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Sample Business ContractsHome: Sample Business Contracts:
Loan No. 950114178
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of
September 28, 2001, by and between FREMONT INVESTMENT & LOAN, a California
industrial loan association ("Lender"), and ASPECT COMMUNICATIONS REAL ESTATE
HOLDINGS LLC, a Delaware limited liability company ("Borrower"), with respect to
the following Recitals:
RECITALS
A. Borrower is the owner of that certain real property described on Exhibit
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A attached hereto (the "Property"), together with the improvements now or
-
hereafter located thereon (the "Improvements"). The Property and the
Improvements are collectively referred to herein as the "Project".
B. Borrower desires to borrow from Lender, and Lender is willing to loan to
Borrower, a loan in the maximum principal amount of Twenty-Five Million Dollars
($25,000,000) (the "Loan") for the purposes and upon the terms set forth herein.
NOW THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
GENERAL DEFINITIONS
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When used herein, the following initially-capitalized terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person which
controls, is controlled by, or is under common control with the Person in
question. For the purposes of the foregoing definition, "controls" (and its
correlative terms "controlled by" and "under common control with") means
possession by the applicable Person of the power to direct or cause the
direction of the management and policies thereof, whether through the ownership
of voting securities, by contract, or otherwise.
"Agreement" means this Loan and Security Agreement, together with all
supplements, amendments and modifications hereto and a11 extensions and renewals
hereof.
"Application Information" means all financial Information and statements
and other information submitted to Lender in connection with the application for
the Loan, including, without limitation, information relating to the tenants.
Leases and rent payment history and the information set forth on the Borrower
Questionnaire delivered to Lender.
"Architect" is defined in the Note.
"Aspect Communications" means Aspect Communications Corporation, a
California Corporation.
"Assignment of Architect's Agreement" is defined in Section 3.1.
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"Assignment of Contractors Agreement" is defined in Section 3.1.
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"Assignment of Rents" means that certain Assignment of Rents and Leases of
even date herewith executed by Borrower, as assignor, in favor of Lender, as
assignee, to be recorded on the Closing Date in the Official Records of the
County in which the Project is situated.
"Attorneys' Fees," "Attorneys' fees and Costs," "'attorneys` fees" and
"attorneys' fees and costs" mean the fees and expenses of counsel to the
applicable parties to the Loan Documents, which may include printing,
photostating, duplicating, facsimilating, messengering, filing and other
expenses, air freight charges, and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing services under the
supervision of an attorney. The terms "attorneys' fees" or "attorneys' fees and
costs" shall also include, without limitation, all such fees and expenses
incurred with respect to appeals, arbitrations, bankruptcy proceedings and any
post-judgment proceedings to collect any judgment, and whether or not any
action or proceeding is brought with respect to the matter for which such fees
and expenses were incurred. The recovery of post-judgment fees, costs and
expenses is separate and several and shall survive the merger of the applicable
Loan Documents into any judgment.
"Average Loss" is defined in Section 7.6(F).
--------------
"Bankruptcy Code" means Title 11 of the U.S. Code, as applicable, or any
similar federal or state laws for the relief of debtors, each as hereafter
amended.
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday under the laws of the State of California or a day on which commercial
banks in such state are authorized or required by law or other governmental
action to be closed.
"Cash Collateral Account" is defined in Section 7.13.
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"Cash Collateral Pledge Agreement" means that certain Pledge and Assignment
of Cash Collateral Account of even date herewith executed by Borrower in favor
of Lender and pursuant to which Borrower grants Lender a security interest in
the Cash Collateral Account.
"Closing Date" means the date of the recordation of the Deed of Trust in
the Official Records of the County in which the Project is situated, but in no
event later than the Termination Date.
"Commitment Letter" means the Commitment Letter dated August 30, 2001 as
amended on September 27, 2001, each issued by Lender in connection with the
Loan.
"Completion Date" is defined in Section 7.12.
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"Completion Guarantor" means Aspect Communications.
"Completion Guaranty" is defined in Section 3.1.
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"Contractor" is defined in the Note.
"Contractual Obligation" as applied to any Person means any provision of
any instrument, document or security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which any of its properties is bound or to
which it or any of its properties is subject.
"Deed of Trust" means that certain Deed of Trust and Fixture Filing of even
data herewith executed by Borrower, as trustor, to Fremont General Credit
Corporation, as trustee, and naming Lender, as beneficiary, to be recorded on
the Closing Date in the Official Records of the County, in which the Project is
situated.
