lender of all interest and other amounts due
-----------
under this Agreement, the Note, the Mortgages and the other Loan Documents;
(iv) with respect to defeasance of the Loan in part (with
respect to any Individual Property) pursuant to Section 2.6 only, including,
-----------
without limitation, in connection with a Transfer of such Individual Property or
any interest therein pursuant to Section 2.7(a), (A) payment of all interest and
--------------
other amounts due under the Mortgage relating to such Individual Property and
(B) satisfaction of the conditions contained in Section 2. 1 1(a);
-----------------
(v) the payment to Lender of the Defeasance Deposit on the
Defeasance Date; and
(vi) the delivery to Lender of:
(1) a security agreement, in form and substance
reasonably satisfactory to Lender, creating a first priority lien on the
Defeasance Deposit and the U.S. Treasuries purchased on behalf of Borrower with
the Defeasance Deposit in accordance with this provision of this Section 7.30
------------
(the "Security Agreement");
------------------
(2) with respect to defeasance of the Loan in whole
pursuant to Section 2.6 only, releases for each of the Individual Properties
-----------
from the Liens of the Mortgages, the Assignments of Leases, the Assignments of
Agreements and UCC-1 financing statements (for execution by Lender) in forms
appropriate for the jurisdiction in which each Individual Property is located:
(3) with respect to defeasance of the Loan in part (with
respect to any Individual Property) pursuant to Section 2.6 only, including,
-----------
without limitation, in connection with a Transfer of such Individual Property or
any interest therein pursuant to Section 2.7(a), a New Note and the releases
--------------
described in Section 2.11(a) (for execution by Lender) in forms appropriate
---------------
for the jurisdiction in which the applicable Individual Property is located;
(4) an Officer's Certificate certifying that the
requirements set forth in this Section 7.30 have been satisfied;
------------
(5) written confirmation from each Rating Agency that the
defeasance will not result in the downgrading, qualification or withdrawal of
the ratings then assigned to the Certificates;
(6) an opinion of counsel for Borrower in form
satisfactory to Lender stating, among other things, that (a) Lender has a
perfected first priority security interest in the Defeasance Deposit and the
U.S. Treasuries purchased by Lender on behalf of Borrower and (b) any REMIC
Trust formed pursuant to the Securitization will not fail to maintain its REMIC
status for federal income tax purposes as a result of such defeasance: and
-86-
<PAGE>
(7) such other certificates, documents or instruments as
Lender may reasonably request, including, without limitation, those reasonably
required in connection with a Securitization, and without limitation, notice to
the Rating Agencies of any defeasance as well as any other notice reasonably
required in connection with such defeasance.
In connection with the conditions set forth above, Borrower
hereby appoints Lender as its agent and attorney-in-fact for the purpose of
using the Defeasance Deposit to purchase U.S. Treasuries which provide Scheduled
Defeasance Payments and Lender shall upon receipt of the Defeasance Deposit
purchase such U.S. Treasuries on behalf of Borrower. For the purpose of this
Section 7.30, "U.S. Treasuries" shall mean and include direct obligations of, or
- ------------ ---------------
obligations fully guaranteed as to payment of principal and interest by, the
United States or any agency or instrumentality thereof provided such obligations
are backed by the full faith and credit of the United States of America.
Borrower, pursuant to the Security Agreement or other appropriate document,
shall authorize and direct that the payments received from the U.S. Treasuries
shall be made directly to the Cash Collateral Account on behalf of Lender and
applied to satisfy the obligations of Borrower under the Note.
(b) With respect to defeasance of the Loan in whole pursuant to
Section 2.6, upon compliance with the requirements of Section 7.30(a), (i) the
- ----------- ---------------
Mortgaged Property shall be released from the Liens of the Mortgages, the
Assignments of Leases, the Assignments of Agreements and the UCC-1 financing
statements and (ii) the pledged U.S. Treasuries shall be the sole source of
collateral securing the Note. With respect to a defeasance of the Loan in part
(with respect to an Individual Property) pursuant to Section 2.6, including,
-----------
without limitation, in connection with a Transfer of such Individual Property or
any interest therein pursuant to Section 2.7(a), upon compliance with the
--------------
requirements of Section 7.30(a), such Individual Property shall be released
---------------
pursuant to Section 2.11(a).
---------------
(c) Any portion of the Defeasance Deposit in excess of the
amount necessary to purchase the U.S. Treasuries required by Section 7.30(a)
---------------
above or to satisfy the other requirements of Section 7.30(a) shall be remitted
---------------
to Borrower.
(d) In connection with any release of a Lien under this Section
-------
7.30, Nomura Asset Capital Corporation ("NACC") shall establish or designate a
- ---- ----
successor entity (the "Successor Borrower") which shall be a single purpose
------------------
bankruptcy remote entity, and Borrower shall transfer and assign all
obligations, rights and duties under and to the Note (or, in connection with a
defeasance in part (with respect to an Individual Property) pursuant to Section
-------
2.6, including, without limitation, in connection with a Transfer of such
- ---
Individual Property or any interest therein pursuant to Section 2.7(a), a new
--------------
promissory note in the form of the Note, but in the amount of principal so
defeased to be executed by Borrower (a "New Note")) together with the pledged
--------
U.S. Treasuries to such Successor Borrower. The obligation of NACC to establish
or designate a Successor Borrower shall be retained by NACC notwithstanding the
sale or transfer of the Loan unless such obligation is specifically assumed by
the transferee. Such Successor Borrower shall assume the obligations under the
Note or the New Note, whichever is applicable, and the Security Agreement, and
Borrower shall be relieved of its obligations under such documents and, in
connection with a defeasance
-87-
<PAGE>
in part (with respect to an Individual Property) pursuant to Section 2.6,
-----------
including, without limitation, in connection with a Transfer of such Individual
Property or any interest therein pursuant to Section 2.7(a), only, shall be
--------------
relieved of its obligations under the Note to the extent of the amount of
principal so defeased. Borrower shall pay $1,000 to any such Successor Borrower
as consideration for assuming the obligations under the Note or the New Note,
whichever is applicable, and the Security Agreement. Notwithstanding anything in
this Agreement to the contrary, no other assumption fee shall be payable upon a
transfer of the Note or the New Note, whichever is applicable, in accordance
with this Section 7.30, but Borrower shall pay all costs and expenses incurred
------------
by Lender, including Lender's attorneys' fees and expenses, incurred in
connection therewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
G&L MEDICAL PARTNERSHIP, L.P.,
a Delaware limited partnership
By: G&L MEDICAL INC.,
a Delaware corporation,
its general partner
By: /s/ Gary Grabel
--------------------------------
Name: Gary Grabel
Title: Executive Vice President
-88-
<PAGE>
LENDER:
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By: /s/ John Burke
------------------------------------
John Burke
Its Attorney-in-Fact
-89-
<PAGE>
EXHIBIT 10.31
AGREEMENT OF PURCHASE AND SALE OF MEMBERSHIP INTEREST
-----------------------------------------------------
THIS AGREEMENT OF PURCHASE AND SALE OF MEMBERSHIP INTEREST ("Agreement") is
made and entered into as of this 26th day of April, 1996, by and between Milner
Investment Corporation, a California corporation ("Seller"), and G&L Realty
Partnership, L.P., a Delaware limited partnership ("Buyer"), with reference to
the following facts:
A. Seller is the owner of a fifty-nine percent (59%) membership interest in
445 Bedford, a California limited liability company (the "Membership Interest")
pursuant to the terms of that certain Operating Agreement of 445 Bedford, a
California limited liability company dated March 21, 1996 (the "LLC Agreement").
B. Buyer desires to purchase the Membership Interest from Seller.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual covenants
and agreements herein set forth, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree
as follows:
ARTICLE I.
SALE OF MEMBERSHIP INTEREST
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees
to purchase from Seller, the Membership Interest, including:
(a) Seller's right, title and interest to, and as a Member in, 445 Bedford,
a California limited liability company ("445 Bedford");
(b) All of Seller's right, title and interest in and to the capital,
profits and losses of 445 Bedford, and all distributions of property and other
assets from 445 Bedford made after the date hereof;
(c) All of Seller's rights and privileges under the LLC Agreement;
(d) All proceeds and all products of the foregoing, all whether known or
unknown, now existing or existing in the future.
Buyer agrees to abide by all of the terms and provisions of the Agreement.
<PAGE>
ARTICLE II.
PURCHASE PRICE
2.1 Purchase Price. The total purchase price for the Membership
--------------
Interest shall be Eight Hundred Eight Thousand Dollars ($808,000) (the "Purchase
Price");
2.2 Manner of Payment. The Purchase Price shall be paid by the
-----------------
Buyer delivering a fully executed promissory note (the "Note"), payable to the
order of the Seller in the original principal amount of Eight Hundred Eight
Thousand Dollars ($808,000) in the form of Exhibit "A" attached hereto,
concurrently with the execution of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby expressly warrants, covenants and represents to Buyer that:
3.1 Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has the full corporate
power and authority to own the Membership Interest and to carry on its business
as it is now being conducted.
3.2 Seller has good and marketable title to the Membership Interest and no
liens have been filed against the Membership Interest.
3.3 This Agreement constitutes the legal, valid and binding obligation of
Seller enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or other laws
affecting other enforcement of creditors' rights generally or by general
equitable principles. Seller has taken all necessary corporate action to
authorize and approve the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby expressly warrants, covenants and represents to Seller that:
4.1 Buyer is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the power and
authority to own the Membership Interest and to carry on its business as it is
now being conducted.
4.2 This Agreement constitutes the legal, valid and binding obligation of
Buyer enforceable in accordance with its terms,
2
<PAGE>
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or other laws affecting other enforcement of creditors'
rights generally or by general equitable principles. Buyer has taken all
necessary partnership action to authorize and approve the execution and delivery
of this Agreement and the consummation of the transaction contemplated hereby.
4.3 The execution, delivery and performance of the Agreement by Buyer does
not and will not:
(a) Require any consent or approval not heretofore obtained of any
partner of the Buyer;
(b) Violate or conflict with any provision of the Buyer's limited
partnership agreement;
(c) Result in or require the creation or imposition of any lien upon
or with respect to any property now owned or leased or hereafter acquired by
Buyer;
(d) Violate any law applicable to Buyer;
(e) Result in a breach of or constitute a default under, or cause or
permit the acceleration of any obligation owed under, any indenture or loan or
credit agreement or any other contractual obligation to which the Buyer is a
party or which the Buyer or any of its property is bound or affected;
and the Buyer is not in violation of, or default under, any law or contractual
obligation, or any indenture, loan or credit agreement in any respect.
ARTICLE V.
INDEMNIFICATIONS
5.1 Seller Indemnification. Buyer hereby agrees to indemnify,
----------------------
defend and hold Seller and its directors, officers, employees, agents,
successors and assigns harmless from and against any and all liability, loss,
cost, damage and/or expense (including, without limitation, reasonable
attorneys' fees and costs) directly or indirectly arising out of or attributable
to any liability of the Membership Interest occurring from and after the date of
this Agreement.
5.2 Buyer Indemnification. Seller hereby agrees to indemnify,
---------------------
defend and hold Buyer and its partners, employees, agents, successors
and assigns harmless from and against any and all liability, loss, cost,
damage and/or expense (including, without limitation, reasonable
attorneys' fees and costs) directly or indirectly arising out of or
attributable to any liability of the Membership Interest occurring prior
to the date of this Agreement.
3
<PAGE>
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between Seller and Buyer with respect to the subject matter hereof and
may not be modified, amended or otherwise changed in any manner except by a
writing executed by both Seller and Buyer.
6.2 Broker's Commission. The parties hereto acknowledge and agree
-------------------
that there is no broker's commission or finder's fee payable in any amount to
anyone by Seller and/or Buyer with respect to this transaction. Each party
("Indemnifying Party") shall indemnify and hold harmless the other party
("Indemnified Party") from any claims, liabilities, costs, and expenses
(including attorneys' fees) incurred by the Indemnified Party with respect to
the payment of any broker's commission or finder's fee with respect to this
transaction which is claimed to be due by reason of the acts of the Indemnifying
Party.
6.3 Interpretation; Captions. Whenever used herein, the term
------------------------
"including" shall be deemed to be followed by the words "without limitation."
Words used in the singular number shall include the plural, and vice-versa, and
any gender shall be deemed to include each other gender. The captions and
headings of the Articles and Sections of this Agreement are for convenience of
reference only, and shall not be deemed to define or limit the provisions
hereof.
6.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
6.5 Attorneys' Fees. In the event any action is necessary to
---------------
enforce the rights of either of the parties hereto, the prevailing party in any
such action shall be entitled to reasonable attorneys' fees in addition to
costs.
6.6 Time of the Essence. Time is of the essence of this Agreement.
--------------------
6.7 Specific Performance. The parties understand and agree that
--------------------
the Membership Interest is unique and for that reason, among others, Buyer will
be irreparably damaged in the event that this Agreement is not specifically
enforced. Accordingly, in the event of any breach or default in or of the
Agreement or any of the warranties, terms or provisions hereof by Seller, Buyer
shall have, in addition to a claim for damages for such breach or default, and
in addition and without prejudice to any right or remedy available at law or in
equity or pursuant to this Agreement, the right to demand and have specific
performance of this Agreement.
6.8 Election of Remedies. No right or remedy conferred upon Buyer
--------------------
in this Agreement is intended to be exclusive of any
4
<PAGE>
other right or remedy contained herein or now or hereafter available to Buyer at
law or in equity, and every such right and remedy shall be cumulative and shall
be in addition to every other right or remedy contained in this Agreement or now
or hereafter available to Buyer at law or in equity.
6.9 Authority. The parties signing below represent and warrant
---------
that they have the requisite authority to bind the entities on whose behalf they
are signing.
6.10 Exhibit. The exhibit attached hereto is hereby incorporated by
-------
reference herein.
6.11 Severability. If any portion of this Agreement is declared void or
------------
unenforceable, such provision shall be deemed severed from this Agreement, which
shall otherwise remain in full force and effect.
6.12 Further Assurances. It is the intent of the parties that all
------------------
right, title and interest in the Membership Interest be fully conveyed to Buyer
hereunder. Accordingly, the parties hereto agree to execute, acknowledge and
deliver any and all additional papers, documents and other assurances and shall
perform any and all acts and things reasonably necessary in connection with the
performance of the obligations hereunder and to carry out the intent of the
parties hereto to ensure that all of the rights of Seller in the Property are
conveyed to Buyer.
6.13 Effect of Waiver. A waiver by either party hereto
----------------
shall not affect either party's right to enforce the provisions contained
herein, nor shall any extension or waiver be held to be an extension of time or
waiver of any prior or subsequent breach of the same or any other obligation
under this Agreement.
6.14 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER: Milner Investment Corporation, a California
corporation
By: /s/ Reese L. Milner, II
-----------------------
Name: Reese L. Milner, II
Its: President
BUYER: G&L REALTY PARTNERSHIP, L.P., a Delaware
limited partnership
By: G&L Realty Corp., a Maryland
corporation
Its: General Partner
By: /s/ Steven D. Lebowitz
----------------------
Name: Steven D. Lebowitz
Its: President
6
<PAGE>
Exhibit "A"
PROMISSORY NOTE
---------------
(unsecured)
$808,000.00 April 26, 1996
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of the
Milner Investment Corporation, a California corporation, ("Holder") at 439 North
Bedford Drive, Beverly Hills, California 90210 or at such other place as the
Holder may in writing designate, in lawful money of the United States of America
and in immediately available funds, the principal amount of EIGHT HUNDRED EIGHT
THOUSAND DOLLARS ($808,000) (the "Principal Amount") together with interest
(computed on the basis of a 365 day year and the actual number of days elapsed)
at a rate of ten percent (10%) per annum, on the Principal Amount from time to
time outstanding. Notwithstanding anything to the contrary contained herein,
the interest rate shall at no time exceed the maximum interest rate permitted
under applicable usury laws. If the interest rate at any time is determined to
exceed such maximum rate, then the interest rate to be applied herein shall be
the maximum interest rate permitted by such applicable usury laws.
The entire Principal Amount outstanding under this Promissory Note
("Note"), together with all accrued but unpaid interest shall be due and payable
upon the earlier of ("Maturity Date")
(1) Six (6) months from the date hereof; or
(2) The sale, exchange or other disposition by 445 Bedford, a California
limited liability company, of its interest in the Real Property as defined
in that certain Purchase Agreement dated March 22, 1996 between Republic
Bank California National Association, a national banking association
organized under the laws of the United States of America, as Buyer, and 445
Bedford, a California limited liability company, and The Milner Trust,
dated November 2, 1973, as Seller.
Each payment shall be credited first on interest, if any, then due and the
remainder on principal. The undersigned shall have the privilege of paying in
advance all or any portion of the principal amount outstanding hereunder without
penalty at any time.
If the undersigned shall fail to pay any principal or interest within five
(5) days of the principal and interest becoming due, the undersigned shall pay
all costs and expenses,
7
<PAGE>
including attorneys' fees, incurred by the Holder in collecting or attempting
to collect amounts due under this Note or otherwise in enforcing his rights
hereunder. The right to plead any and all statutes of limitation as a defense to
a demand hereunder is hereby waived to the fullest extent permitted by law. None
of the provisions hereof and none of Holder's rights or remedies on account of
any past or future default shall be deemed to have been waived by Holder's
acceptance of any past due payment or by an indulgence granted by Holder to the
undersigned. The undersigned, for himself and his successors and assigns, waives
presentment, demand, protest and notice of dishonor and diligence in collecting
or bringing suit. It is hereby agreed that time is of the essence of this Note.