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"Default Interest Rate" is defined in the Note.
"Deposit" is defined in Section 7.13.
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"Entitlements" means all final use, zoning, platting, site plan and other
applicable development approvals and permits (including, without limitation,
building permits and certificates of occupancy) from all applicable Governmental
Agencies for the; development and occupancy of the Improvements (as defined in
the Note) in a manner consistent with the terms of the Master Lease.
"Environmental Indemnity" means that certain Environmental Indemnity of
even date herewith executed by Borrower and the other parties named therein, if
any.
"Environmental laws" means any and all present and future federal, state
and local laws, ordinances, regulations, policies and any other requirements of
any Governmental Agency relating to health, safety, the environment or to any
Hazardous Substances, including without limitation, the Comprehensive
Environmental Response; Compensation, and Liability Act of 1980 (CERCLA), the
Resource Conservation Recovery Act (RCRA), the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Endangered Species
Act, the Clean Water Act, the Occupational Safety and Health Act, the California
Environmental Quality Act and the applicable provisions of the California Health
anti Safety Code, California Labor Code and the California Water Code, each as
hereafter amended from time to time, and the present and future rules,
regulations and guidance documents promulgated under any of the foregoing.
"Environmental Report" means: that certain Phase I Environmental Site
Assessment dated August 17, 2001 performed by ADR Environmental Group.
"Event of Default" means any other events specified in Section 8.1.
-----------
"First Reduction Date" means the date upon which Lender shall have received
evidence satisfactory to Lender in its sole and absolute discretion, but acting
in good faith, that at all times during the immediately prior eight consecutive
fiscal quarters (i) the Net Worth of the Guarantor was not less than Two
Hundred Million Dollars ($200,000,040), (ii) Guarantor's EBITDA was greater than
zero (0), and (iii) there has been no material adverse change in the financial
condition of Guarantor.
"Formation Documents" means: (a) as to any corporation. its articles of
incorporation and bylaws, (b) as to any limited partnership, its Certificate of
Limited Partnership and partnership agreement, (c) as to any general partnership
or joint venture, its statement of Partnership and partnership agreement, (d) as
to any limited liability company, its articles or certificate of organization
and operating agreement, and (e) as to any trust, its trust agreement and a
certification of the current trustees thereof, each of the foregoing together
with all supplements, amendments and modifications,
"General Partner" or "general partner" means the general partners of the
partnership in question or the managers, members or managing member of the
limited liability company in question, together with any constituent general
partners, managers, members or managing members of such general partners,
managers, members or managing members.
"Governmental Agency" means any federal, state, municipal or other
governmental or quasi-governmental court, agency, authority or district.
"Guarantor's EBITDA" means far any period, the sum, as reflected in
consolidated financial statements, of the following, each of which shall be
calculated in accordance with generally accepted accounting principles: (a) the
net income (or net loss) for such period, plus (b) all amounts treated as
expenses for depreciation and interest and the amortization of intangibles
(including purchased in-process
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<PAGE>
Research and Development) of any kind to the extent deducted in the
determination of such net income (or net loss), plus (c) all accrued taxes on
or measured by income to the extent included in the determination of such net
income (or net loss), plus (d) amortization of stock-based compensation, less
(e) any non-recurring gains (or plus any nonrecurring losses), all determined by
Lender in its sole and absolute discretion; provided, however, that net income
(or loss) shall be computed for these purposes without giving effect to
extraordinary losses or extraordinary gains, and provided, further, that each of
the above shall be to the extent reported on the financial statements of
Guarantor submitted to Lender in accordance with the Loan Documents.
"Hazardous Substances" means (a) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, or otherwise
classified pursuant to, any Environmental Laws as a "hazardous substance",
"hazardous material", "hazardous waste", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "infectious waste", "biohazardous waste",
"toxic substance". "pollutant", "toxic pollutant", "contaminant" as well as
any formulation not mentioned herein intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "E:P
toxicity", or "TCLP toxicity"; (b) Petroleum natural gas, natural gas liquids,
liquefied natural gas, synthetic gas usable for fuel (or mixtures of natural gas
and such synthetic gas) and ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas, or geothermal resources; (c) "hazardous substance" as
defined In Section 252B1(f) of the California Health and Safety Code; (d)"waste"
as defined In Section 13050(d) of the California Water Code; (e) asbestos in any
form; (f) ureas formaldehyde foam insulation; (g) polychlorinated biphenyls
(PCBs); (h) radon; and (i) any other chemical material, or substance exposure
to which is limited or regulated by any Governmental Agency because of its
quantity, concentration, or physical or chemical characteristics, or which poses
a significant present or potential hazard to human health or safety or to the
environment if released into the workplace or the environment. "Hazardous
Substances" shall not include ordinary office supplies and repair, maintenance
and cleaning supplies maintained in reasonable and necessary quantities and used
in accordance with all Environmental Laws.