The undersigned agrees to pay all costs of collection when incurred,
including, but not limited to, reasonable attorneys' fees. If any suit or action
is instituted to enforce this Note, the undersigned promises to pay, in addition
to the costs and disbursements otherwise allowed by law, such sum as the court
may adjudge reasonable attorneys' fees in such suit or action.
Any notice to the undersigned required under this Note shall be in writing
and shall be delivered in person, by reputable overnight courier or by
registered or certified mail, postage prepaid with return receipt requested, to
the undersigned at 439 N. Bedford Drive, Beverly Hills, California 90210, or
such other address as the undersigned may have furnished the Holder.
This Note and the rights and obligations of the undersigned and Holder
shall be governed by and construed in accordance with the laws of the State of
California, without regard to the rules regarding conflicts of laws.
In witness whereof, the undersigned has caused this Note to be executed by
the duly authorized president of its corporate general partner as of the day and
year first above written.
G&L REALTY PARTNERSHIP, L.P.,
a Delaware limited partnership
By: G&L REALTY CORP., a Maryland
corporation
Its: General Partner
By: ___________________
Name: Steven D. Lebowitz
Its: President
8
<PAGE>
EXHIBIT 10.32
G & L REALTY PARTNERSHIP, L.P.
439 NORTH BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
June 12, 1996
445 NORTH BEDFORD DRIVE, LLC
("445 LLC")
439 North Bedford Drive
Beverly Hills, California 90210
Attention: Steven D. Lebowitz
RE: PURCHASE OF TUSTIN HOSPITAL
---------------------------
Reference is made to that certain Agreement of Purchase and Sale and Escrow
Instructions (the "Purchase Agreement") between G&L Realty Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership"), and Tustin Hospital,
Inc., a Delaware corporation, dated as of March 7, 1996. The Purchase Agreement
relates to the purchase of all of the property (the "Property") as defined in
Section 1 of the Purchase Agreement.
In connection with the purchase of the Property, we hereby agree as
follows:
1. Notwithstanding the terms of the Purchase Agreement, the Property shall
be purchased by the Operating Partnership and 445 LLC, as tenants in common;
each of the Operating Partnership and 445 LLC shall acquire an undivided
interest in the Property, as more particularly described on Exhibit A hereto.
---------
2. The gross aggregate purchase price of the Property of $4,500,000 shall
be payable by the parties as follows: (a) 445 LLC shall contribute $1,357,020,
(b) the Operating Partnership shall contribute the balance, if any, in cash and
(c) the parties acknowledge and agree that the Real Property (as defined in the
Purchase Agreement) shall be encumbered by a Deed of Trust in favor of Tokai
Bank as beneficiary securing indebtedness of approximately $4,760,000 (70% of
the appraised value as determined by Tokai Bank).
3. Each of the Operating Partnership and 445 LLC acknowledge and agree
that to the extent necessary to effectuate the intent of this agreement, 445 LLC
shall be deemed to be a "Buyer" under the Purchase Agreement, and 445 LLC hereby
agrees to assume and perform as and when due all agreements of "Buyer" under the
Purchase Agreement, to the extent such agreement may be limited by the
provisions hereof. Nothing set forth herein shall be deemed to limit or relieve
the Operating Partnership from its duties or obligations under the Purchase
Agreement.
4. Each of the undersigned shall execute all such further documents,
instruments and agreements and take any and all further actions as may be
necessary or advisable in order to
<PAGE>
445 North Bedford Drive, LLC
Page 2
effectuate the intent of this letter agreement and the purchase of the Property
pursuant to the Purchase Agreement.
If the foregoing is in accordance with your understanding, please
acknowledge below your acceptance of the terms hereof.
G & L REALTY PARTNERSHIP, L.P.
a Delaware limited partnership
By: G & L Realty Corp., a Maryland
corporation, its general partner
By: /s/ Steven D. Lebowitz
-----------------------------
Name: Steven D. Lebowitz
Title: President
ACCEPTED AND AGREED
as of the date set forth above
445 NORTH BEDFORD DRIVE, LLC
By: G & L DEVELOPMENT,
a California general partnership, as memeber
By: /s/ Steven D. Lebowitz
------------------------------
Steven D. Lebowitz
as General Partner
2
<PAGE>
EXHIBIT 10.33
================================================================================
REDEMPTION AGREEMENT
by and between
G&L REALTY PARTNERSHIP, L.P., a Delaware limited partnership
and
445 BEDFORD, a California limited liability company
Dated as of June 27, 1996
================================================================================
<PAGE>
REDEMPTION AGREEMENT
THIS REDEMPTION AGREEMENT (this "Agreement") is made and entered into as of
June 27, 1996 by and between G&L REALTY PARTNERSHIP, L.P., a Delaware limited
partnership (the "Operating Partnership"), and 445 BEDFORD, a California limited
liability company ("445 LLC").
RECITALS
A. Operating Partnership is a limited partnership, the sole general
partner of which is G&L Realty Corp. a Maryland corporation ("REIT").
B. 445 LLC and the Operating Partnership are parties to that certain
letter agreement dated June 12, 1996 (the "Letter Agreement") with respect to
the purchase of certain property from Tustin Hospital, Inc., a Delaware
corporation. Such property is more particularly described in that certain
Agreement of Purchase and Sale and Escrow Instructions between Tustin Hospital,
Inc. and Operating Partnership dated March 7, 1996 (the "Tustin Purchase
Agreement") and is referred to herein as the "Property" (as defined herein).
Pursuant to the Letter Agreement (and other documents), 445 LLC and the
Operating Partnership acquired an undivided interest in the Property as tenants
in common, as more fully described in the Letter Agreement.
C. As of the date hereof, the Operating Partnership owns approximately a
59% Interest (as defined in that certain Operating Agreement of 445 LLC, dated
as of March 21, 1996 the "Operating Agreement")) in 445 LLC (the "OP Interest").
D. 445 LLC desires to redeem the OP Interest in consideration for which
445 LLC will convey to the Operating Partnership an additional undivided
interest in the Property, as set forth in Exhibit A hereto (the
---------
"Consideration").
NOW, THEREFORE, for and in consideration of the foregoing premises, and the
mutual undertakings set forth below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
TERMS OF AGREEMENT
SECTION 1
Definitions
The following capitalized terms not otherwise defined herein shall have the
following meanings herein:
Assignment. The "Assignment" shall mean a Global Assignment in the form of
----------
Exhibit B attached hereto.
- ---------
1
<PAGE>
Bill of Sale. "Bill of Sale" shall mean a Bill of Sale in the form of
------------
Exhibit C attached hereto.
- ---------
Closing Date. "Closing Date" shall be the date on which the Closing occurs.
------------
Code. "Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time, and the regulations promulgated thereunder from time to time.
Contracts. "Contracts" shall mean all written or oral management,
---------
architectural, engineering, leasing, insurance, bonding, construction,
financing, guarantee, indemnity, service, maintenance, operating, repair,
collective bargaining, employment, employee benefit, equipment leasing, supply,
warranty, purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments (excluding the Leases) in
any way relating to the Property or any part thereof.
FIRPTA Affidavit. "FIRPTA Affidavit" shall mean an affidavit in the form
----------------
attached hereto as Exhibit E.
---------
Grant Deed. "Grant Deed" shall mean a deed in the form attached hereto as
----------
Exhibit D.
- ---------
Leases. "Leases" shall mean all lease, occupancy agreements and other
------
similar agreements, together with all modifications, extensions and renewals
thereof, and any guarantees of any of the foregoing with respect to or demising
any part of the Property, as set forth on Schedule 1 hereto.
----------
Partnership Agreement. "Partnership Agreement" shall mean the Agreement of
---------------------
Limited Partnership of Operating Partnership, dated as of November 15, 1993, as
amended and restated from time to time.
Permitted Exceptions. "Permitted Exceptions" shall mean (i) exceptions to
--------------------
the title contained in the pro forma title policy for the Property prepared by
the Title Company and approved in writing by Operating Partnership and (ii) the
Leases.
Property. "Property" shall mean the Real Property, Improvements and
--------
Personal Property as defined in the Tustin Purchase Agreement.
Operating Partnership. "Operating Partnership" shall have the meaning set
---------------------
forth in the first paragraph of this Agreement.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the regulations promulgated thereunder from time to time.
445 LLC. "445 LLC" shall have the meaning set forth in the first paragraph
-------
of this Agreement.
Title Company. "Title Company" shall mean a title company of Operating
-------------
Partnership's choosing which is engaged in the business of issuing title
policies.
2
<PAGE>
SECTION 2
Redemption
The Operating Partnership hereby sells, transfers, conveys, assigns and
delivers to 445 LLC, and 445 LLC hereby redeems, purchases, acquires and accepts
from the Operating Partnership, the OP Interest, including:
(a) The Operating Partnership's right, title and interest to, and as a
Member (as defined in the Operating Agreement) in, 445 LLC;
(b) All of the Operating Partnership's right, title and interest in and
to the capital, profits, losses of 445 LLC, and all distributions of property
and other assets from 445 LLC made after the date hereof;
(c) All of the Operating Partnership's rights and privileges under the
Operating Agreement; and
(d) All proceeds and all products of the foregoing, all whether known or
unknown, now existing or existing in the future.
SECTION 3
Terms of Redemption
3.1 Consideration. As full, complete and fair consideration and payment
-------------
for the OP Interest, 445 LLC hereby sells, pays, assigns, conveys and delivers
to the Operating Partnership the Consideration.
3.2 Manner of Delivery. At the Closing, 445 LLC shall deliver or cause to
------------------
be delivered to the Operating Partnership or its agent the Consideration.
SECTION 4
Representations and Warranties
4.1 Representations and Warranties of Operating Partnership to 445 LLC.
-------------------------------------------------------------------
Operating Partnership hereby represents and warrants to and covenants with 445
LLC that:
4.1.1 Authority. Each of Operating Partnership and REIT is duly
---------
organized, validly existing and in good standing under the laws of the state of
its organization or incorporation, as applicable, will be duly qualified and in
good standing as a foreign corporation or limited partnership, as applicable, in
the State of California on the Closing Date and has the power to own all of its
properties and assets and to carry on its business as presently conducted. The
execution, delivery and performance of this Agreement, and all agreements
contemplated hereby have been duly and validly authorized by all necessary
action of Operating Partnership and this Agreement and all agreements
contemplated hereby are valid and binding obligations of Operating Partnership,
enforceable against Operating Partnership in accordance with their respective
terms.
3
<PAGE>
4.1.2 Status of Partnership Agreement. The Partnership Agreement is
-------------------------------
in full force and effect, and there are no dissolution, termination or
liquidation proceedings pending or contemplated with respect to Operating
Partnership or REIT.
4.1.3 OP Interest. The Operating Partnership has good and marketable
-----------
title to the OP Interest free and clear of all liens, charges and encumbrances.
4.2 Representations and Warranties of 445 LLC to Operating Partnership.
-------------------------------------------------------------------
445 LLC represents and warrants to and covenants with Operating Partnership
that:
4.2.1 Knowledge. 445 LLC has no knowledge, as of the date hereof and
---------
as of the Closing, of any facts which would indicate that any of the
representations and warranties of Tustin Hospital, Inc. made in the Tustin
Purchase Agreement are not true and correct.
4.2.2 Authority. 445 LLC is duly organized, validly existing and in
---------
good standing under the laws of the state of its organization and has the power
to own all of its properties and assets and to carry on its business as
presently conducted. The execution, delivery and performance of this Agreement
and all agreements contemplated hereby have been duly and validly authorized by
all necessary action of 445 LLC, and this Agreement and all agreements
contemplated hereby are valid and binding obligations of 445 LLC, enforceable
against 445 LLC in accordance with their respective terms.
4.2.3 Property. 445 LLC owns, as tenant in common, an undivided
--------
interest in the Property, and at the Closing will transfer the Consideration to
Operating Partnership free and clear of all security interests, mortgages,
pledges, liens, encumbrances, claims and equities.
SECTION 5
Conditions to Operating Partnership's Obligation to Close
The obligation of Operating Partnership to close hereunder shall be subject
to the timely satisfaction of the following conditions unless waived by
Operating Partnership in its sole and absolute discretion:
5.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties made by 445 LLC in this Agreement shall be true in all material
respects as of the Closing with the same effect as though such representations
and warranties had been made or given at the Closing.
5.2 Compliance with Agreement. 445 LLC shall have performed and complied
-------------------------
in all respects with its respective obligations under this Agreement which are
to be performed or complied with by it prior to or at the Closing.
5.3 Title Policy. Operating Partnership shall have received from the
------------
Title Company, at Operating Partnership's expense, an unconditional commitment
to issue to Operating Partnership at Closing, an owner's title policy on
standard ALTA Form B (1970), in form and substance acceptable to Operating
Partnership with respect to the Consideration, subject only to the Permitted
Exceptions (the "Title Policy").
4
<PAGE>
5.4 Grant Deed. 445 LLC shall have delivered to Operating Partnership a
----------
Grant Deed, duly executed by 445 LLC in recordable form, and such documents and
instruments as may be necessary to place title to the Consideration in the state
required to allow Title Company to issue the Title Policy required by Operating
Partnership.
5.5 Global Assignment. 445 LLC shall have delivered to Operating
-----------------
Partnership a Global Assignment, in the form attached hereto as Exhibit B, duly
---------
executed by 445 LLC in recordable form.
5.6 Bill of Sale. 445 LLC shall have delivered to Operating Partnership a
------------
Bill of Sale, in the form attached hereto as Exhibit C, duly executed by 445 LLC
---------
in recordable form.
5.6 FIRPTA Affidavit. 445 LLC shall have delivered to Operating
----------------
Partnership a FIRPTA Affidavit in the form attached hereto as Exhibit E, duly
---------
executed by 445 LLC.
SECTION 6
Conditions to 445 LLC's Obligation to Close
The obligation of 445 LLC to close hereunder shall be subject to
satisfaction of the following conditions in favor of 445 LLC unless waived by
445 LLC.
6.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties made by Operating Partnership in this Agreement shall be true in
all material respects as of the Closing with the same effect as though such
representations and warranties had been made or given at the Closing.
6.2 Compliance with Agreement. Operating Partnership shall have performed
-------------------------
and complied in all respects with all its obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
6.3 Further Assurances. Operating Partnership, at the request of 445 LLC,
------------------
shall have furnished, executed, and delivered such documents, instruments,
certificates, notices, or other further assurances as 445 LLC shall reasonably
request as necessary to effect complete consummation of this Agreement and the
transactions contemplated by this Agreement.
SECTION 7
Closing
7.1 Time and Place. The Closing shall take place on June 27, 1996, or at
--------------
such other date and time as the parties may agree.
7.2 Post-Closing Covenants.
-----------------------
(a) After the Closing, each party, at the request of the other party,
shall furnish, execute, and deliver such documents, instruments, certificates,
notices, or other further assurances as such requesting party shall reasonably
request as necessary to effect complete consummation of this Agreement.
5
<PAGE>
(b) Operating Partnership and 445 LLC shall promptly pay to the party
entitled thereto any sums due as a result of any adjustments to prorations as
set forth in Section 8.1 hereof.
SECTION 8
Closing Adjustments and Related Items
8.1 Closing Costs. All closing costs and expenses of the parties in
-------------
connection with the transactions contemplated hereby shall be borne by Operating
Partnership; provided, however, each party shall bear the fees and expenses of
their respective counsel.
8.2 Prorations. At the Closing, all revenues and charges relating to the
----------
Property that are customarily prorated in transfers of real property, including
but not limited to periodic charges payable or receivable with respect to the
Property, shall be prorated between Operating Partnership and 445 LLC in cash as
the Parties hereto shall agree.
SECTION 9
Failure Of 445 LLC To Perform; Termination; No Waiver
9.1 Operating Partnership's Remedies. If 445 LLC shall default in the
--------------------------------
performance of its obligations under this Agreement to Operating Partnership,
then Operating Partnership shall have the right to either (i) institute an
action against 445 LLC for all damages suffered by Operating Partnership,
including without limitation, the loss of its bargain, or (ii) institute an
action for specific performance to enforce 445 LLC's obligation under this
Agreement to convey title to the CONSIDERATION AND FOR INCIDENTAL DAMAGES.
9.2 No Waiver. Nothing contained in this Agreement shall be deemed or
---------
construed to be a waiver of any right which 445 LLC may have to institute an
action against Operating Partnership under the Securities Act or any other law
or statute, under common law, or in equity.
SECTION 10
Miscellaneous
10.1 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.2 Governing Law. This Agreement shall be governed by the internal laws
-------------
of the State of California, without regard to the choice of laws provisions
thereof.
10.3 Entire Agreement. This Agreement (including the Exhibits hereto)
----------------
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes any and
all prior agreements and understandings between the parties with respect to such
subject matter.
6
<PAGE>
10.4 Amendment. This Agreement may be amended only in a writing signed by
---------
the parties to be bound by such amendment.
10.5 Waiver. No waiver shall be effective against a party unless it is in
------
a writing signed by that party.
10.6 Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective successors and
assigns. Neither party hereto shall assign its rights and responsibilities under
this Agreement without the prior written consent of the other party hereto. No
assignment by either party shall release or relieve any party from liability
hereunder.
10.7 Time of the Essence. Time is of the essence with respect to this
-------------------
Agreement.
10.8 Attorneys' Fees. In the event of a dispute arising out of the
---------------
interpretation or enforcement of this Agreement, or a declaration of rights
hereunder, or enforcement of any judgment of any judicial or non-judicial body
with respect to the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and expenses.
10.9 Notices. Any notice or other communications required or permitted to
-------
be given hereunder shall be in writing and mailed postage prepaid by certified
or registered mail, return receipt requested, sent by personal delivery,
overnight courier or by telecopy to the appropriate address or telephone number
specified below, or at such other place or telecopy number as any party may,
from time to time, designate in a written notice given to the others in the
manner specified herein. Notices or other communications shall be effective when
actually received.
445 LLC: 445 BEDFORD
439 N. Bedford Drive
Beverly Hills, California 90210
Attn: Steven D. Lebowitz
Operating Partnership: G&L REALTY PARTNERSHIP, L.P.
439 N. Bedford Drive
Beverly Hills, California 90210
Attn: Steven D. Lebowitz
10.10 Headings. The headings in this Agreement are intended solely for
--------
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.11 Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not impair the validity or enforceability of any other
provision.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"OPERATING PARTNERSHIP"
G&L REALTY PARTNERSHIP, L.P.,
a Delaware limited partnership
By: G&L REALTY CORP., a Maryland
corporation, General Partner
By: /s/ Steven D. Lebowitz
-------------------------------
Name: Steven D. Lebowitz
Title: President
"445 LLC"
445 BEDFORD, a California limited
liability company
By: /s/ Steven D. Lebowitz
------------------------------------
Name: Steven D. Lebowitz
Title: Manager
G&L Development, a California general partnership and member of 445 LLC,
hereby consents to the assignment by the Operating Partnership of the OP
Interest to 445 LLC, as described herein.
G&L DEVELOPMENT, a California general
partnership
By /s/ Steven D. Lebowitz
-------------------------------------
Steven D. Lebowitz
General Partner
8
<PAGE>
INDEX TO EXHIBITS AND SCHEDULES
Exhibit A Description of Consideration
Exhibit B Global Assignment
Exhibit C Bill of Sale
Exhibit D Grant Deed
Exhibit E FIRPTA Affidavit
Schedule 1 List of Leases
<PAGE>
EXHIBIT A
---------
<PAGE>
EXHIBIT B
---------
GLOBAL ASSIGNMENT
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, 445 BEDFORD, a California limited liability company
("ASSIGNOR"), does hereby assign, transfer and set over unto G&L REALTY
PARTNERSHIP, L.P., a Delaware limited partnership ("Assignee"), 59% of
Assignor's right, title, claim, estate and interest in and to: (i) any and all
intangible personal property which relates in any manner to or arises from or in
connection with the Consideration, as such term is defined in that certain
Redemption Agreement dated June 27, 1996 between Assignor and Assignee (the
"Redemption Agreement"), the improvements thereon related to the Consideration
(the "Improvements") or personal property located thereon or associated
therewith and relating to the Consideration (the "Personal Property"), including
without limitation the name "Tustin Hospital", (ii) any and all Contracts
affecting or relating to the Consideration, Improvements or Personal Property,
(iii) all of the Assignor's right, title, interest, claim and estate in and to
all leases, occupancy agreements and other similar agreements relating to the
Consideration, together with all modifications, extensions and renewals thereof
and any guarantees of any of the foregoing (collectively, the "Leases") which
demise any part of the Real Consideration or the Improvements, (iv) any and all
other property, rights in or to property and contractual rights which Assignor
may have which are necessary or useful in connection with, or otherwise affect
or relate to, the acquisition, development, improvement, holding, use,
operation, maintenance, leasing or sale of the Consideration, Improvements or
Personal Property, including, but not limited to, any and all plans,
specifications, subdivision maps and filings with respect thereto, applications,
entitlements, licenses and entitlements, subdivision or other bonds, engineering
or soil reports, surveys, maps, correspondence, inspection reports, management
reports, marketing reports, marketing displays and brochures, all contract
rights, warranties from contractors, architects, engineers and material and
labor suppliers whether written or implied, all insurance policies, proceeds and
unearned premiums, all books and records, all claims, choses in action,
judgments, remedies, damages and causes of action, all leases, easements,
licenses and rights of way, occupancy or use agreements and all other documents
affecting or relating to the Consideration, Improvements or Personal Property,
and (iv) any and all other intangibles, warranties, guarantees, permits, maps,
surveys, entitlements and other intangible rights of any type or nature relating
to any or all of the Consideration, Improvements or Personal Property
(collectively, the items described above are referred to herein as the "Assigned
Property"); provided, however, that the Assigned Property shall not include any
deposits and reimbursements, any water development fee refunds with respect to
the period prior to the Closing (as defined in the Redemption Agreement) and any
property tax refunds with respect to the period prior to the Closing.
Assignee hereby assumes and agrees to perform, as and when due, all of
Assignor's obligations under or with respect to the Assigned Property.
Assignee hereby assumes and agrees to perform, as and when due, all of
Assignor's obligations under or with respect to the Leases.
Assignor has conveyed the Property to Assignee by grant deed of even date
herewith.
<PAGE>
Assignor covenants and agrees with Assignee to hereafter furnish to
Assignee such further assignments and consents as Assignee may reasonably
require in furtherance of this Assignment or to carry out the intent hereof.
This Assignment shall be binding on Assignor, Assignee and their respective
legal representatives, successors and assigns.
In the event any action or suit is brought by a party hereto against
another party hereto by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of such other party arising out
of this Assignment, the prevailing party shall be entitled to have and recover
of and from the other party all costs and expenses of the action or suit,
including reasonable attorneys' fees.
This Assignment may be executed in counterparts, each of which shall be
deemed an original, but all of which, together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF, this Assignment has been executed as of June 27, 1996.
"Assignor"
445 BEDFORD, a California limited liability
company
By: ------------------------------------
Name: Steven D. Lebowitz
Title: Manager
"Assignee"
G&L REALTY PARTNERSHIP, L.P., a Delaware
limited partnership
By: G&L Realty Corp., a Maryland
corporation, General Partner
By:--------------------------------
Name: Steven D. Lebowitz
Title: President
<PAGE>
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On June __, 1996, before me, a Notary Public in and for said State,
personally appeared Steven D. Lebowitz, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
- -----------------------------------
Print Name
-------------------------
My Commission Expires -
------------
(Seal)
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On June __, 1996, before me, a Notary Public in and for said State,
personally appeared Steven D. Lebowitz, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
- -----------------------------------
Print Name
-------------------------
My Commission Expires -
------------
(Seal)
<PAGE>
EXHIBIT C
---------
BILL OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, 445 BEDFORD, a California limited liability company
("Transferor"), hereby transfers, conveys and assigns to G&L REALTY PARTNERSHIP,
L.P., a Delaware limited partnership ("Transferee"), its successors and assigns
forever, a 59% interest in any and all tangible personal property related to or
associated with the Consideration, as such term is defined in that certain
Redemption Agreement dated June 27, 1996 between Transferor and Transferee or
any improvements thereon, including, but not limited to, fixtures, furniture,
furnishings, tools, machinery appliances and other apparatus and equipment,
plans, specifications, operational handbooks, machinery and/or equipment,
operational instructions and/or specifications, surveys, drawings, business
records and the personal property listed on any schedule which may be attached
hereto (collectively, the "Transferred Property").
Transferor covenants and agrees with Transferee to hereafter furnish to
Transferee such further conveyance documents and consents as Transferee may
reasonably require in furtherance of this Bill of Sale or to carry out the
intent hereof.
This Bill of Sale shall be binding on Transferor, and its legal
representatives, successors and assigns.
In the event any action or suit is brought by a party hereto against
another party hereto by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of such other party arising out
of this Bill of Sale, the prevailing party shall be entitled to have and recover
of and from the other party all costs and expenses of the action or suit,
including reasonable attorneys' fees.
Dated: June 27, 1996.
"Transferor"
445 BEDFORD, a California limited liability
company
By:
------------------------------------------
Name: Steven D. Lebowitz
Title: Manager
<PAGE>
EXHIBIT D
---------
GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Quentin Thompson
G&L Realty Partnership, L.P.
439 North Bedford Drive
Beverly Hills, CA 90210
MAIL TAX STATEMENTS TO:
Quentin Thompson
G&L Realty Partnership, L.P.
439 North Bedford Drive
Beverly Hills, CA 90210
- --------------------------------------------------------------------------------
(Space Above This Line For Use by Recorder)
GRANT DEED
----------
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is hereby acknowledged, 445 BEDFORD, a California limited liability company
("Grantor"), hereby grants to G&L REALTY PARTNERSHIP, L.P., a Delaware limited
partnership ("Grantee"), an undivided 47.05% right, title and interest in that
certain real property located in the County of Orange, State of California and
more particularly described in Exhibit A attached hereto and incorporated herein
---------
by this reference (the "Property"), together with all improvements located
thereon and all rights, privileges, easements and appurtenances of Grantor
appertaining to the Property and all right, title and interest of Grantor in, to
and under adjoining streets, rights of way and easements.
This conveyance is made subject to all matters shown in Schedule B of
Chicago Title Insurance Company Policy of Title Insurance, dated June 14, 1996.
<PAGE>
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of June __,
1996.
Transfer Tax shown on separate document
pursuant to Revenue and Taxation Code (S)11932.
APN
-----------
"Grantor"
445 BEDFORD, a California limited
liability company
By:
-----------------------------
Its:
-----------------------------
<PAGE>
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On June ___, 1996, before me, a Notary Public in and for said State, personally
appeared Steven D. Lebowitz, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
______________________________________ (Seal)
<PAGE>
STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION NOT BE
MADE A PART OF THE PERMANENT RECORD IN THE OFFICE OF THE COUNTY
RECORDER PURSUANT TO SECTION 11932 REVENUE AND TAXATION CODE.
REGISTRAR-RECORDER
COUNTY OF ORANGE
The request is hereby made in accordance with the provisions of the Documentary
Transfer Tax Act that the amount of tax due not be shown on the original
document which names:
445 BEDFORD, A CALIFORNIA LIMITED LIABILITY COMPANY
- --------------------------------------------------------------------------------
(Name of Grantor)
and
G&L REALTY PARTNERSHIP, L.P.
- --------------------------------------------------------------------------------
(Name of Grantee)
Property described in the attached document is located in the city of:
Tustin, County of Orange
- ------------------------
(Name of City or Unincorporated area)
The amount of tax due on the attached document is $
-----------------------------
Computed on full value of property conveyed.
- ---
OR
X Computed on full value less liens and encumbrances remaining at time of
- --- sale.
- ---------------------------------------
Signature of Declarant or Agent
- ---------------------------------------
Name of Company or Firm
NOTE: After the permanent record is made, this form will be affixed to the
conveying document and returned with it.
<PAGE>
EXHIBIT E
---------
FIRPTA AFFIDAVIT
445 BEDFORD, a California limited liability company ("Transferor"), is the
transferor of an interest in that certain real property located in the City of
Tustin, County of Orange, State of California and more particularly described in
that certain Agreement of Purchase and Sale and Escrow Instructions between
Tustin Hospital, Inc. and G&L Realty Partnership, L.P., dated March 7, 1996 (the
"Property").
Section 1445 of the Internal Revenue Code of 1986 (the "Code") provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. To inform the transferee that withholding of tax
will not be required in connection with the disposition of the Property pursuant
to that certain Redemption Agreement dated as of June 27, 1996, by and between
Transferor and G&L REALTY PARTNERSHIP, L.P., a Delaware limited partnership.
Transferor hereby certifies the following:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust or foreign estate, as those terms are defined in the Code and the
regulations promulgated thereunder;
2. The U.S. employer identification number of Transferor is 95-4557581;
and
3. The address of Transferor is 439 N. Bedford Drive, Beverly Hills,
California.
It is understood that this certificate may be disclosed to the Internal
Revenue Service and that any false statement contained herein could be punished
by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined the foregoing
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of Transferor.
Dated: June 27, 1996
"Transferor"
445 BEDFORD, a California limited liability
company
By:
----------------------------------------
Name: Steven D. Lebowitz
Title: Manager
<PAGE>
SCHEDULE 1
----------
LEASES
<PAGE>
EXHIBIT 10.34
================================================================================
PROPERTY CONTRIBUTION AGREEMENT
BY AND BETWEEN
G&L REALTY PARTNERSHIP, L.P., A DELAWARE LIMITED PARTNERSHIP, AS PURCHASER
AND
445 BEDFORD, A CALIFORNIA LIMITED LIABILITY COMPANY, AS SELLER
DATED AS OF JUNE 28, 1996
================================================================================
<PAGE>
PROPERTY CONTRIBUTION AGREEMENT
THIS PROPERTY CONTRIBUTION AGREEMENT (this "Agreement") is made and entered
into as of June 28, 1996 by and between G&L REALTY PARTNERSHIP, L.P., a Delaware
limited partnership ("Purchaser"), and 445 BEDFORD, a california limited
liability company ("Seller").
RECITALS
A. Purchaser is a limited partnership, the sole general partner of which
is G&L Realty Corp. a Maryland corporation ("REIT").
B. Seller owns, as a tenant in common, an undivided interest in the real
property commonly known as Tustin Hospital and more particularly described in
that certain Agreement of Purchase and Sale and Escrow Instructions between
Tustin Hospital, Inc. and Purchaser dated March 7, 1996 (the "Tustin Purchase
Agreement").
C. Seller desires to transfer and assign to Purchaser, and Purchaser
desires to accept, all of Seller's right, title and interest in and to such real
property in exchange for a total of 39,215 Units of limited partnership interest
in Purchaser (the "Consideration"), on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, for and in consideration of the foregoing premises, and the
mutual undertakings set forth below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
TERMS OF AGREEMENT
SECTION 1
DEFINITIONS
The following capitalized terms not otherwise defined herein shall have the
following meanings herein:
ASSIGNMENT. The "Assignment" shall mean a Global Assignment in the form of
----------
EXHIBIT A attached hereto.
- ---------
BILL OF SALE. "Bill of Sale" shall mean a Bill of Sale in the form of
------------
EXHIBIT B attached hereto.
- ---------
CLOSING DATE. "Closing Date" shall be the date on which the Closing occurs.
------------
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time, and the regulations promulgated thereunder from time to time.
1
<PAGE>
CONTRACTS. "Contracts" shall mean all written or oral management,
---------
architectural, engineering, leasing, insurance, bonding, construction,
financing, guarantee, indemnity, service, maintenance, operating, repair,
collective bargaining, employment, employee benefit, equipment leasing, supply,
warranty, purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments (excluding the Leases) in
any way relating to the Property or any part thereof.
FIRPTA AFFIDAVIT. "FIRPTA Affidavit" shall mean an affidavit in the form
----------------
attached hereto as Exhibit D.
GRANT DEED. "Grant Deed" shall mean a deed in the form attached hereto as
----------
EXHIBIT C.
- ---------
LEASES. "Leases" shall mean all lease, occupancy agreements and other
------
similar agreements, together with all modifications, extensions and renewals
thereof, and any guarantees of any of the foregoing with respect to or demising
part of the Property, as set forth on Schedule 1 hereto.
PARTNERSHIP AGREEMENT. "Partnership Agreement" shall mean the Agreement of
---------------------
Limited Partnership of Purchaser, dated as of November 15, 1993, as amended and
restated from time to time.
PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean (i) exceptions to
--------------------
the title contained in the pro forma title policy for the Property prepared by
the Title Company and approved in writing by Purchaser and (ii) the Leases.
PROPERTY. "Property" shall mean the Real Property, Improvements and
--------
Personal Property as defined in the Tustin Purchase Agreement.
PURCHASER. "Purchaser" shall have the meaning set forth in the first
---------
paragraph of this Agreement.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, and the regulations promulgated thereunder from time to time.
SELLER. "Seller" shall have the meaning set forth in the first paragraph of
------
this Agreement.
TITLE COMPANY. "Title Company" shall mean a title company of Purchaser's
-------------
choosing which is engaged in the business of issuing title policies.
TUSTIN PURCHASE AGREEMENT. "Tustin Purchase Agreement" shall have the
-------------------------
meaning set forth in the recitals to this Agreement.
UNITS. "Units" shall mean units of limited partnership interest in
-----
Purchaser.
2
<PAGE>
SECTION 2
CONTRIBUTION
At the closing of the transactions contemplated by this Agreement, subject
to the terms and conditions of this Agreement, Seller shall assign, transfer,
convey and deliver to Purchaser all of its right, title and interest in the
Property.
SECTION 3
TERMS OF CONTRIBUTION
3.1 CONSIDERATION. In exchange for the Property, Purchaser shall deliver
-------------
to Seller the Consideration.
3.2 MANNER OF DELIVERY. At the Closing, Purchaser shall deliver or cause
------------------
to be delivered to Seller or its agent the Consideration for the Seller. If any
fractional interest in Units otherwise would be deliverable as a portion of the
Consideration, Purchaser shall deliver in cash an amount equal to the value of
such fractional interest.
3.3 CERTIFICATES. The certificates representing the Consideration shall
------------
be issued pursuant to and in compliance with the terms of the Partnership
Agreement and shall, among other things, bear the restrictive legends provided
for on Exhibit E hereto.
---------
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER TO SELLER. Purchaser
-----------------------------------------------------
hereby represents and warrants to and covenants with Seller that:
4.1.1 AUTHORITY. Each of Purchaser and REIT is duly organized,
---------
validly existing and in good standing under the laws of the state of its
organization or incorporation, as applicable, will be duly qualified and in good
standing as a foreign corporation or limited partnership, as applicable, in the
State of California on the Closing Date and has the power to own all of its
properties and assets and to carry on its business as presently conducted. The
execution, delivery and performance of this Agreement, and all agreements
contemplated hereby have been duly and validly authorized by all necessary
action of Purchaser and this Agreement and all agreements contemplated hereby
are valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms.