"Indemnitees" means, collectively and individually, Lender, its, Affiliates
and its and their directors, officers, agents, employees, successors and
assigns.
"Issuer" means the ABN AMRO (provided that it issues a letter of credit
that can be drawn in California or Chicago, Illinois) or other issuer or
confirming bank of a letter of credit which is a bank (other than an affiliate
of Borrower or Guarantor) organized under the laws of the United States, any
state of the United States, or of the District of Columbia end with both: (a) a
Long-Term Bank deposit Rating of A2 or better from Moody's Investors Service,
and (b) a Long Term Counterparty Credit Rating of A or better from Standard &
Poor's, and otherwise, approved by Lender in its sole discretion.
"Junior Lender" is defined in Section 7.14.
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"Junior Loan" is defined in Section 7.14.
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"Laws" means all federal, state, county, municipal and other governmental
and quasi-governmental statutes, laws, rules, orders; regulations, ordinances,
judgments, decrees and injunctions affecting either the Project or the
occupanty, operation, ownership or use thereof, whether now or hereafter enacted
and in force including, without limitation, the American With Disabilities
Act, 42 U.S.C. Sections 12101-12213 (1991) and all Environmental Laws, any
zoning or other land use entitlements and any requirements which may require
repairs, modifications or alterations in or to the Project, all Permits and
all covenants, agreements, restrictions and encumbrances running in favor of any
Person, contained in any instruments, either of record or known to Borrower, at
any time in force affecting the Project or the occupancy, operation, ownership
or use thereof.
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<PAGE>
"Lease Subordination Agreement" means that certain Lease Subordination
Agreement of even date herewith, executed by Borrower, Guarantor and Lender with
respect to the Master Lease and recorded on the Closing Date in the Official
Records in which the Project is located.
"Leases" is defined in the Assignment of Rents.
"Letter of Credit" means an irrevocable, unconditional, direct draw letter
of credit issued by an Issuer, payable at site in the State of California, in
the face amount of Three Million Dollars ($3,000,000), having an initial term of
not less than twelve (12) months, automatically renewable through a date no
earlier than sixty-five (65) months after the Closing Date, and otherwise in
form and substance acceptable to Lender in its sole discretion, and any and all
modifications, extensions, renewals and replacements thereof and substitutions
therefor.
"Letter of Credit Amount" means the maximum amount available under the
Letter of Credit.
"Lien" Means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, charge or claim of any kind (including any agreement to give
any of the foregoing, any Conditional sale or other title retention agreement,
any lease in the nature thereof, and/or the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction)
with respect to the Project or the Personal Property or any portion thereof or
interest therein.
"Limited Recourse Obligations Guarantor" means Aspect Communications.
"Limited Recourse Obligations Guaranty" is defined in Section 3.1(A).
--------------
"Loan" means the Loan to Borrower as more particularly described in Section
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2.1.
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"Loan Amount" means Twenty-Five Million Dollars ($25,000,000).
"Loan Documents" means the documents described in Section 3.1 and all other
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documents securing, or executed in connection with, the Loan, together with all
renewals, substitutions, extensions, modifications or replacements thereof,
but excluding the Environmental Indemnity.
"Loan Fee" means a fee in the amount of one percent (1.0%) of the Loan
Amount.
"Loan Year" shall mean the twelve (12) month period commencing on the
first day of the month following the Closing Date and each twelve (12) months
thereafter.
"Major Lease" means a Lease of ten percent (10%) or more of the net
rentable square feet of space in the Project and includes, without limitation
the Master Lease.
"Master Lease" means that certain Lease dated October 1, 2001, by and
between Borrower, as landlord, and Aspect Communications, as tenant.
"Material Lease Provisions" is defined in Section 7.4(E).
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"Maturity Date" means the date set forth in the Note upon which the entire
principal amount of the Loan, together with all other amounts owing to Lender
under the Loan Documents, shall be due and payable.