4.1.2 STATUS OF PARTNERSHIP AGREEMENT. The Partnership Agreement is
-------------------------------
in full force and effect, and there are no dissolution, termination or
liquidation proceedings pending or contemplated with respect to Purchaser or
REIT.
4.1.3 UNITS. The Units forming part of the Consideration, when
-----
issued, will be duly authorized, validly issued, fully paid and non-assessable,
and will not be issued in violation of any preemptive rights. The Units forming
part of the Consideration, when issued, will have been issued in compliance with
applicable law and the Partnership Agreement. At the Closing, upon receipt of
the Consideration, Purchaser will have transferred the Units forming part of the
3
<PAGE>
Consideration to Seller free and clear of all security interests, mortgages,
pledges, liens, encumbrances, claims and equities. The issuance of the Units to
Seller at the Closing will not require any governmental approval except any such
governmental approval that shall have been obtained on or prior to the Closing,
and except for the listing on the New York Stock Exchange of shares of the
Common Stock of the REIT into which such Units may be converted. Assuming the
accuracy of the representations of Seller hereunder as of the Closing, the
issuance of the Units to Seller at the Closing by Purchaser is exempt from
registration under the Securities Act.
4.2 REPRESENTATIONS AND WARRANTIES OF SELLER TO PURCHASER. Seller
-----------------------------------------------------
represents and warrants to and covenants with Purchaser that:
4.2.1 KNOWLEDGE. Seller has no knowledge, as of the date hereof and
---------
as of the Closing, of any facts which would indicate that any of the
representations and warranties of Tustin Hospital, Inc. made in the Tustin
Purchase Agreement are not true and correct.
4.2.2 AUTHORITY. Seller is duly organized, validly existing and in
---------
good standing under the laws of the state of its organization and has the power
to own all of its properties and assets and to carry on its business as
presently conducted. The execution, delivery and performance of this Agreement
and all agreements contemplated hereby have been duly and validly authorized by
all necessary action of Seller, and this Agreement and all agreements
contemplated hereby are valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms.
4.2.3 PROPERTY. Seller owns, as tenant in common, an undivided
--------
interest in the Property, and at the Closing will transfer such interest to
Purchaser free and clear of all security interests, mortgages, pledges, liens,
encumbrances, claims and equities.
4.2.4 INVESTMENT INTENT. Seller is acquiring Units in Purchaser as
-----------------
the Consideration for the undersigned's own account for the purpose of
investment and not as a nominee or agent for any person, and not with a view to
the resale, pledge or distribution thereof, except that Seller anticipates
distributing the Units to Seller's beneficial owners, Messrs. Daniel M. Gottlieb
and Steven D. Lebowitz, subsequent to the closing.
SECTION 5
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to close hereunder shall be subject to the
timely satisfaction of the following conditions unless waived by Purchaser in
its sole and absolute discretion:
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
----------------------------------------------
and warranties made by Seller in this Agreement shall be true in all material
respects as of the Closing with the same effect as though such representations
and warranties had been made or given at the Closing.
5.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and complied
-------------------------
in all respects with its respective obligations under this Agreement which are
to be performed or complied with by it prior to or at the Closing.
4
<PAGE>
5.3 TITLE POLICY. Purchaser shall have received from the Title Company,
------------
at Purchaser's expense, an unconditional commitment to issue to Purchaser at
Closing, an owner's title policy on standard ALTA Form B (1970), in form and
substance acceptable to Purchaser with respect to the Property, subject only to
the Permitted Exceptions (the "Title Policy").
5.4 GRANT DEED. Seller shall have delivered to Purchaser a Grant Deed,
----------
duly executed by Seller in recordable form, and such documents and instruments
as may be necessary to place title to the Property in the state required to
allow Title Company to issue the Title Policy required by Purchaser.
5.5 GLOBAL ASSIGNMENT. Seller shall have delivered to Purchaser a Global
-----------------
Assignment, in the form attached hereto as EXHIBIT A, duly executed by Seller in
---------
recordable form.
5.6 BILL OF SALE. Seller shall have delivered to Purchaser a Bill of Sale,
------------
in the form attached hereto as EXHIBIT B, duly executed by seller in recordable
---------
form.
5.6 FIRPTA AFFIDAVIT. Seller shall have delivered to Purchaser a FIRPTA
----------------
Affidavit in the form attached hereto as EXHIBIT D, duly executed by Seller.
---------
5.7 SECURITIES LAW COMPLIANCE. Seller shall execute any additional
-------------------------
documents or instruments that are necessary or desirable in order to comply with
the Securities Act or state securities or "Blue Sky" laws or that are otherwise
reasonably requested by Purchaser.
SECTION 6
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to close hereunder shall be subject to
satisfaction of the following conditions in favor of Seller unless waived by
Seller.
6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
----------------------------------------------
and warranties made by Purchaser in this Agreement shall be true in all material
respects as of the Closing with the same effect as though such representations
and warranties had been made or given at the Closing.
6.2 COMPLIANCE WITH AGREEMENT. Purchaser shall have performed and complied
-------------------------
in all respects with all its obligations under this Agreement which are to be
performed or complied with by it prior to or at the Closing.
6.3 FURTHER ASSURANCES. Purchaser, at the request of Seller, shall have
------------------
finished, executed, and delivered such documents, instruments, certificates,
notices, or other further assurances as Seller shall reasonably request as
necessary to effect complete consummation of this Agreement and the transactions
contemplated by this Agreement.
5
<PAGE>
SECTION 7
CLOSING
7.1 TIME AND PLACE. The Closing shall take place on June 28, 1996, or at
--------------
such other date and time as the parties may agree.
7.2 POST-CLOSING COVENANTS.
----------------------
(a) After the Closing, each party, at the request of the other party,
shall furnish, execute, and deliver such documents, instruments, certificates,
notices, or other further assurances as such requesting party shall reasonably
request as necessary to effect complete consummation of this Agreement.
(b) Purchaser and Seller shall promptly pay to the party entitled
thereto any sums due as a result of any adjustments to prorations as set forth
in Section 8.1 hereof.
(c) Prior to transferring the Units issued by Seller hereunder to
Messrs. Gottlieb and Lebowitz, Seller shall deliver to Purchaser an investment
representation letter executed by each of Messrs. Gottlieb and Lebowitz which
shall contain substantially the representation set forth in Section 4.2.4 and
such additional provisions related thereto as Purchaser may reasonably request
that are necessary or desirable in order to comply with the Securities Act or
State Securities or "Blue Sky" laws.
SECTION 8
CLOSING ADJUSTMENTS AND RELATED ITEMS
8.1 CLOSING COSTS. All closing costs and expenses of the parties in
-------------
connection with the transactions contemplated hereby shall be borne by
Purchaser; provided, however, each party shall bear the fees and expenses of
their respective counsel.
8.2 PRORATIONS. At the Closing, all revenues and charges relating to the
----------
Property that are customarily prorated in transfers of real property, including
but not limited to periodic charges payable or receivable with respect to the
Property, shall be prorated between Purchaser and Seller in cash as the Parties
hereto shall agree.
SECTION 9
FAILURE OF SELLER TO PERFORM; TERMINATION; NO WAIVER
9.1 PURCHASER'S REMEDIES. If Seller shall default in the performance of
--------------------
its obligations under this Agreement to Purchaser, then Purchaser shall have the
right to either (i) institute an action against seller for all damages suffered
by Purchaser, including without limitation, the loss of its bargain, or (ii)
institute an action for specific performance to enforce Seller's obligation
under this Agreement to convey title to the Property and for incidental damages.
9.2 NO WAIVER. Nothing contained in this Agreement shall be deemed or
---------
construed to be a waiver of any right which Seller may have to institute an
action against Purchaser under the Securities Act or any other law or statute,
under common law, or in equity.
6
<PAGE>
SECTION 10
MISCELLANEOUS
10.1 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.2 GOVERNING LAW. This Agreement shall be governed by the internal laws
-------------
of the State of California, without regard to the choice of laws provisions
thereof.
10.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
----------------
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes any and
all prior agreements and understandings between the parties with respect to such
subject matter.
10.4 AMENDMENT. This Agreement may be amended only in a writing signed by
---------
the parties to be bound by such amendment.
10.5 WAIVER. No waiver shall be effective against a party unless it is in
------
a writing signed by that party.
10.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
----------------------
and be binding upon the parties hereto and their respective successors and
assigns. Neither party hereto shall assign its rights and responsibilities under
this Agreement without the prior written consent of the other party hereto. No
assignment by either party shall release or relieve any party from liability
hereunder.
10.7 TIME OF THE ESSENCE. Time is of the essence with respect to this
-------------------
Agreement.
10.8 ATTORNEYS' FEES. In the event of a dispute arising out of the
---------------
interpretation or enforcement of this Agreement, or a declaration of rights
hereunder, or enforcement of any judgment of any judicial or non-judicial body
with respect to the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and expenses.
10.9 NOTICES. Any notice or other communications required or permitted to
-------
be given hereunder shall be in writing and mailed postage prepaid by certified
or registered mail, return receipt requested, sent by personal delivery,
overnight courier or by telecopy to the appropriate address or telephone number
specified below, or at such other place or telecopy number as any party may,
from time to time, designate in a written notice given to the others in the
manner specified herein. Notices or other communications shall be effective when
actually received.
Seller: 445 BEDFORD
439 N. Bedford Drive
Beverly Hills, California 90210
Attn: Steven D. Lebowitz
7
<PAGE>
Purchaser: G&L REALTY PARTNERSHIP, L.P.
439 N. Bedford Drive
Beverly Hills, California 90210
Attn: Steven D. Lebowitz
10.10 HEADINGS. The headings in this Agreement are intended solely for
--------
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.11 SEVERABILITY. The invalidity or unenforceability of any provision
------------
of this Agreement shall not impair the validity or enforceability of any other
provision.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"PURCHASER"
G&L REALTY PARTNERSHIP, L.P.,
a Delaware limited partnership
BY: G&L REALTY CORP., a Maryland
corporation General Partner
By: /s/ Steven D. Lebowitz
----------------------
Name: Steven D. Lebowitz
Title: President
"SELLER"
445 BEDFORD, a California limited
liability company
By: /s/ Steven D. Lebowitz
----------------------
Steven D. Lebowitz
Name: Steven D. Lebowitz
Title: Manager
9
<PAGE>
INDEX TO EXHIBITS AND SCHEDULES
Exhibit A Global Assignment
Exhibit B Bill of Sale
Exhibit C Grant Deed
Exhibit D FIRPTA Affidavit
Schedule 1 List of Leases
<PAGE>
EXHIBIT A
GLOBAL ASSIGNMENT
FOR VALUABLE CONSDERATION, the receipt and sufficiency of which are hereby
acknowledged, 445 BEDFORD, a California limited liability company ("Assignor"),
does hereby assign, transfer and set over unto G&L REALTY PARTNERSHIP, L.P., a
Delaware limited partnership ("Assignee"), all of Assignor's right, title,
claim, estate and interest in and to (i) any and all intangible personal
property owned by Assignor which relates in any manner to or arises from or in
connection with the Real Property, as such term is defined in that certain
Agreement of Purchase and Sale and Escrow Instructions between Tustin Hospital,
Inc. and Assignee, dated March 7, 1996, the improvements thereon (the
"Improvements") or personal property located thereon or associated therewith
(the "Personal Property"), including without limitation the name "Tustin
Hospital", (ii) any and all Contracts affecting the Real Property, Improvements
or Personal Property, (iii) all of the Assignor's right, title, interest, claim
and estate in and to all leases, occupancy agreements and other similar
agreements, together with all modifications, extensions and renewals thereof,
and any guarantees of any of the foregoing (collectively, the "Leases") which
demise any part of the Real Property or the Improvements, (iv) any and all other
property, rights in or to property and contractual rights which Assignor may
have which are necessary or useful in connection with, or otherwise affect or
relate to, the acquisition, development, improvement, holding, use, operation,
maintenance, leasing or sale of the Real Property, Improvements or Personal
Property, including, but not limited to, any and all plans, specifications,
subdivision maps and filings with respect thereto, applications, entitlements,
licenses and entitlements, subdivision or other bonds, engineering or soil
reports, surveys, maps, correspondence, inspection reports, management reports,
marketing reports, marketing displays and brochures, all contract rights,
warranties from contractors, architects, engineers and material and labor
suppliers whether written or implied, all insurance policies, proceeds and
unearned premiums, all books and records, all claims, choses in action,
judgments, remedies, damages and causes of action, all leases, easements,
licenses and rights of way, occupancy or use agreements and all other documents
affecting or relating to the Real Property, Improvements or Personal Property,
and (iv) any and all other intangibles, warranties, guarantees, permits, maps,
surveys, entitlements and other intangible rights of any type or nature relating
to any or all of the Real Property, Improvements or Personal Property
(collectively, the items described above are referred to herein as the "Assigned
Property"); provided, however, that the Assigned Property shall not include any
deposits and reimbursements, any water development fee refunds with respect to
the period prior to the Closing (as defined in that certain Property
Contribution Agreement dated as of June 28, 1996, by and between Assignee, as
"Purchaser," and Assignor, as "Seller") and any property tax refunds with
respect to the period prior to the Closing.
Assignee hereby assumes and agrees to perform, as and when due, all of
Assignor's obligations under or with respect to the Assigned Property.
Assignee hereby assumes and agrees to perform, as and when due, all of
Assignor's obligations under or with respect to the Leases.
<PAGE>
Assignor has conveyed the Property to Assignee by grant deed of even date
herewith.
Assignor covenants and agrees with Assignee to hereafter furnish to
Assignee such further assignments and consents as Assignee may reasonably
require in furtherance of this Assignment or to carry out the intent hereof.
This Assignment shall be binding on Assignor, Assignee and their respective
legal representatives, successors and assigns.
In the event any action or suit is brought by a party hereto against
another party hereto by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of such other party arising out
of this Assignment, the prevailing party shall be entitled to have and recover
of and from the other party all costs and expenses of the action or suit,
including reasonable attorneys' fees.
This Assignment may be executed in counterparts, each of which shall be
deemed an original, but all of which, together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF, this Assignment has been executed as of June 28, 1996.
"Assignor"
445 BEDFORD, a California limited liability
company
By:
-------------------------
Name: Steven D. Lebowitz
Title: Manager
"Assignee"
G&L REALTY PARTNERSHIP, L.P., a Delaware
limited partnership
By: G&L Realty Corp., a Maryland corporation,
General Partner
By:
------------------------
Name: Steven D. Lebowitz
Title: President
<PAGE>
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On June 1996, before me, a Notary Public in and for said State,
--,
personally appeared Steven D. Lebowitz, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
- --------------------------------------
Print Name
----------------------------
My Commission Expires -
---------------
(Seal)
STATE OF CALIFORNIA )
) SS:
COUNTY OF LOS ANGELES )
On June 1996, before me, a Notary Public in and for said State,
--,
personally appeared Steven D. Lebowitz, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
- --------------------------------------
Print Name
---------------------------
My Commission Expires -
---------------
(Seal)
<PAGE>
EXHIBIT B
---------
BILL OF SALE
FOR VALUABLE CONSDERATION, the receipt and sufficiency of which are hereby
acknowledged, 445 BEDFORD, a California limited liability company
("Transferor"), hereby transfers, conveys and assigns to G&L REALTY PARTNERSHIP,
L.P., a Delaware limited partnership ("Transferee"), its successors and assigns
forever, any and all tangible personal property owned by Transferor and located
on or about or used in connection with the Property, as such term is defined in
that certain Property Contribution Agreement dated June 28, 1996 between
Transferor and Transferee or any improvements thereon, including, but not
limited to, fixtures, furniture, furnishing, tools, machinery appliances and
other apparatus and equipment, plans, specifications, operational handbooks,
machinery and/or equipment, operational instructions and/or specifications,
surveys, drawings, business records and the personal property listed on any
schedule which may be attached hereto (collectively, the "Transferred
Property").
Transferor covenants and agrees with Transferee to hereafter furnish to
Transferee such further conveyance documents and consents as Transferee may
reasonably require in furtherance of this Bill of Sale or to carry out the
intent hereof.
This Bill of Sale shall be binding on Transferor, and its legal
representatives, successors and assigns.
In the event any action or suit is brought by a party hereto against
another party hereto by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of such other party arising out
of this Bill of Sale, the prevailing party shall be entitled to have and recover
of and from the other party all costs and expenses of the action or suit,
including reasonable attorneys' fees.
Dated: June 28, 1996.
"Transferor"
445 BEDFORD, a California limited liability
company
By:
-----------------------------------------
Name: Steven D. Lebowitz
Title: Manager
<PAGE>
EXHIBIT C
---------
GRANT DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Quentin Thompson
G&L Realty Partnership, L.P.
439 North Bedford Drive
Beverly Hills, CA 90210
MAIL TAX STATEMENTS TO:
Quentin Thompson
G&L Realty Partnership, L.P.
439 North Bedford Drive
Beverly Hills, CA 90210
==============================================================================
(Space Above This Line For Use By Recorder)
GRANT DEED
----------
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is hereby acknowledged, 445 BEDFORD, a California limited liability company
("Grantor"), hereby grants to G&L REALTY PARTNERSHIP, L.P., a Delaware limited
partnership ("Grantee"), all of Grantor's undivided right, title and interest in
that certain real property located in the County of Orange, State of California
and more particularly described in Exhibit A attached hereto and incorporated
---------
herein by this reference (the "Property"), together with all improvements
located thereon and all rights, privileges, easements and appurtenances of
Grantor appertaining to the Property and all right, title and interest of
Grantor in, to and under adjoining streets, rights of way and easements.
This conveyance is made subject to all matters shown in Schedule B of
Chicago Title Insurance Company Policy of Title Insurance, dated June 14, 1996.
<PAGE>
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of
June ,1996.
---
Transfer Tax shown on separate document
pursuant to Revenue and Taxation Code (S) 11932.
APN
-------------------
"Grantor"
445 BEDFORD, a California limited liability
company
By:
----------------------------------------
Its:
----------------------------------------
<PAGE>
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )SS:
)
On June ___ 1996, before me, a Notary Public in and for said State, personally
appeared Steven D. Lebowitz, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
- -------------------------------------
<PAGE>
STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION NOT BE
MADE A PART OF THE PERMANENT RECORD IN THE OFFICE OF THE COUNTY
RECORDER PURSUANT TO SECTION 11932 REVENUE AND TAXATION CODE.
REGISTRAR-RECORDER
COUNTY OF ORANGE
The request is hereby made in accordance with the provisions of the Documentary
Transfer Tax Act that the amount of tax due not be shown on the original
document which names:
445 BEDFORD, A CALIFORNIA LIMITED LIABILITY COMPANY
- -------------------------------------------------------------------------------
(Name of Grantor)
and
G&L REALTY PARTNERSHIP, L.P.
- -------------------------------------------------------------------------------
(Name of Grantee)
Property described in the attached document is located in the city of:
Tustin, County of Orange
- -------------------------------------
(Name of City or Unincorporated area)
The amount of tax due on the attached document is $
----------------------------
- - Computed on full value of property conveyed.
OR
X Computed on full value less liens and encumbrances remaining at time of sale.
- -
- ------------------------------------
Signature of Declarant or Agent
- ------------------------------------
Name of Company or Firm
NOTE: After the permanent record is made, this form will be affixed to the
conveying document and returned with it.
<PAGE>
EXHIBIT D
---------
FIRPTA AFFIDAVIT
445 BEDFORD, a California limited liability company ("Transferor"), is the
transferor of an interest in that certain real property located in the City of
Tustin, County of Orange, State of California and more particularly described in
that certain Agreement of Purchase and Sale and Escrow Instructions between
Tustin Hospital, Inc. and G&L Realty Partnership, L.P., dated March 7, 1996 (the
"Property").
Section 1445 of the Internal Revenue Code of 1986 (the "Code") provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. To inform the transferee that withholding of tax
will not be required in connection with the disposition of the Property pursuant
to that certain Property Contribution Agreement dated as of June 28, 1996, by
and between Transferor, as a "Seller," and G&L REALTY PARTNERSHIP, L.P., a
Delaware limited partnership, as "Purchaser," Transferor hereby certifies the
following:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust or foreign estate, as those terms are defined in the Code and the
regulations promulgated thereunder;
2. The U.S. employer identification number of Transferor is 95-4557581;
3. The address of Transferor is 439 N. Bedford Drive, Beverly Hills,
California.
It is understood that this certificate may be disclosed to the Internal
Revenue Service and that any false statement contained herein could be punished
by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined the foregoing
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of Transferor.
Dated: June 28, 1996
"Transferor"
445 BEDFORD, a California limited liability
company
By:
--------------------------------------
Name: Steven D. Lebowitz
Title: Manager
<PAGE>
EXHIBIT E
---------
[Unit Certificate Legend]
<PAGE>
EXHIBIT 10.35
RECORDING REQUESTED BY:
Chicago Title Company
16969 Von Karman
Irvine California 92714
Attn: Susie Jacobsen
Order No. 6016026
AND WHEN RECORDED, MAIL TO:
Tokai Bank of California
300 South Grand Avenue, 5th Floor
Los Angeles, California 90071
Attn: Central Note Department (Br. 8922)
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
This Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing ("Deed of Trust") is made to be effective on the 12th day of June, 1996,
between 445 BEDFORD, a California Limited Liability Company, and G&L REALTY
PARTNERSHIP, L.P., a Delaware Limited Partnership, as tenants in common, as
Trustor ("Trustor"), whose address is 439 N. Bedford Drive, Beverly Hills,
California 90210, CHICAGO TITLE COMPANY, as Trustee ("Trustee"), and TOKAI BANK
OF CALIFORNIA, a California banking corporation, as Beneficiary ("Lender").
THIS DEED OF TRUST ALSO CONSTITUTES A FIXTURE FILING UNDER SECTION 9313 OF THE
CALIFORNIA UNIFORM COMMERCIAL CODE AND COVERS GOODS WHICH ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY DESCRIBED ON EXHIBIT "A" ATTACHED HERETO AND MADE
A PART HEREOF. TRUSTOR IS A RECORD OWNER OF AN INTEREST IN SAID REAL PROPERTY.
GRANT IN TRUST:
Trustor irrevocably grants, transfers and assigns to Trustee, in trust, for the
benefit of Lender, with power of sale, all of Trustor's interest in that certain
real property located in the County of Orange, City of Tustin, California,
described as:
[SEE LEGAL DESCRIPTION ATTACHED AS EXHIBIT "A"]
TOGETHER WITH: All right, title and interest which Trustor now has or may later
acquire in such real property and all appurtenances, easements, rights of way,
tenements, hereditaments and appurtenances thereunto belonging or in any way
appertaining thereto now or hereafter, and all of the estate, right, title,
interest claim, demand, reversion or remainder whatsoever of Trustor therein or
thereto, at law or in equity, now or hereafter in possession or expectancy,
including, without limitation, all mineral, oil, and gas rights and royalties
and profits therefrom, all water and water rights and shares of stock pertaining
to water and water rights, and all sewers, pipes, conduits, wires and other
facilities furnishing utility or services to the real property (collectively,
the "Land");
TOGETHER WITH: All right, title and interest which Trustor now has or may later
acquire in and to all
1
<PAGE>
buildings, structures and improvements now or hereafter erected on the Land,
including, without limitation, all plant equipment, apparatus, machinery and
fixtures of every kind and nature whatsoever now or hereafter located on or
forming part of said buildings, structures and improvements (collectively, the
"Improvements"; the Land and Improvements being hereinafter sometimes
collectively referred to as the "Premises");
TOGETHER WITH: All right, title and interest which Trustor now has or may later
acquire in and to the land lying in the bed of any street, road, highway or
avenue now or hereafter in front of or adjoining the Premises;
TOGETHER WITH: Any and all awards heretofore or hereafter made by any
governmental authorities (federal, state, local or otherwise) to Trustor and all
subsequent owners of the Premises which may be made with respect to the Premises
as a result of the exercise of the right of eminent domain, the alteration of
the grade of any street or any other injury to or decrease of value of the
Premises, which said award or awards are hereby assigned to Lender;
TOGETHER WITH: Any and all unearned premiums accrued, accruing or to accrue,
and the proceeds of insurance now or hereafter in effect with respect to all or
any portion of the Premises;
TOGETHER WITH: Any and all claims or demands which Trustor now has or may
hereafter acquire against anyone with respect to any damage to all or any
portion of the Premises;
TOGETHER WITH: All goods, equipment, machinery, furniture, furnishings, trade
fixtures, appliances, inventory, building materials, apparatus, utensils,
vehicles, wiring, pipes, conduits, elevators, escalators, heating and air
conditioning equipment, chattels and articles of personal property, including,
without limitation, any interest therein now or at any time hereafter affixed
to, attached to or used in any way in connection with or to be incorporated at
any time into the Premises or placed on any part thereof wheresoever located,
whether or not attached to or incorporated in the Premises, together with any
and all accessions, accessories, attachments, and replacements thereof,
appertaining and adapted to the complete and compatible use, enjoyment,
occupancy, operation or improvement of the Premises;
TOGETHER WITH: All instruments, deposit accounts, accounts, contract rights,
general intangibles, and other intangible property and rights now or hereafter
relating to the foregoing property, or the operation thereof or used in
connection therewith, including, without limitation, all options, letters of
intent, and rights of first refusal of any nature whatsoever, covering all or
any portion of such property, together with any modifications thereof and
deposits or other payments made in connection therewith, existing and future
development rights, permits and approvals, air rights, density bonus rights, and
transferable development rights; all of Trustor's right, title, and interest in
and to any awards, remunerations, settlements, or compensation heretofore made
or hereafter made by any and all courts, boards, agencies, commissions, offices,
or authorities, of any nature whatsoever for any governmental unit (federal,
state, local or otherwise) to the present or any subsequent owner of the
foregoing property, including those for any vacation of or change of grade in,
any streets affecting the foregoing property;
TOGETHER WITH: All leases of the Premises, Personalty, Fixtures, or any part
thereof, now or hereafter entered into and all right, title and interest of
Trustor thereunder, including, without limitation, cash or securities deposited
thereunder to secure performance by the lessees of their obligations thereunder
(whether such cash or securities are to be held until the expiration of the
terms of such leases or applied to one or more of the installments of rent
coming due immediately prior to the expiration of such terms); all other rights
and easements of Trustor now or hereafter existing pertaining to the use and
enjoyment of the Premises; and all right, title and interest of Trustor in and
to all declarations of covenants, conditions and restrictions as may affect or
otherwise relate to the Premises;
TOGETHER WITH: All permits, plans, licenses, specifications, subdivision
rights, security interests,
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contracts, contract rights, public utility deposits, prepaid sewer and water
hook-up charges, or other rights as may affect or otherwise relate to the
Property;
TOGETHER WITH: All rents, income, issues and profits (subject, however, to the
rights given in this Deed of Trust to Lender to collect and apply same),
including, without limitation, the accounts, revenues, and proceeds of any
business operation conducted by or on behalf of Trustor on or through the use of
the Premises, prepaid municipal and utility fees, bonds, revenues, income, and
other benefits to which Trustor may now or hereafter be entitled to, or which
are derived from, the Property or any portion thereof or interest therein.
The foregoing listing is intended only to be descriptive of the property
encumbered hereby, and not exclusive or all inclusive. It is the intent of
Trustor to encumber hereby all property located or to be located upon the above-
described real property. Said real property (or the leasehold estate if this
Deed of Trust encumbers a leasehold estate), buildings, improvements,
appurtenances, Fixtures, Personalty, additions, accretions, and other property
are hereinafter referred to as the "Property." As used herein, the term
"Fixtures" shall include all articles of personal property hereinabove
described, now or hereafter attached to, placed upon for a definite term, or
otherwise used in connection with the Property, and shall include trade fixtures
and goods which are or are to become fixtures. As used herein, the term
"Personalty" shall include all furniture, furnishings, equipment, machinery,
goods, contract rights, general intangibles, money, deposit accounts,
instruments, accounts, leases, chattel paper and other personal property
described in this Deed of Trust (other than Fixtures) of any kind or character
now existing or hereafter arising or acquired, now or hereafter located upon,
within or about the Property, or which otherwise pertains to the use, ownership,
management, operation, construction, leasing and sale of the Property, and all
products and proceeds thereof and all of Trustor's right title, and interest in
and to all such property.
Trustor makes the foregoing grant to Trustee, and to Lender, as applicable, to
hold the Property in trust for the benefit of Lender and for the purposes and
upon the terms and conditions hereinafter set forth.
FOR THE PURPOSE OF SECURING:
(1) Payment of an amount not to exceed $4,760,000.00 of the total
obligations of G&L Realty Partnership, L.P., a Delaware Limited Partnership
("Borrower") in the original amount of $20,000,000.00, together with certain
additional costs and expenses related to or incurred in connection or as
provided in that certain Promissory Note ("the Note") dated August 11, 1995,
in the original principal amount of $20,000,000.00 executed by Borrower payable
to Lender, or order, and all extensions, modifications or renewals thereof
(including, without limitation, any extension, modification, or renewal of the
Note at a different rate of interest or on different terms);
(2) Performance of each and every term, covenant and condition of
that certain Loan Agreement (Term) of even date herewith by and between Borrower
and Lender, and all modifications, renewals or extensions thereof ("Agreement");
(3) Payment of all other sums, with interest, advanced, paid, or
incurred by Lender or Trustee under the terms of this Deed of Trust to protect
the Property or Lender's security interest therein;
(4) Payment of such additional sums, with interest, as the then
record owner of the Property may later borrow from Lender, in those instances in
which the later obligations are evidenced by a promissory note or notes reciting
that it or they are so secured (which additional obligations shall be referred
to as "future advances" in this Deed of Trust);
(5) If the Property is a leasehold, the Trustor's compliance with and
performance of each
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provision of the lease creating such leasehold; and
(6) Trustor's performance of each agreement in this Deed of Trust.
TRUSTOR AND LENDER AGREE AS FOLLOWS:
RIGHTS AND DUTIES OF THE PARTIES:
(1) PAYMENT AND PERFORMANCE BY TRUSTOR: Trustor shall promptly: (a)
pay when due all sums payable under the Note and all future advances; and (b)
perform each and every term, covenant and condition of this Deed of Trust and
any other obligation secured by this Deed of Trust.
(2) PAYMENT BY TRUSTOR OF TAXES AND OTHER IMPOSITIONS: The term
"Taxes" shall mean all taxes, bonds and assessments, both general and special,
affecting or levied upon the Property or any part thereof, assessments on water
company stock, if any, all taxes or excises levied or assessed against Trustor,
the Property, or any part thereof, in addition to or as a substitution in whole
or in part for any real estate taxes or assessments, all taxes or excises
measured by or based in whole or in part upon the rents, operating income, or
any other factor relating to the Property, or any part thereof, and all license
fees, taxes and excises imposed upon Lender (but not any federal or state income
taxes imposed upon Lender) and measured by or based in whole or in part upon the
obligations secured hereby. The term "Other Impositions" shall mean any fine,
fee, charge, or other imposition in connection with the Property or Trustor,
payment of which Lender shall deem to be necessary to protect, preserve, and
defend Lender's interests hereunder. Trustor shall pay all Taxes, insurance
premiums, and Other Impositions attributable to the Property, at least fifteen
(15) days before delinquency directly to the payee thereof, or in such other
manner as Lender may designate in writing. Trustor shall promptly furnish to
Lender all notices of amounts due under this paragraph, and if Trustor shall
make payment directly, Trustor shall furnish to Lender receipts evidencing
payments of Taxes at least ten (10) days before delinquency and shall promptly
deliver to Lender receipts evidencing all other payments above required.
Following any default under this Deed of Trust, or in the payment or
performance of any other obligation secured hereby, at the request of Lender, or
otherwise upon written agreement between Trustor and Lender, or as provided by
applicable law, Trustor shall pay to Lender, on each day on which monthly
installments of principal and/or interest are payable under the Note, until the
Note is paid in full, an amount equal to one-twelfth (1/12) of the sum of annual
Taxes and Other Impositions, together with annual insurance premiums on all
policies of insurance required by this Deed of Trust, plus additional amounts
reasonably estimated by Lender for the purpose of paying future installments of
Taxes, Other Impositions, and insurance premiums. In such event, Trustor further
agrees to cause all bills, statements, or other documents relating to Taxes,
Impositions, and insurance premiums to be sent or mailed directly to Lender.
Upon receipt of such bills, statements, or other documents, and provided Trustor
has deposited sufficient funds with Lender pursuant to this paragraph (2).
Lender shall pay such amounts as may be due thereunder out of the funds so
deposited with Lender for that purpose, subject to Lender's rights to seize and
apply said funds to satisfy, in whole or in part, any default by Trustor. If at
any time and for any reason the funds deposited with Lender are or will be
insufficient to pay such amounts as may then or subsequently be due, Lender
shall notify Trustor and Trustor shall immediately deposit an amount equal to
such deficiency with Lender. Notwithstanding the foregoing, nothing contained
herein shall cause Lender to be deemed a trustee of said funds or to be
obligated to pay any amounts in excess of the amount of funds deposited with
Lender pursuant to this paragraph (2). Lender shall not be obligated to pay or
allow any interest on any sums held by Lender pending disbursement or
application hereunder, and Lender may impound or reserve for future payment of
Taxes, Other Impositions, and insurance such portion of such payments as Lender
may in its absolute discretion deem proper, applying the balance on the
principal of or interest on the obligations secured hereby. Should Trustor fail
to deposit with Lender (exclusive of that portion of said payments which has
been applied by Lender on principal of or
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interest on the indebtedness secured hereby) sums sufficient to fully pay such
Taxes, Other Impositions, or insurance premiums, at least thirty (30) days
before delinquency thereof, Lender may, at Lender's election, but without any
obligation so to do, advance any amounts required to make up the deficiency,
which advances, if any, shall be secured hereby and shall be repayable to Lender
as herein elsewhere provided, or at the option of Lender the latter may, without
making any advance whatever, apply any sums held by it upon any obligation of
Trustor secured hereby. Shall any default occur or exist on the part of Trustor
in the payment or performance of any of Trustor's and/or any guarantor's
obligation in connection with the above Note, Lender may, at Lender's option,
apply any sums or amounts in its possession or under its control, received
pursuant hereto or as rents or income of the Property or otherwise, upon any
indebtedness or obligation of the Trustor secured hereby in such manner and
order as Lender may elect. The receipt, use or application of any such sums paid
by Trustor to Lender hereunder shall not be construed to affect the maturity of
any indebtedness secured by this Deed of Trust or any of the rights or powers of
Lender or said Trustee under this Deed of Trust or any other obligation secured
hereby.