"Minimum Balance" means Three Million Dollars ($3,000,000), provided,
however, that as long as Lender shall have received evidence satisfactory to
Lender in its sole discretion, but acting in good faith, that with respect to
any period of time after the First Reduction Date, during the immediately prior
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eight consecutive fisca1 quarters, (a) the Net Worth of Guarantor was not less
than Two Hundred Million Dollars ($200,000,000), (b) the Guarantor's EBITDA was
greater than zero (0), and (3) there has been no material adverse change in the
financial condition of Guarantor, then (i) from the first Reduction Date through
and including the first anniversary of the First Reduction Date, Two Million
Seven Hundred Thousand Dollars ($2,700,000), (ii) from the first anniversary of
the First Reduction Date through and including the second anniversary of the
first Reduction Date, Two Million Four Hundred Thirty Thousand Dollars
($2,430,000), (iii) from the second anniversary of the First Reduction Date
through and including the third anniversary of the First Reduction Date, Two
Million One Hundred Eighty-Seven Thousand Dollars ($2,867,000). (iv) from the
third anniversary of the First Reduction Date through and including the fourth
anniversary of the First Reduction Date, One Million Nine Hundred
Sixty-Eight Thousand Three Hundred Dollars ($1,968,300), and (v) from the fourth
anniversary of the First Reduction Date through and including the fifth
anniversary of the First Reduction Date, One Million Seven Hundred Seventy-One
Thousand Four Hundred Seventy Dollars ($1,771,470).
"Minimum Rent Loss Coverage" means Five Million Dollars ($5,000,000).
"Net Rentable Square Feet" and "net rentable square feet" shall be
calculated in accordance with the method of measuring net rentable area as
described in the Standard Method for Measuring Floor Area in Office Buildings,
ANSI Z65.1-1996, as promulgated by the Building Owners and Managers Association
(BOMA) International.
"Net Worth" means, with respect to Aspect Communications, the stockholders
equity of Aspect Communications, as determined in accordance with generally
accepted accounting principles.
"Note" means that certain Secured Promissory Note of even date herewith in
the principal amount of Twenty-Five Million Dollars ($25,000,000), executed by
Borrower, as maker, in favor of Lender, as holder, and any and all
modifications, extensions, renewals and replacements thereof.
"Permits" means all permits, licenses, franchises, approvals, variances and
land use entitlements necessary for the occupancy, operation, ownership and use
of the project.
"Person" means and includes natural persons, corporations, limited
liability companies, limited liability partnerships, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, real
estate investment trusts or other organizations, whether or not legal entities,
and governments and agencies and political subdivisions thereof.
"Personal Property" means all personal property now or hereafter located on
or used or useful in the development, operation, ownership, occupancy, use,
maintenance, repair or restoration of the Project or any portion thereof,
together with all present and future attachments, accessions, replacements,
substitutions and additions thereto or therefor, and together with all insurance
proceeds from any policy of insurance covering any of the foregoing property
provided that the Borrower now or hereafter owns or acquires any interest or
right in the foregoing property. "Personal Property" shall include, without
limitation, the personal property described in Exhibit B attached hereto and any
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leased personal property.
"Potential Default" means a condition or event which, with the giving of
notice or passage of time, or both, would constitute an Event of Default under
any of the Loan Documents.
"Principals" means individually end collectively Borrower, its general
partners, managing members and major shareholders, as applicable, and each of
such parties' constituent general partners, managing members and major
shareholders, as applicable, the Limited Recourse Obligations Guarantor and the
Completion Guarantor.
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"Probable Maximum Loss" is defined in Section 7.6(F).
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"Project Documents" means (a) a11 agreements now or hereafter in effect
with any contractor, architect or engineer, including, without limitation, any
design architect, landscape architect, civil engineer, electrical engineer,
environmental engineer, soils engineer or mechanical engineer, in connection
with the Project; (b) all other agreements now or hereafter in effect with any
property manager or broker with respect to the management, leasing, or operation
of the Project; (c) all as-built plans and specifications and surveys for the
Project; (d) all Permits; and (e) all renewals, substitutions, extensions,
modifications or replacements of any of the foregoing.
"Related Parties" means Borrower, Principals, any Affiliate of Borrower or
Principals, any partnership of which Borrower or any Principal is a general
partner, and any limited liability company of which Borrower or any Principal is
a manager or managing member.
"Replacement Cost" is defined in Section 7.6(F).