In the event of the passage, after the date of this Deed of Trust, of
any law or judicial decision deducting from the value of the Property for the
purposes of taxation any lien thereon, or changing in any way the laws now in
force for the taxation of deeds of trust or obligations secured by deeds of
trust, or the manner of operation of any such Taxes so as to adversely affect
the interest of Lender, or imposing payment of the whole or any portion of any
Taxes upon Lender, then and in such event, Trustor shall bear and pay the full
amount of such Taxes; provided that if for any reason payment by Trustor of any
such new or additional Taxes would be unlawful or if the payment thereof would
constitute usury or render the Note, or other indebtedness secured hereby,
wholly or partially usurious under any of the terms or provisions of the Note,
or this Deed of Trust, or otherwise, Lender may, at its option, upon thirty (30)
days' written notice to Trustor, (i) declare the whole indebtedness secured by
this Deed of Trust, together with accrued interest thereon, to be immediately
due and payable, or (ii) pay that amount or portion of such Taxes as renders the
Note, or other indebtedness secured hereby, unlawful or usurious, in which event
Trustor shall concurrently therewith pay the remaining lawful nonusurious
portion or balance of such Taxes.
(3) TRUSTOR TO PAY GROUND RENTS AND OBLIGATIONS THAT COULD RESULT IN
LIENS ON THE PROPERTY: Trustor shall fully and faithfully pay and perform each
and every obligation, and otherwise satisfy all conditions and covenants, which
are or may be secured by any deed of trust upon the Property, or any portion
thereof, existing of record as of the date this Deed of Trust is recorded, and
to which this Deed of Trust may be subordinate. Trustor shall pay at or prior to
maturity all ground rents and any liens, charges and encumbrances that are,
later become, claim to be or appear to Lender to be prior or superior to the
lien of this Deed of Trust, including, without limiting the generality of the
foregoing, any and all claims for (a) work or labor performed, (b) materials and
services supplied in connection with any work of demolition, alteration,
improvement of or construction upon the Property, and (c) fees, charges and
liens for utilities provided to the Property.
(4) TRUSTOR TO MAINTAIN INSURANCE: (a) Trustor shall maintain
insurance covering the Property against loss or damage by fire and other risks
as shall from time to time be required by Lender as necessary to protect the
security interest of Lender in the Property. The insurance shall be maintained
with such companies, in such amounts, for such terms, and in form and content
satisfactory to Lender, in Lender's reasonable opinion and judgment. Lender
shall be named as the primary loss payee under all of the insurance policies,
and Trustor shall assure that Lender receive a certificate from each insurance
company that acknowledges Lender's position as loss payee and that states that
the insurance policy cannot be terminated as to Lender except upon thirty (30)
days' prior written notice to Lender. Such policies of insurance shall include,
without limitation, the following: (i) insurance against loss or damage to the
Property (including contents) by fire or other risk embraced by coverage of the
type known as the broad form or extended coverage (or special extended coverage)
in the amount required by Lender, but in no event less than one hundred percent
(100%) of the full replacement cost of the Improvements and Personalty included
within the
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Property without deduction for depreciation of any kind or the unpaid balance of
the Note, whichever is greater, (ii) insurance against the loss of rental value
of the Property on a "rented or vacant basis," including business interruption
insurance, arising out of the perils insured against pursuant to clause (i)
above in the amount required by Lender, but in no event less than one (1) year's
gross rental income and other revenues from the Property, and (iii)
comprehensive public liability insurance against claims for personal injury,
death, or property damage occurring on, in, or about the Property, or arising
from or connected with the use, conduct, or operation of Trustor's business in
the amount from time to time required by Lender. (b) If such insurance, together
with written evidence of the premium having been paid, are not delivered to
Lender at least five (5) days prior to the expiration of such insurance, Lender
shall have the right, but without obligation to do so, without notice to or
demand upon Trustor and without releasing the Trustor from any obligation under
this Deed of Trust, to obtain such insurance or like insurance through or from
any insurance agency or company acceptable to it, pay the premium for such
insurance, and add the amount of the premium to the loan secured by this Deed of
Trust, and this amount shall bear interest at the applicable rate of interest
set forth in the Note. Neither the Trustee nor Lender shall be responsible for
such insurance or for the collection of any insurance monies, or for any
insolvency of any insurer or insurance underwriter. (c) In the event that the
Property is sold to Lender at any trustee's sale under this Deed of Trust (see
paragraph 17, below), the Trustor hereby assigns to Lender all unearned premiums
on all policies of insurance covering the Property and agrees that any and all
unexpired insurance covering the Property shall inure to the benefit of and pass
to Lender at the time of such Trustee's sale.
(5) INSURANCE PROCEEDS, CONDEMNATION PROCEEDS AND OTHER RECOVERIES:
(a) All settlements, awards, damages and proceeds received by Trustor or any
other person under any fire or other hazard insurance policy, for losses
occurring after the effective date of this Deed of Trust, or in connection with
any condemnation for public use of or injury to the Property (or any part of or
interest in the Property) are assigned to Lender and may, at the option of
Lender, be applied by Lender as provided in section (c) of this paragraph (5).
(b) All causes of action, whether accrued before or after the date of this Deed
of Trust, of any type for any damage or injury to the Property (or any portion
of or interest in the Property), or in connection with the sale or other
transaction being financed by the funds that are secured by this Deed of Trust,
or in connection with or affecting the Property (or any portion of or interest
in the Property), including causes of action arising in tort or contract and
causes of action in fraud or concealment of a material fact, are assigned to
Lender, and the proceeds of any such causes of action may, at the option of
Lender, be applied by Lender as provided in section (c) of this paragraph (5).
Lender may, at its option, appear in and prosecute in its own name any action or
proceeding to enforce any such cause of action and may make any compromise or
settlement of any such action or proceeding. Trustor agrees to execute such
further assignments of any settlements, awards, damages and causes of action as
Lender from time to time may request. (c) Settlements, awards, proceeds and
damages (collectively, "Awards") received by Lender under the provisions of
section (a) and section (b) of this paragraph (5), at the option of Lender, may
be applied by Lender to the outstanding balance due on the Note, or any other
obligation secured by this Deed of Trust, in such order as Lender may determine.
The Award may be used by Lender, without reducing the principal balance of the
Note or any other obligation secured by this Deed of Trust, to replace, restore
or reconstruct the Property to a condition satisfactory to Lender. The Award may
be released to Trustor, or any such amount may be divided in any manner among
any such application, use or release. No such application, use or release of the
Award shall cure or waive any default or notice of default under this Deed of
Trust or invalidate any act done pursuant to such notice.
(6) MAINTENANCE AND PRESERVATION OF THE PROPERTY:
(a) Trustor shall: (i) keep the Property, and every portion
thereof, in good condition and repair and replace from time to time, or at any
time, any Fixtures, Personalty or other items comprising the Property which may
become obsolete or worn out, with Fixtures, Personalty or other items of at
least the same utility, quality and value, each such replacement to be free of
any liens or security interests
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of any kind or character other than the lien of this Deed of Trust, or any other
document or instrument securing the indebtedness hereunder; (ii) not remove or
demolish the Property, or any part thereof; (iii) complete or restore promptly
and in good and workmanlike manner the Property, or any part thereof, which may
be damaged or destroyed; (iv) comply with and not suffer violations of (A) any
and all laws, ordinances, rules, regulations, standards and orders, including,
without limitation, making any alterations or additions required to be made to,
or safety appliances and devices required to be installed or maintained in or
about, the Property, or any portion thereof, under any such laws, ordinances,
rules, regulations, standards or orders now or hereafter adopted, enacted or
made applicable to the Property, or any portion thereof, and payment of any
fees, charges or assessments arising out of or in any way related to treatment
of the Property, or any portion thereof, as a source of air pollution, traffic,
stormwater runoff, or other adverse environmental impacts or effects, and (B)
any and all covenants, conditions, restrictions, equitable servitudes and
easements, whether public or private, of every kind and character, and (C) any
and all requirements of insurance companies and any bureau or agency which
establishes standards of insurability, which laws, covenants or requirements
affect the Property and/or pertain to acts committed or conditions existing
thereon, or the use, management, operation or occupancy thereof by Trustor and
anyone holding under Trustor, including (but without limitation) such work of
alteration, improvement or demolition as such laws, covenants or requirements
mandate; (v) not commit or permit waste of the Property, or any portion thereof;
(vi) do all other acts which from the character or use of the Property may be
reasonably necessary to maintain, preserve and enhance its value, including,
without limitation, keeping all plants, lawns and other landscaping in a good
and thriving condition, and otherwise performing such appropriate upkeep and
maintenance to the Property to insure that the Property, and each part thereof,
is maintained in a first-class manner and retains at all times a first-class
appearance and condition, such upkeep to include, without limitation,
appropriate measures to protect wood, stucco and concrete surfaces from
weathering, deterioration and aging, and to protect from and immediately remove
graffiti or other defacement from such surfaces; (vii) perform all obligations
required to be performed in leases or conditional sales or like agreements
affecting the Property or the operation, occupation or use thereof (and, if not
previously assigned, in the event of default, all right, title and interest of
Trustor under any such leases, conditional sales or like agreements shall be
automatically assigned to Lender hereunder, together with any deposits made in
connection therewith); (viii) make payment of any and all charges, assessments
or fees imposed in connection with the delivery, installation or maintenance of
any utility services or installations on, to or for the Property, or any portion
thereof; (ix) not create any deed of trust, liens or encumbrances upon the
Property subsequent hereto, the parties hereby having specifically bargained in
contemplation of the fact that any subsequent encumbrance upon the Property
would adversely affect Lender's reasonable security interests hereunder; (x)
make no further assignment of rents of the Property; and (xi) execute and, where
appropriate, acknowledge and deliver such further documents or instruments as
Lender or Trustee deem necessary or appropriate to preserve, continue, perfect
and enjoy the security provided for herein, including (but without limitation)
assignments of Trustor's interest in leases of the Property.
(b) Trustor shall not undertake or suffer to be made pursuant to
section (a) of this paragraph (6), any material alterations, additions, repairs,
expansions, relocations, remodeling or demolition of or structural or other
material changes in, any buildings, improvements, Fixtures or Personalty
comprising the Property, without the prior written consent of Lender; which
consent shall not be unreasonably withheld. No material changes are to be made
in the Plans and Specifications as approved by Lender without Lender's prior
written consent, which consent or non-consent shall not be unreasonably
withheld. All such work shall be performed promptly and in good and workmanlike
manner, using first quality materials in conformity with plans and
specifications approved in advance by Lender, and shall be diligently prosecuted
to completion free of liens and encumbrances, other than this Deed of Trust and
any other document or instrument evidencing or securing the indebtedness secured
hereby.
(c) Without limiting the generality of this paragraph (6),
Trustor hereby warrants, represents and covenants to Lender that Trustor and the
Property presently comply with, and will in the future comply fully with, all
applicable federal, state and local laws, ordinances, rules and regulations, and
all permits
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and approvals issued thereunder, affecting Trustor's qualification to do
business, the construction of the improvements to be located upon the Property,
the sale, operation, leasing or financing of the Property and the intended
occupancy, use and enjoyment thereof, including, but not limited to, all
applicable subdivision laws, licenses and permits, building codes, zoning
ordinances, environmental protection laws, flood disaster laws, and all laws
pertaining to industrial hygiene and the environmental conditions on, under or
about the Property, including, but not limited to, soil and groundwater
condition. Trustor further warrants, represents and covenants that Trustor does
not presently, and will not in the future, use, store, manufacture, generate,
transport to or from, or dispose of any toxic substances, hazardous wastes,
radioactive materials, flammable explosives or related material on or in
connection with the Property or the business of Trustor on the Property; except
as are described in Exhibit "B" attached hereto and incorporated herein, and
-----------
which are used, stored or maintained in full and complete compliance with all
such laws ("Permitted Toxic Materials"). Trustor further warrants, represents
and covenants to Lender that Trustor does not presently, and will not, permit
any lessee or other user of the Property to use, store, manufacture, generate,
transport to or from, release or dispose of any toxic substances, hazardous
materials, hazardous wastes, radioactive materials, flammable explosives or
related materials on or in connection with the Property or the business of said
lessee or other user of the Property. Trustor further warrants, represents and
covenants to Lender that as to the Permitted Toxic Materials, Trustor shall
obtain and continue to maintain all necessary permits and approvals for the
Permitted Toxic Materials, and comply with all laws, ordinances, rules and
regulations, and all permits and approvals issued thereunder, pertaining
thereto. ("Toxic substances," "hazardous materials" and "hazardous wastes" shall
include, but not be limited to, such substances, materials and wastes which are
or become regulated under applicable federal, state or local laws, ordinances,
rules or regulations.) Without the prior written consent of Lender, Trustor
shall not seek, make or consent to any change in the zoning, conditions of use,
or any other applicable land use permits, approvals or regulations pertaining to
the Property, or any portion thereof, which would constitute a violation of the
warranties, representations and covenants herein contained, or would otherwise
impair the ability of Trustor to complete construction of any improvements now
underway or to be constructed, constituting the Property, or would change the
nature of the use or occupancy of the Property. Within five (5) days of (i) any
contact from any federal, state, or local governmental agency concerning any
environmental protection laws, including, but not limited to, any notice of any
proceeding or inquiry with respect to the presence of any hazardous wastes,
toxic substances or hazardous materials on the Property or the migration thereof
from or to other property, (ii) any and all claims made or threatened by any
third party against or relating to the Property concerning any loss or injury
resulting from toxic substances, hazardous wastes, or hazardous materials, or
(iii) Trustor's discovery of any occurrence or condition on any property
adjoining or in the vicinity of the Property that could cause the Property, or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability, or loss of the Property under any federal, state, or local
laws, ordinances, rules, or regulations, Trustor shall deliver to Lender a
report regarding such contact and setting forth in detail and describing any
action which Trustor proposes to take with respect thereto, signed by Trustor.
(d) If Trustor has executed any unsecured agreement regarding
hazardous materials containing any warranties and/or indemnities by Trustor in
favor of Lender pertaining to the presence or release of hazardous and/or toxic
materials or other similar substances upon, within or from the Property
(hereinafter "Environmental Indemnity"), then the covenants, duties, and
liabilities of Trustor, and the rights and remedies of Lender with respect to
the subject of hazardous and/or toxic materials, shall be governed by the
provisions of the Environmental Indemnity in addition to the provisions of this
Deed of Trust; provided, however that the provisions of the Environmental
-------- -------
Indemnity shall prevail and exclusively govern the subject matter to the extent
of any duplication, conflict or inconsistency between such provisions and the
provisions of this Deed of Trust, and payment or performance of Trustor's
obligations under said Environmental Indemnity shall not be secured by this Deed
of Trust but shall be and remain unsecured obligations of the Trustor, unless
expressly otherwise therein provided.
(e) Trustor shall deliver to Lender such affidavits, reports,
certificates or other
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written instruments as may be requested by Lender, in Lender's sole and absolute
opinion and judgment, pertaining to Trustor's compliance with this paragraph
(6). Lender may conclusively assume that the statements, facts, information and
representations contained herein and/or in any affidavits, orders, receipts or
other written instruments that are filed with Lender or exhibited to it, are
true and correct. Lender may rely thereon without any investigation or inquiry.
By accepting or approving anything required to be observed, performed,
fulfilled, or given to Lender pursuant to this paragraph (6), Lender shall not
be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, or of Trustor's compliance with the terms of this Deed of
Trust, and such acceptance or approval thereof shall not be or constitute any
warranty or representation to anyone with respect thereto by Lender.
(7) LEGAL ACTIONS AND PAYMENT OF RELATED COSTS: Trustor shall appear
in and defend any action or proceeding that may, in the Lender's judgment,
affect the Lender's security interest under this Deed of Trust or any of the
rights or powers of Lender or Trustee under this Deed of Trust. Whether or not
Trustor so appears or defends, Trustor shall pay all costs and expenses,
including, without limitation, cost of evidence of title and reasonable
attorneys' fees, that are incurred by Trustor, Lender or Trustee in any such
action or proceeding in which Lender or Trustee may appear, by virtue of being
made a party defendant or otherwise, and irrespective of whether the interest of
Lender or Trustee in the Property is directly questioned by such action or
proceeding or whether Lender's rights or interests are otherwise adversely
affected thereby, or whether Lender is or shall become a party, including by way
of intervention. Trustor promises and agrees to give Lender notice in writing of
the pendency of any such action or proceeding promptly, but in any event no
later than five (5) days, after Trustor first obtains knowledge of the pendency
of such action or proceeding. Trustor shall cooperate with Lender in any action
that are brought by Lender to protect its security interest under this Deed of
Trust. Trustor will, upon demand by Lender, commence any action or proceeding
reasonably required to protect or facilitate Lender's recovery of Awards under
paragraph (5) of this Deed of Trust. If Trustor fails to bring any such action
or proceeding, then Lender may, but need not, do so, and Trustor shall pay to
Lender all costs, expenses and reasonable attorneys' fees that are incurred by
Lender in doing so. Whenever, under this Deed of Trust, or any other document or
instrument evidencing or securing the indebtedness secured hereby, Trustor is
obligated to appear in and defend Lender or defend or prosecute any action or
proceeding, Lender shall have the right of full participation in any such action
or proceeding, with counsel of Lender's choice, and all costs and expenses
incurred by Lender in connection with such participation (including, without
limitation, reasonable attorneys' fees) shall be reimbursed by Trustor to Lender
immediately upon demand. In addition, Lender shall have the right to approve any
counsel retained by Trustor in connection with the prosecution or defense of any
such action or proceeding by Trustor, which approval shall not be unreasonably
withheld. All costs or expenses required to be reimbursed by Trustor to Lender
hereunder shall, if not paid upon demand by Lender, thereafter bear interest at
the applicable rate of interest set forth in the Note. As used herein,
"proceeding" shall include litigation (whether by way of complaint, answer,
cross-complaint, counter claim or third party claim), arbitration and
administrative hearings or proceedings, and shall include commencement of any
case or the filing of any petition for relief or other action under any Chapter
of the U.S. Bankruptcy Code.