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"Secured Obligations" is defined in the Deed of Trust.
"Seismic Principal Payment" is defined in Section 7.6(F).
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"Seismic Review" is defined in Section 7.6(F).
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"Subordination Agreement" is defined in Section 7.15.
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"Tax Identification Number" means Borrower's employer identification number
or social security number, which is 77-0582967.
"Termination Date" means October 5, 2001.
"Title Company" means the title insurance company selected by Borrower and
approved by Lender in Lender's sole discretion to provide the Title Policy.
"Title Policy" means an American Land Title Association Extended Coverage
Policy of Title Insurance (1970 version, amended 10/17/70 only), insuring Lender
that on the Closing Date Borrower owns fee simple title to the Project and that
the Deed of Trust is a valid first lien on the Project. The Title Policy shall
have a liability limit equal to the Loan Amount. The Title Policy shall contain
such endorsements as Lender reasonably requires and shall be subject only to
such exceptions to coverage as approved by Lender in writing prior to the
Closing Date.
ARTICLE 2
LOAN TERMS
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2.1 Loan and Disbursement of Loan Proceeds.
--------------------------------------
Subject to the terms and conditions of this Agreement, and in reliance
upon the representations and warranties of Borrower set forth in the Loan
Documents, Lender agrees to make to Borrower, and Borrower agrees to accept
from Lender, loan (the "Loan") in the maximum principal amount of Twenty-Five
Million Dollars ($25,000,000). The Loan proceeds shall be disbursed by Lender as
provided in Section 2.6 of the Note.
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2.2 Evidence of Indebtedness and Maturity.
------------------------------------
Borrower shall execute and deliver to Lender, on or before the Closing
Date, the Note evidencing the Loan. Borrower agrees to repay the indebtedness
evidenced by the Note in accordance with the terms thereof and the terms hereof.
The outstanding principal balance of the Loan, together with accrued and unpaid
interest thereon and all other amounts payable by Borrower with respect to the
Loan under the Loan Documents shall be due and payable on the Maturity Date. The
outstanding principal balance of the Loan, together with all accrued and unpaid
interest thereon and all other amounts payable by Borrower under the Loan
Documents shall be due and payable on the Maturity Date provided in the Note.
2.3 Interest Rate.
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The Loan shall bear interest at the rate per annum specified in the
Note.
2.4 Loan Fee and Payment of Expenses.
--------------------------------
Subject to the terms of Section 10 of the Commitment, Borrower
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acknowledges and agrees that any unpaid portion of the Loan Fee has been fully
earned by Lender. Borrower further acknowledges and agrees that any unpaid
portion of the Loan Fee has been fully earned by Lender and is due and payable
upon the Closing of the Loan. The Loan Fee shall be nonrefundable except as set
forth in the Commitment Letter. Borrower hereby authorizes Lender to disburse
proceeds of the Loan to Lender or to any other party to pay the Loan Fee,
interest for any partial calendar month in which the Closing Date occurs, and
the fees and expenses of Lender's appraisers, engineers, consultants, legal
counsel and other third parties retained by Lender in connection with the Loan,
notwithstanding that Borrower may not have requested a disbursement of such
amounts. Borrower covenants to pay all such amounts within ten (10) days after
demand by Lender, if and to the extent not disbursed by Lender from proceeds of
the Loan. Borrower's payment of the Loan Fee is in addition to Borrower's
obligation to pay closing costs, brokers' commissions and any and all other sums
due hereunder, under the Commitment Letter or under any of the Loan Documents.
2.5 Recourse.
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The Loan and the amounts payable to Lender under the Loan Documents
with respect to Borrower's obligations under the Loan shall be fully recourse to
Borrower.
2.6 Prepayment.
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Borrower may prepay the outstanding principal balance of each Loan in
whole or in part at any time in accordance with the provisions of the Note.
ARTICLE 3
CONDITIONS TO LOAN
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3.1 Condition Precedent to Closing of Loan.
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As a condition precedent to Lender's obligation to close the Loan and
disburse any Loan proceeds, on or before the Closing Date Borrower must satisfy
and fulfill each of the following conditions precedent to closing, to the
satisfaction of Lender:
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A. Loan Documents and Environmental Indemnity. Borrower shall deliver
to Lender the following documents, each duly executed and acknowledged by a
notary public where necessary, and in form and substance satisfactory to Lender:
(i) This Agreement;
(ii) The Note;
(iii) The Deed of Trust;
(iv) The Assignment of Rents;
(v) A Delaware UCC-1 Financing Statement relating to the Personal
Property, to be filed with the Delaware Secretary of State, together with UCC-1
Financing Statements for such other States as are required by Lender;
(vi) The Environmental Indemnity;
(vii) A guaranty, on Lender's form, executed by the Completion
Guarantor, of the completion of certain improvements to the extent provided
therein (the "Completion Guaranty");
(viii) A guaranty, on Lender's form, executed by the Limited
Recourse Obligations Guarantor, of the payment and performance of certain of the
obligations for which Borrower is personally liable pursuant to the terms
thereof (the "Limited Recourse Obligations Guaranty");
(ix) The Lease Subordination Agreement;
(x) Cash Collateral Pledge Agreement;
(xi) An assignment of all agreements between Borrower, any
Principal or any agent or nominee thereof, and each Architect, executed by
Borrower and each Architect (the "Assignment of Architect's Agreement"); and
(xii) An assignment of all agreements between Borrower, any
Principal or any agent or nominee thereof, and each Contractor, executed by
Borrower and each Contractor (the "Assignment of Contractor's Agreement").
B. Commitment Letter Conditions. Borrower shall have satisfied all of
the conditions set forth in the Commitment Letter, together with any additional
conditions imposed by Lender in connection with its final approval of the Loan.
C. Truth of Representations and Warranties. The representations and
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on the Closing Date.
D. No Default. As of the Closing Date, no event shall have occurred or
would result from the funding of the Loan that would constitute an Event of
Default or a Potential Default.
3.2 Termination of Agreement.
------------------------
Lender's obligation to make the Loan and perform any of its other
obligations under the Loan Documents shall terminate unless all of the
conditions precedent set forth in Section 3.1 have been satisfied, and the
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Closing Date for the Loan has occurred, on or before the Termination Date.
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ARTICLE 4
ASSIGNMENT OF PROJECT DOCUMENTS
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4.1 Assignment of Documents.
-----------------------
A. As security for the payment and performance of the Secured
Obligations, Borrower hereby grants, conveys, assigns and transfers to Lender
the Project Documents, and all rights of Borrower thereunder, together with the
immediate and continuing right to collect and receive all sums which are now or
hereafter due to Borrower thereunder or in connection therewith, and all of
Borrower's rights to receive the proceeds of any insurance, indemnity, warranty
or guaranty with respect to any of the Project Documents. The parties expressly
acknowledge and agree that Lender does not hereby assume any of Borrower's
obligations with respect to any of the Project Documents, including, without
limitation, any obligation to pay for any work done pursuant thereto, unless
Lender expressly assumes such obligations in accordance with Section 4.1(B). At
--------------
Lender's request from time to time, Borrower shall deliver copies of the Project
Documents to Lender.
B. Lender shall not exercise its rights under this Section 4.1 until
-----------
the occurrence of an Event of Default. Upon the occurrence of an Event of
Default under any of the Loan Documents, Lender may, at its option in its sole
discretion and without any obligation, exercise any or all of its rights and
remedies under Section 8.4 and/or upon written notice to Borrower and the other
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parties to any or all of the Project Documents, exercise or enforce any or all
of the rights and remedies granted to Borrower under such Project Documents as
if Lender had been a party to or recipient of such Project Documents (and
Borrower hereby irrevocably constitutes and appoints Lender as its
attorney-in-fact, which power is coupled with an interest, to do so). Upon
giving such notice Lender may elect to assume all of the obligations of Borrower
thereafter accruing under any or all of the Project Documents; provided that in
no event shall Lender be responsible for any default by Borrower or any other
party occurring prior to any election by Lender to assume such obligations.
C. The acceptance by Lender of the assignment contained in this
Section 4.1 and the rights granted to Lender hereunder and under Section 8.4
----------- -----------
shall not, prior to Lender's assumption of the obligations under the Project
Documents as provided in Section 4.1(B), obligate Lender to assume any
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obligations or liability under the Project Documents, to expend any money or
incur any expense in connection with the Project Documents or to perform any
obligation under any of the Project Documents.
4.2 Performance under Project Documents.
-----------------------------------
Borrower shall at all times perform and discharge each of its
obligations under the Project Documents, diligently enforce its rights under the
Project Documents unless otherwise agreed by Lender, and, at Borrower's sole
cost and expense, appear in and defend Lender in any action or proceeding in any
way related to any of the Project Documents. Borrower shall, within ten (10)
days after demand by Lender, pay all reasonable costs and expenses incurred by
Lender in connection with any such action or proceeding, including, without
limitation, reasonable attorneys' fees and costs.