(8) LENDER'S RIGHTS TO INSPECT THE PROPERTY: Lender and its agents,
employees and contractors, may enter upon the Property at any reasonable time to
inspect the Property for any purpose relating to Lender's rights and interests
under the terms of this Deed of Trust, including, but not limited to, Trustor's
compliance with the terms of paragraph (6).
(9) SUBSTITUTION OF TRUSTEE: From time to time, by an instrument
signed and acknowledged by Lender, and recorded in the Office of the Recorder of
the County in which the Property is located, Lender may appoint a substitute
Trustee or Trustees in place of the Trustee named in this Deed of Trust. Such
instrument shall refer to this Deed of Trust and shall set forth the date and
instrument number or book and page of its recordation. Upon recordation of such
instrument, the Trustee named in this Deed
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of Trust shall be discharged and the new Trustee so appointed shall be
substituted as Trustee under this Deed of Trust with the same effect as if
originally named Trustee in this Deed of Trust. An instrument recorded pursuant
to the provisions of this paragraph (9) shall be conclusive proof substitution
of such new Trustee.
(10) MISCELLANEOUS POWERS OF LENDER AND TRUSTEE: In addition to any
other powers granted in this Deed of Trust to the Trustee, from time to time,
upon the written request of Lender and upon the presentation of this Deed of
Trust and any obligation secured by this Deed of Trust for endorsement, and
without affecting any obligation secured by this Deed of Trust or the
performance of the obligations set forth in this Deed of Trust, the Trustee may,
without liability and without notice to any person: reconvey all or any part of
the Property to Trustor, consent to the making of any map or plat of the
Property, join in granting any easement on the Property, join in any agreement
subordinating the lien of this Deed of Trust, release any obligation secured by
this Deed of Trust, in whole or in part, with regard to any Trustor, extend or
renew the Note or any other obligation secured by this Deed of Trust, accept or
release any additional security under this Deed of Trust, or accept and release
the guaranty of any additional person or any obligation secured by this Deed of
Trust.
(11) ASSIGNMENT AND COLLECTION OF RENTS: (a) Trustor hereby assigns
absolutely to Lender the rents of the Property, with a revocable license to
collect such rents as they become due and payable, prior to any default by
Trustor under paragraph (14) of this Deed of Trust, being retained by Trustor.
(b) Upon any default by Trustor under paragraph (14) of this Deed of Trust, such
license will, automatically, be deemed revoked without the necessity for any
act or notice by Lender, and Lender, in person, by agent or by judicially
appointed receiver, shall be entitled to enter upon, take possession of and
manage the Property and may collect the rents of the Property, and, after so
taking possession, shall be entitled to collect any rents that are past due.
Lender has, however, no duty to produce rents from the Property nor any
responsibility for pursuing or collecting claims or rights of Trustor. If
Trustor, at or immediately prior to such taking of possession by or on behalf of
Lender, has operated a business upon the Property other than the rental thereof,
the authority granted herein to so take possession of the Property shall also
include the authority and power to take possession of the receipts of such
business and, if appropriate, to operate such business, and the receipts thereof
shall be deemed herein to be a form of rents. All rents collected by Lender or
the receiver shall be applied first to payment of the costs of management of the
Property and of collection of rents, including, but not limited to, costs and
expenses of any receivership and reasonable attorneys' fees incurred by Lender
in connection with the receivership, and then to the Note and any other
obligations secured by this Deed of Trust. Lender and the receiver shall be
liable to account only for those rents actually received. (c) At any time,
whether or not an event of default exists under this Deed of Trust, or any other
agreement or obligation secured by this Deed of Trust, Trustor shall, on demand,
deliver to Lender from time to time all security deposits made by lessees to
Trustor under the terms of any lease of all or part of the Property. These funds
shall be held by Lender without interest payable to Trustor and as a part of and
commingled with Lender's general funds. These funds,however, will be repayable
to lessees pursuant to the provisions of the leases under which security
deposits are made. In the event of any conflict between the provisions of this
paragraph (11) and the provisions of a specific separate assignment of rents
and/or assignment of lease(s), the provisions of the specific assignment(s)
shall be deemed to govern over the provisions of this paragraph.
(12) RECONVEYANCE OF THE PROPERTY: Upon the written request of Lender
stating that the Note and all other obligations secured by this Deed of Trust
have been discharged, and upon surrender of this Deed of Trust, the Note or any
other notes or instruments evidencing such other obligations to the Trustee, and
upon payment of the Trustee's fees, the Trustee shall reconvey, without
warranty, the Property or that portion of the Property then held by the Trustee
under this Deed of Trust. The recitals in any such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness of such matters or facts.
The grantee in such reconveyance may be described as "the person or persons
legally entitled thereto." When the property has been fully reconveyed, the
last such reconveyance shall operate as a reassignment
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of all of the rents of the Property to the person or persons legally entitled to
such rents. Five (5) years after issuance of such full reconveyance, the Trustee
may destroy this Deed of Trust and any such notes, unless directed in such
request to retain them.
(13) CHANGE OF LENDER'S RECORDS: In the event Trustor requests Lender
to change any of its records relating to the Property, the Note or this Deed of
Trust (including, but not limited to, changes in mailing address or ownership of
the Property), Trustor shall pay a reasonable fee prescribed by the Lender to so
change its records.
ACCELERATION AND DEFAULT:
(14) CONDITIONS UNDER WHICH LENDER MAY DECLARE A DEFAULT BY TRUSTOR:
A default under this Deed of Trust shall occur in the event that: (a) Trustor,
jointly and severally, fail to pay when due: (i) any sum payable under the Note;
(ii) any sum the payment of which is required or secured by this Deed of Trust;
(b) Trustor, jointly and severally, fail to perform any other obligation
required to be performed by Trustor under this Deed of Trust or secured by this
Deed of Trust; (c) the Property is or becomes subject to any proceedings for
abatement of a public nuisance; (d) any material information given to Lender by
Trustor, intended to or which does, in fact, induce the granting of any loan
secured by this Deed of Trust, was not true in any respect when given, or any
material information requested or required by Lender is withheld or concealed
from such application by Trustor; or (e) an Event of Default under the
Agreement.
(15) LENDER'S RIGHT TO REQUIRE IMMEDIATE PAYMENT IN FULL: In the
event: (a) of a default under this Deed of Trust, or (b) Trustor sells,
transfers, grants, hypothecates, conveys, encumbers, alienates, or assigns
(voluntarily, involuntarily, or by operation of law), enters into a contract of
sale of, or leases, the Property, or any portion of the Property or any interest
therein, Lender may, at its option and without further notice to any person,
declare the entire principal balance and any other obligations under the Note
and/or any other obligations secured by this Deed of Trust, together with
accrued interest thereon and any prepayment penalties, immediately due and
payable. As used herein, the term "transfer" includes, without limitation
thereto, (i) the transfer of any general partnership or joint venture interest
in Trustor or any general partner of Trustor, or change in the general partners
or joint venturers of Trustor or of any general partner (if Trustor or any such
general partner is a partnership or a joint venture), and the transfer of any
common or voting stock in Trustor or any general partner of Trustor (if Trustor
or any general partner of Trustor is a corporation), (ii) if Trustor is a
limited partnership, any transfer of a limited partnership interest in a single
transaction, or series of transactions, intended to transfer all or
substantially all of the beneficial interest of the Property, or any part
thereof, and (iii) if Trustor is not an individual, corporation, or partnership,
the transfer, directly or indirectly, of any beneficial interest in Trustor.
Trustor shall provide to Lender a complete and exact duplicate copy of any
contract providing for the transfer of any interest in the Property, or any deed
of trust or similar instrument creating a lien or encumbrance on the Property,
immediately upon the execution of any such contract, deed of trust, or other
instrument. No waiver of the Lender's right to accelerate shall be effective
unless it is in writing.
(16) LENDER'S RIGHT TO PERFORM ACTS TRUSTOR FAILS TO PERFORM AND
INDEMNIFICATION:
(a) If Trustor fails to make any payment when due or to do any
act required to be made or performed under this Deed of Trust, then Lender or
Trustee, without notice to or demand upon Trustor and without releasing Trustor
from any obligation under this Deed of Trust, may, but are not required to, make
or do the same in such manner and to such extent as either may deem necessary or
desirable to protect the security of this Deed of Trust. Lender and Trustee are
authorized to (i) enter upon the Property for such purposes; (ii) appear in and
defend any action or proceeding purporting to affect the security of this Deed
of Trust or the rights or powers of Lender or Trustee; and (iii) pay, purchase,
contest or compromise any
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encumbrance, charge, lien or claim of lien, in whole, in part and/or in
installments, which in the judgment of either Lender or Trustee appears to be
prior or superior to the lien of this Deed of Trust, the judgment of Lender or
Trustee being conclusive of the matter as among the parties to this Deed of
Trust. In exercising the above powers, Lender or Trustee may pay necessary costs
and expenses, employ counsel, consultants, any other agents or independent
contractors, and pay reasonable fees, compensation, and costs thereof. Trustor
promises and agrees to pay immediately upon demand all amounts so expended by
Lender or Trustee (including all such costs, expenses and attorneys' fees) under
this paragraph (16), together with any fees charged by Lender in regard to such
activity by Lender and interest from the date of expenditure at the applicable
rate of interest set forth in the Note, with payment of such amounts being
secured by this Deed of Trust.
(b) Trustor hereby indemnifies and agrees to hold harmless
Lender and Trustee and their directors, officers, shareholders, agents and
employees (individually and collectively the "Indemnitees") from and against:
(i) any and all claims, demands, actions, liabilities, or causes of action that
are asserted against any Indemnitee by any person or entity if the claim,
demand, action, liability, or cause of action, directly or indirectly, relates
to a claim, demand, action, liability, or cause of action that the person or
entity has or asserts based upon, arising out of, or in connection with, the
Property, the conduct of Trustor, any action or non-action by Trustor in
connection with the Property, or this Deed of Trust; and (ii) any and all
claims, liabilities, losses, costs, or expenses (including court costs and
attorneys' fees) that any Indemnitee suffers or incurs as a result of the
assertion of any such claim, demand, action, liability or cause of action. The
foregoing indemnity shall survive the release of this Deed of Trust, whether
such release is as a result of payment of the indebtedness secured hereby,
foreclosure, acceptance of a deed in lieu of foreclosure, other action, or
otherwise.
(17) TRUSTEE'S RIGHTS AND DUTIES TO SELL THE PROPERTY: (a) In the
event of a default under this Deed of Trust by Trustor, Lender may then or
thereafter execute or cause the Trustee to execute a written notice of such
default and of its election to have the Property sold to satisfy the obligations
secured by this Deed of Trust. Such notice shall be recorded in the office of
the Recorder of the County where the Property is located. (b) When the minimum
period of time required by law following recordation of such notice of default
has elapsed, and notice of sale having been given as then required by law, the
Trustee, without demand upon Trustor, shall sell the Property at the time and
place of sale fixed by it in the notice of sale, either as a whole or in
separate parcels, and in such order as Lender may determine, at public auction
to the highest bidder for cash or a cash equivalent acceptable to Trustee, in
lawful money of the United States, payable at time of sale. Lender shall have
the right, at its option, to offset Lender's bid(s) to the extent of the total
amount due Lender, including but not limited to all Trustee's fees, costs,
expenses (including, without limitation, premiums for guarantees or other
evidence of title), and other amounts secured by this Deed of Trust. The Trustee
may postpone the sale of all or any portion of the Property by public notice at
such time and place of sale, and from time to time thereafter may postpone such
sale by public announcement at the time fixed by the preceding postponement.
Additionally, Lender, from time to time before any Trustee's sale, may rescind
or cause to be rescinded any notice of default and election to sell or notice of
sale by executing and delivering to Trustee a written notice of such rescission,
which notice, when recorded, shall also constitute a cancellation of any prior
declaration of default and demand for sale. The exercise by Lender of such right
of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Lender to execute and
deliver to Trustee, as above provided, other declarations or notices of default
and demand for sale of the Property to satisfy the obligations hereof, nor
otherwise affect any provision, covenant or condition of the Note or the
Agreement or any of the rights, obligations or remedies of Trustee to Lender.
(c) The Trustee shall deliver to the purchaser at such sale its deed conveying
the Property so sold, but without any covenant or warranty, express or implied.
The recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. (d) Any person, including Trustor, Lender or Trustee
may purchase at such sale. After deducting all costs, fees and expenses of the
Trustee and of this Trust, including, without limitation, cost of evidence of
title and attorneys' fees in connection with the sale, the
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Trustee shall apply the proceeds of the sale to the payment of: first, all sums
expended under the terms of this Deed of Trust not then repaid, with interest at
the applicable rate of interest set forth in the Note; second, the payment of
all other sums then secured by this Deed of Trust; and third, the remainder, if
any, to the person or persons legally entitled to such proceeds.
(18) OTHER REMEDIES IF TRUSTOR DEFAULTS: (a) All of the remedies of
Lender and Trustee set forth in this Deed of Trust are intended to be in
addition to and not in substitution for any other remedies available to Lender
or Trustee at law or in equity. It is expressly understood and agreed that
Lender or Trustee, or both, may bring suit in any court of competent
jurisdiction to foreclose this Deed of Trust by judicial action or to obtain
specific performance of the assignment of rents contained in this Deed of Trust.
In connection with any such action, Lender or Trustee may apply to the court for
the appointment of a receiver to take possession of the Property, operate the
business of Trustor being conducted on the Property, utilize and enforce all
agreements of Trustor in respect of the operation of such business, the
utilization of any such agreement being at the election of Lender or the
receiver, to be exercised at any time after declaration of a default hereunder,
receive the rents of the Property and apply the same to the obligations of
Trustor under this Deed of Trust and under the Note and any other obligations
secured by this Deed of Trust. (b) Neither the acceptance of this Deed of Trust
nor its enforcement in any manner shall prejudice the right of Lender or Trustee
to realize upon or enforce any other security now or later held by Lender or
Trustee. Trustor promises and agrees that the rights of Lender and Trustee under
this Deed of Trust, and with respect to any other security now or later held by
Lender, may be enforced in such order and manner as Lender and Trustee, or
either of them, may determine in their sole and absolute discretion.
(19) TRUSTOR'S OBLIGATIONS AND LENDER'S RIGHTS NOT WAIVED: By
accepting payment of any sum secured by this Deed of Trust after its due date,
or by accepting late performance of any obligation secured by this Deed of
Trust, or by making any payment or performing any act on behalf of Trustor that
Trustor was obligated to make or perform under this Deed of Trust but failed to
make or perform, or by adding any payment so made by Lender to the Note secured
by this Deed of Trust, Lender does not waive its right either to require prompt
payment when due of all other sums so secured or to declare default for failure
to make any such prompt payment or to perform any such act. No failure or delay
on the part of Lender, Trustee, or any holder of the Note or this Deed of Trust
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any such power, right or
privilege shall preclude other or further exercise thereof or of any other
right, power or privilege. No exercise of any right or remedy of Lender or
Trustee under this Deed of Trust shall constitute a waiver of any other right or
remedy contained in this Deed of Trust or provided by law. All rights and
remedies existing under this Deed of Trust are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
(20) SUCCESSORS IN INTEREST: The terms, agreements, and conditions
contained in this Deed of Trust shall apply to, be binding upon and inure to the
benefit of, all of the parties to this Deed of Trust, their heirs, personal
representatives, successors and assigns.
(21) STATEMENTS CONCERNING THE STATUS OF THE LOAN: From time to time
as required by law, Lender shall furnish to Trustor such statements as may be
required concerning the status of the obligations secured by this Deed of Trust
Trustor promises and agrees to pay upon demand for such statements the maximum
amount permitted by law.
(22) TRUSTEE'S OBLIGATIONS: The Trustee accepts this Trust when this
Deed of Trust, duly executed and acknowledged, is made a public record as
provided by law. The Trustee is not obligated to notify any party to this Deed
of Trust of pending sale under any other deed of trust or of any action or
proceeding in which Trustor, Lender or Trustee is a party unless such action is
brought by the Trustee. The Trustee shall not be obligated to perform any act
required of it under this Deed of Trust unless the performance of such act is
requested in writing and the Trustee is reasonably indemnified against loss,
costs,
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liability and expense.
(23) OBLIGATIONS OF TRUSTOR ARE JOINT AND SEVERAL; GENDER AND NUMBER:
If more than one person has executed this Deed of Trust as "Trustor," the
obligations of all such persons under this Deed of Trust shall be joint and
several. In this Deed of Trust, whenever the context so requires, the masculine
gender includes the feminine and/or neuter, and the singular number includes the
plural.
(24) NO OFFSETS: No offset or claims which Trustor now or in the
future may have against Lender shall relieve Trustor from making payments or
performing any other obligations contained in or secured by this Deed of Trust.
Despite any right or option that may be granted to Lender or Trustee by this
Deed of Trust or in the evidence of any obligations secured by this Deed of
Trust or document ancillary to this Deed of Trust to receive, collect, accept
deposit of, use, apply or in any other manner obtain or dispose of any funds or
property, the same shall not be deemed to constitute any credit against or to
satisfy any obligation secured by this Deed of Trust, in whole or in part,
unless and until such funds or property shall be both so obtained and expressly
so applied by Lender or Trustee to such satisfaction of such obligation and then
only in the manner and to the extent of such application.