4.3 Indemnification.
---------------
Borrower hereby indemnifies and agrees to defend and hold the
Indemnitees harmless from all expenses, loss, claims, damage or liability which
the Indemnitees may or might incur under any of the Project Documents or under
or by reason of the assignment set forth in Section 4.1 or by reason of any
-----------
alleged obligation or undertaking on Lender's part to perform or discharge any
covenants or agreements contained in any of the Project Documents; provided that
such indemnity shall not extend to expenses, loss, claims, damage or liability
arising from an Indemnitee's gross negligence or wilful misconduct or
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<PAGE>
arising after the date, if ever, that Lender assumes the obligations under the
Project Documents as provided in Section 4.1(B).
--------------
ARTICLE 5
SECURITY AGREEMENT
------------------
5.1 Grant of Security Interest.
--------------------------
As security for the payment and performance of the Secured
Obligations, Borrower hereby assigns, transfers and grants to Lender, and there
is hereby created in favor of Lender, a security interest under the California
Commercial Code in and to the Personal Property, whether now owned or hereafter
acquired, and in all proceeds thereof (and proceeds of proceeds) in whatever
form. This Agreement shall constitute a security agreement pursuant to the
California Commercial Code with respect to the Personal Property and proceeds
thereof, with Borrower the "Debtor" and Lender the "Secured Party" as such terms
are used therein.
5.2 Representations, Agreements and Covenants Regarding Personal Property.
---------------------------------------------------------------------
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents, warrants and covenants as follows:
A. Except for the security interest in favor of Lender, Borrower is,
and as to any of the Personal Property acquired after the date hereof will be,
the sole owner of the Personal Property, free from any adverse lien, security
interest, or adverse claim of any kind whatsoever. Borrower will notify Lender
of and will defend the Personal Property against all claims and demands of all
persons at any time claiming any interest therein.
B. Borrower will keep the Personal Property in good condition and
repair, and will not misuse, abuse, allow to deteriorate, waste or destroy the
Personal Property or any part thereof, except for ordinary wear and tear
resulting from normal and expected use in the ordinary course of Borrower's
business, which shall be promptly replaced by Borrower with property of similar
nature and of equal or greater value unless obsolete.
C. Borrower will not, without the prior written consent of Lender,
sell, offer to sell or otherwise transfer, exchange or dispose of the Personal
Property or any interest therein, unless in the normal course of business the
Personal Property is being replaced by collateral of similar nature and of equal
or greater value. If the Personal Property or any part thereof is sold,
transferred, exchanged, or otherwise disposed of (either with or without the
written consent of Lender), the security interest of Lender shall extend to the
proceeds of such sale, transfer, exchange or other disposition and Borrower will
hold such proceeds in a separate account for Lender's benefit and will, at
Lender's request, transfer such proceeds to Lender.
D. The tangible Personal Property will be kept on or at the Project
and Borrower will not, without the prior written consent of Lender, remove the
Personal Property therefrom except such portions or items of Personal Property
which are consumed or worn out in ordinary usage, all of which shall be promptly
replaced by Borrower as provided in Section 5.2(B).
--------------
E. Borrower will immediately notify Lender in writing of any change in
its place of business or the adoption or change of any trade name or fictitious
business name, and will, within ten (10) days after Lender's request, execute
any additional financing statements or other certificates reasonably requested
by Lender to reflect such change.
-11-
<PAGE>
F. The Personal Property is not and will not be used or bought for
personal, family or household purposes.
G. Borrower shall immediately notify Lender of any claim against the
Personal Property adverse to the interest of Borrower or Lender therein.
H. Lender may examine and inspect the Personal Property at any
reasonable time. wherever located upon reasonable prior notice to Borrower
(except in the event of an emergency, in which event prior notice shall not be
required).
5.3 Affixed Collateral.
------------------
The inclusion in Section 5.1 of any Personal Property which may now be
-----------
or hereafter become affixed or in any manner attached to the Project shall be
without prejudice to any claim at any time made by Lender that such Personal
Property is or has become a part of or an accession to the Project.