(25) GOVERNING LAW: The loan secured by this Deed of Trust is made
pursuant to the laws of the State of California, and the rules and regulations
promulgated thereunder. The loan contracts between the parties, including this
Deed of Trust, shall be construed and governed by such laws, rules, and
regulations.
(26) AGREEMENT CHANGED ONLY BY WRITING: This Deed of Trust cannot be
changed except by agreement in writing signed by Trustor and Lender.
(27) TIME: Time is of the essence in connection with all of Trustor's
obligations under this Deed of Trust.
(28) NOTICE: Except for any notice required under applicable law to be
given in another manner: (a) any notice to Trustor provided for in this Deed of
Trust shall be addressed to Trustor at the address of Trustor set forth above,
or to such other address as Trustor may designate by notice to Lender pursuant
to the terms of paragraph (28)(c), and (b) any notice to Lender provided for in
this Deed of Trust shall be addressed to Lender as follows:
Tokai Bank of California
300 South Grand Avenue
Los Angeles, California 90071
Attention: Corporate Banking Division
and to such other address as Lender may designate by notice to Trustor, pursuant
to the terms of paragraph (28)(c).
(c) Except as otherwise provided by law, all notices, requests,
demands, directions, and other communications provided for in this Deed of Trust
must be in writing mailed, telegraphed, delivered, or sent by telex, facsimile,
cable or other form of electronic written communication to the appropriate party
at its respective address. Any notice given by telegram, telex, facsimile, cable
or other form of electronic written communication must be confirmed within
forty-eight (48) hours by letter mailed or delivered to the appropriate party at
its respective address. If any notice is given by mail it will be effective when
deposited in the mails with first-class or airmail postage prepaid; if given by
telegraph or cable, when delivered to the telegraph company with charges
prepaid; if given by telex, facsimile or other form of electronic written
communication, when sent; or if given by personal delivery, when delivered.
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(29) TITLES, CAPTIONS, AND HEADINGS: The titles, captions, and
headings to paragraphs contained in this Deed of Trust are for assistance in
identification only and are not to be considered part of the substance of the
provisions of this Deed of Trust.
(30) SEVERABILITY OF PROVISIONS: If any paragraph, clause or provision
of this Deed of Trust is construed or interpreted by a court of competent
jurisdiction to be void, invalid or unenforceable, such decision shall affect
only those paragraphs, clauses or provisions so construed or interpreted and
shall not affect the remaining paragraphs, clauses and provisions of this Deed
of Trust.
(31) ACKNOWLEDGMENT OF TRUSTOR'S UNDERSTANDING OF DEED OF TRUST:
The foregoing terms, provisions and conditions of this Deed of Trust have been
read and are understood by Trustor. Trustor hereby acknowledges receipt of a
copy of this Deed of Trust.
(32) LENDER'S RELIANCE: The financial accommodations made or to be
made by Lender to Trustor are being made, renewed or extended, as applicable, by
Lender to Trustor at the request and urging of Trustor and this Deed of Trust is
being given in consideration of such financial accommodations, and Lender may
rely upon the validity and enforceability of this Deed of Trust in making such
financial accommodations.
(33) SECURITY AGREEMENT:
(a) Security Interest and Fixture Filing. This Deed of Trust
------------------------------------
shall also constitute and serve as a security agreement and financing statement
for Personalty, Fixtures, and any of the Property in which a security interest
can be perfected under Division 9 of the California Uniform Commercial Code,
within the meaning of, and shall grant to Lender, until the obligations secured
hereby shall be satisfied, a first priority security interest, including but not
limited to a fixture filing, pursuant to Division 9 of the California Uniform
Commercial Code with respect to the Personalty and Fixtures. To this end,
Trustor shall and hereby does grant to Lender, a first priority security
interest in, under and to the Personalty, Fixtures, and any of the Property in
which a security interest can be perfected under Division 9 of the California
Uniform Commercial Code.
(b) Financing Statements. Trustor shall execute and deliver to
--------------------
Lender, in form and substance satisfactory to Lender, such financing statements
and further assurances as Lender may, from time to time, require to create,
perfect, and preserve Lender's security interest herein granted, and Lender may
cause such financing statements and assurances to be recorded and filed at such
times and places as may be required or permitted by law to so create, perfect
and preserve such security interest.
(c) Remedies on Default. Upon default Lender may, at its option:
-------------------
(i) exercise any remedy permitted by law or in equity, including without
limitation, all the rights and remedies of a secured party under the California
Uniform Commercial Code in any jurisdiction where enforcement is sought, whether
in California or elsewhere; (ii) notify any parties obligated on any of the
Personalty or Fixtures to make payment to Lender and enforce collection thereof;
(iii) apply any sums received or collected from or on account of any Personalty
or Fixtures, including the proceeds of any sales thereof, to the payment of any
indebtedness of Trustor to Lender in any order, including the costs and expenses
incurred in preserving and enforcing the rights of Lender and attorneys' fees,
in such order and manner as Lender in Lender's sole discretion determines. All
of Lender's rights and remedies shall be cumulative and not exclusive.
(d) This Deed of Trust shall constitute a fixture filing under
the California Uniform Commercial Code. Lender's address from which information
concerning Lender's security interest can be obtained is set forth in paragraph
(28) above, subject to change as therein provided.
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(34) SALE OF INTEREST: Trustor acknowledges and accepts that Lender
may, or any time, in Lender's sole discretion sell all or any portion of
Lender's interest in the Note and this Deed of Trust to one or more third
parties. The sale of all or any part of Lender's interest in the Note or Deed of
Trust shall not relieve Trustor of any of Trustor's obligations hereunder.
(35) SEPARATE PROPERTY: Any married person executing this Deed of
Trust in an individual capacity agrees that recourse may be had to his or her
separate property for satisfaction of all sums secured under this Deed of Trust.
(36) BOOKS AND RECORDS: Trustor shall keep and maintain at all times
at Trustor's address stated above, or at such other place as Lender may approve
in writing from time to time, complete and accurate books or accounts and
records adequate to reflect correctly the results of the operation of the
Property and copies of all written contracts, leases, rental agreements,
concessions, licenses, and other documents and instruments which affect the
Property, or any portion thereof or interest therein. Such books, records,
contracts, leases, documents, and other instruments shall be subject to
examination and inspection by Lender, or Lender's agents or designated auditors,
at any reasonable time and from time to time. Trustor shall furnish to Lender,
within one hundred twenty (120) days after the end of each fiscal year of
Trustor, a balance sheet, a statement of income and expense of the Property, and
a statement of changes in financial position, each in reasonable detail and
prepared in accordance with generally accepted accounting principles
consistently applied, and certified by Trustor and, if Lender shall so require,
by an independent certified public accountant. Trustor shall furnish, together
with the foregoing financial statements, and at any other time upon Lender's
request, a rent schedule for the Property, certified by Trustor, showing the
name of each tenant and, for each tenant, the space occupied, the expiration
date of the lease or rental agreement, the rent payable and the rent paid, the
security deposit held, and such other information regarding the leasing of the
Property as Lender shall require. Upon Lender's request, Trustor shall also
provide to Lender, within five (5) days after request, such interim statements
of income and expense as Lender shall require, and current financial statements
of Trustor and any general partner of Trustor, and any guarantor of all or any
of the obligations secured by this Deed of Trust. Such statements shall be
prepared in accordance with generally accepted accounting principles
consistently applied, certified as being complete and accurate by the party
whose statement is being furnished and, if required by Lender, by an independent
certified public accountant.
(37) FINANCIAL STATEMENTS: Trustor, and any other person or entity
liable for any of the obligations of Trustor hereunder, or to which this Deed of
Trust refers, shall, upon Lender's request, and in any event within three (3)
months after the end of each calendar year during which said obligations have
not been fully repaid and performed, and discharged, provide to Lender complete
and accurate financial statements presenting the financial condition of Trustor
and each such obligor as of the date such financial statements are prepared and
delivered to Lender, including but limited to all audited financial statements
and accompanying opinions, qualifications, and footnotes of the auditor
preparing them, or, in the absence of such audited financial statements, their
respective consolidated and consolidating balance sheets, income statements,
sources and uses of funds, and such other supplemental reports and schedules as
Lender shall require. All such financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied,
or in such other form and content as Lender may permit, in its sole opinion and
judgment. All such financial statements shall contain a certification signed by
one or more authorized representatives of Trustor and such other obligors
certifying to the completeness and accuracy of all information therein, without
exception.
(38) INSPECTION, APPRAISAL, AND ASSESSMENTS: Lender may, at any time
and from time to time and as and when Lender deems to be appropriate, whether or
not Trustor is then in default, (a) enter upon the Premises, directly or through
one or more agents or independent contractors, to inspect any and all Property
which is security for the obligations herein described, and (b) cause to be
performed and prepared one or more appraisals and/or preliminary or other
environmental assessments of the Property, or
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any portion thereof, in form and content satisfactory to Lender and meeting all
requirements or standards of applicable laws, regulations, ordinances, orders,
and generally recognized industry standards relating thereto. All costs and
expenses incurred by Lender or Trustee in connection with any such inspection,
appraisal, or assessment, shall be payable by Trustor upon demand and shall be
secured by this Deed of Trust. All reports and other evidence and work papers
relating to such inspections, appraisals, and assessments, shall be and remain
the sole property of Lender, and Trustor hereby waives any right which Trustor
may have by agreement or by operation of law to receive an original or duplicate
thereof. Any appraisal or assessment may, at Lender's sole election, be relied
upon by Lender in taking any action Lender deems to be necessary or appropriate
in connection with the enforcement of its rights and exercise of remedies under
or by virtue of this Deed of Trust, or under any obligation secured hereby, or
under any separate obligation pertaining to the Property, or in connection with
the protection, maintenance, preservation, remediation, restoration, or repair
of the Property. Unless Lender otherwise expressly declares in writing, neither
said appraisal nor assessment shall constitute conclusive evidence of the value
or condition of the Property or as a representation or warranty by Lender as to
the value or condition of the Property, and may not be used or relied upon by
Trustor for any purpose.
(39) DEFINITIONS: All terms not defined herein shall be defined as set
forth on the Agreement
(40) RIDER: For additional terms, see Rider to Deed of Trust Executed
by a Non-Borrower Trustor attached hereto and by this reference incorporated
herein.
THE UNDERSIGNED TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND ANY
NOTICE OF SALE HEREUNDER BE MAILED TO TRUSTOR AT TRUSTOR'S ADDRESS SET FORTH
ABOVE.
("Trustor")
445 BEDFORD, a California Limited G&L REALTY PARTNERSHIP, L.P., a Delaware
Liability Company Limited Partnership
G&L REALTY PARTNERSHIP, L.P., By: G&L REALTY CORP., a Maryland
A Delaware limited partnership, corporation
as Manager
By: G&L REALTY CORP., By: /s/ Steven D. Lebowitz
a Maryland corporation ----------------------------------
Its general partner
Print Name & Title: STEVEN D. LEBOWITZ
------------------
By /s/ Steven D. Lebowitz PRESIDENT
--------------------------------
Steven D. Lebowitz
President
[ALL SIGNATURES MUST BE ACKNOWLEDGED]
17
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF CALIFORNIA )
COUNTY OF Los Angeles)
On June 13, 1996 before me, Helen Nelson, a Notary Public in and for the
------------- ------------
State of California, personally appeared Steven D. Lebowitz, personally known to
------------------
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument(s) the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL APPEARS HERE]
/s/ Helen Nelson
- ---------------------------------
(Signature)
(Space above for official notarial seal)
ACKNOWLEDGMENT
--------------
STATE OF CALIFORNIA )
COUNTY OF Los Angeles)
On June 13, 1996 before me, Helen Nelson, a Notary Public in and for the
------------- ------------
State of Ca1ifornia, personally appeared Steven D. Lebowitz, personally known to
------------------
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument(s) the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL APPEARS HERE]
/s/ Helen Nelson
- -----------------------------------
(Signature)
(Space above for official notarial seal)
18
<PAGE>
EXHIBIT "A"
(Legal Description)
THE PROPERTY REFERRED TO HEREIN IS LOCATED IN THE CITY OF TUSTIN, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
PARCEL 2, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 193, PAGES 25 AND 26 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
PARCEL B:
THE SOUTHEASTERLY 264.00 FEET OF THE SOUTHWESTERLY ONE-HALF OF THE NORTHWESTERLY
ONE-HALF OF THE SOUTHWESTERLY ONE-HALF OF LOT 49, AS SHOWN ON PLAT NO. 1 OF THE
RANCHOS SANTIAGO DE SANTA ANA AND SAN JOAQUIN, CITY OF TUSTIN, COUNTY OF ORANGE,
STATE OF CALIFORNIA, RECORDED IN BOOK 5, PAGE 7, MISCELLANEOUS RECORDS OF LOS
ANGELES COUNTY, CALIFORNIA.
SAID LAND IS INCLUDED WITHIN THE MAPS FILED IN BOOK 69, PAGE 1 AND BOOK 71, PAGE
24, BOTH OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
PARCEL C:
ALL THAT CERTAIN LAND IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF
CALIFORNIA, DESCRIBED AS THAT PORTION OF THE F. W. KOLL ALLOTMENT IN SECTION 16,
TOWNSHIP 5 SOUTH, RANGE 9 WEST, AS PER MAP OF PARTITION OF THE RANCHO SANTIAGO
DE SANTA ANA, RECORDED IN BOOK "B" OF JUDGMENTS OF THE 17TH JUDICIAL DISTRICT
COURT, LOS ANGELES COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE NORTHERLY LINE OF SAID KOLL ALLOTMENT DISTANT
EASTERLY THEREON 20.40 CHAINS FROM THE NORTHWEST CORNER OF THE LAND DESCRIBED IN
DEED TO G. G. GODFREY ON OCTOBER 20, 1881 IN BOOK 83, PAGE 64 OF DEEDS, RECORDS
OF LOS ANGELES COUNTY, CALIFORNIA; THENCE ALONG THE WESTERLY LINE OF THE LAND
DESCRIBED IN DEED TO EDNA G. SCOTT, RECORDED APRIL 26, 1963 IN BOOK 6524, PAGE
476, OFFICIAL RECORDS OF SAID COUNTY; SOUTH 0 24 (MINUTES) 12 (SECONDS) WEST
484.96 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 50 04 (MINUTES) 16
(SECONDS) EAST 157.32 FEET; THENCE NORTH 39 55 (MINUTES) 44 (SECONDS) EAST 15.00
FEET; THENCE SOUTH 50 04 (MINUTES) 16 (SECONDS) EAST 200.00 FEET TO THE
CENTERLINE OF NEWPORT AVENUE; THENCE ALONG SAID CENTERLINE, SOUTH 39 55
(MINUTES) 44 (SECONDS) WEST 157.49 FEET TO THE EASTERLY PROLONGATION OF THE
SOUTHERLY LINE OF THE LAND DESCRIBED IN SAID DEED TO EDNA G. SCOTT; THENCE ALONG
SAID PROLONGATION AND SAID SOUTHERLY LINE SOUTH 89 33 (MINUTES) 36 (SECONDS)
WEST 184.95 FEET TO THE SOUTHWEST CORNER OF THE LAND DESCRIBED IN SAID DEED;
THENCE ALONG THE WESTERLY LINE THEREOF, NORTH 0 24 (MINUTES) 12 (SECONDS) EAST
340.04 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPT THEREFROM THAT PORTION OF SAID LAND LYING WITHIN NEWPORT AVENUE, BEING
MEASURED 50 FEET WIDE FROM THE CENTERLINE OF SAID NEWPORT AVENUE.
19
<PAGE>
PARCEL D:
LOT 1 OF TRACT 12372, CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN BOOK 586, PAGES 24, 25 AND 26, OF MISCELLANEOUS MAPS,
RECORDS OF SAID COUNTY.
20
<PAGE>
EXHIBIT "B"
(Permitted Toxic Materials)
There shall not be any hazardous and/or toxic materials at, on, in, around
and/or under the Property and improvements, other than those as used in the
regular course of business and for which Trustor has licenses from the proper
authority, such as a government agency or regulatory body, and further,
notwithstanding the foregoing, Trustor hereby expressly covenants, represents
and warrants to Lender that all such materials shall be used or stored in strict
compliance with the provisions as set forth in Section 6 (c) of said Deed of
Trust for compliance with all state and federal laws, rules, regulations,
relating to or governing the use, storage and/or presence of toxic and/or
hazardous substances.
Notwithstanding any provisions to the contrary contained in this Exhibit "B" and
Section 6(c) of the Deed of Trust, in the event Trustor has executed any
unsecured Environmental Indemnity in favor of Beneficiary pertaining to the
presence or release of hazardous and/or toxic materials or other similar
substances upon, within or from the Property, then the covenants, duties and
liabilities of Trustor, and the rights and remedies of Beneficiary with respect
to the subject of hazardous and/or toxic materials, shall be governed by the
provisions of the Environmental Indemnity in addition to the provisions of the
Deed of Trust; provided, however, that the provisions of said Environment
Indemnity shall prevail and exclusively govern the subject matter to the extent
of any duplication, conflict or inconsistency between such provisions and the
provisions of this Deed of Trust, and payment or performance of Trustor's
obligations under said Environmental Indemnity shall not be secured by this Deed
of Trust, but shall be and remain unsecured obligations of the Trustor.
21