5.4 Further Security Agreements.
---------------------------
Borrower agrees to take such actions and, within ten (10) days after
Lender's request, to execute, deliver and file and/or record such documents,
agreements and financing statements as may be reasonably necessary to evidence
the security interest set forth in Section 5.1, to establish the priority
-----------
thereof and to carry out the intent and purpose of this Article 5. Borrower
---------
further agrees that Lender may, in such manner and upon such terms and at such
times as Lender deems best, and without demand or notice to or consent or
signature of Borrower, file such UCC financing statements (including fixture
filings), and/or amendments to or continuations of any previously filed
financing statements, to evidence and/or perfect and/or continue the perfection
of the security interest in the Collateral created or to be created pursuant to
the Loan Documents.
ARTICLE 6
BORROWER'S REPRESENTATIONS AND WARRANTIES
-----------------------------------------
As an inducement to Lender to execute this Agreement and make the Loan,
Borrower represents and warrants to Lender the truth and accuracy of the matters
set forth in this Article 6.
---------
6.1 Organization, Power, Good Standing, and Business.
------------------------------------------------
A. Borrower is a Delaware limited liability company duly formed,
validly existing and in good standing under the Laws of the State of Delaware
and, if formed under the Laws of a jurisdiction other than the State of
California, has registered to do business and is in good standing under the Laws
of the State of California. Borrower has the full power and authority to own and
operate its properties, to carry on its business as now conducted, to enter into
each Loan Document and the Environmental Indemnity, and to carry out the
transactions contemplated hereby and thereby. Borrower does not do business
under any trade name or fictitious business name. Borrower has delivered to
Lender true, correct and complete copies of its Formation Documents and such
Formation Documents have not been amended or modified except pursuant to
agreements delivered to Lender prior to the date hereof.
B. Aspect Communications is a California corporation duly formed,
validly existing and in good standing under the Laws of the State of California.
Aspect Communications has the full power and authority to own and operate its
properties, to carry on its business as now conducted, to act as the sole member
and manager of Borrower, to enter into each Loan Document and the Environmental
Indemnity as the manager of Borrower, to enter into the Lease Subordination
Agreement, Limited
-12-
<PAGE>
Recourse Obligations Guaranty, Completion Guaranty and the Environmental
Indemnity, on its own behalf, and to carry out the transactions contemplated in
the Loan Documents and the Environmental Indemnity. Borrower has delivered or
caused to be delivered to Lender true, correct and complete copies of the
Formation Documents for Aspect Communications and such Formation Documents have
not been amended or modified except pursuant to agreements delivered to Lender
prior to the date hereof.
6.2 Authorization of Borrowing, etc.
-------------------------------
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents and the Environmental Indemnity and the issuance, delivery
and payment of the Note have been duly authorized by all necessary action of
Borrower, its general partners, Aspect Communications, Limited Recourse
Obligations Guarantor and Completion Guarantor.
B. No Conflict. The execution, delivery and performance by Borrower,
its general partners, Limited Recourse Obligations Guarantor and Completion
Guarantor of each applicable Loan Document and the Environmental Indemnity do
not and will not (i) violate any Law applicable to any such Person, the
Formation Documents of any such Person, or any order, judgment or decree of any
court or other Governmental Agency binding on any such Person; (ii) conflict
with, result in a breach of or constitute (with the giving of notice or the
passage of time or both) a default under any Contractual Obligation of any such
Person; (iii) result in or require the creation or imposition of any Lien of any
nature on Borrower's properties or assets other than the Liens in favor of
Lender under the Loan Documents; or (iv) require any approval or consent of any.
Person under any Contractual Obligation of Borrower, its general partners or
Limited Recourse Obligations Guarantor or Completion Guarantor.
C. Governmental Consents. The execution, delivery and performance by
Borrower, its general partners, Limited Recourse Obligations Guarantor and
Completion Guarantor of each applicable Loan Document and the Environmental
Indemnity does not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Governmental
Agency or other Person.
D. Binding Obligation. The Note and the other Loan Documents are the
legally valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally. The Environmental Indemnity is the
legally valid and binding obligation of each of the parties thereto, enforceable
against such parties in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally. The Completion Obligations
Guaranty is the legally valid and binding obligation of the Completion
Guarantor, enforceable against the Completion Obligations Guarantor in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally. The Limited Recourse Obligations Guaranty is the
legally valid and binding obligation of the Limited Recourse Obligations
Guarantor, enforceable against the Limited Recourse Obligations Guarantor in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally.
6.3 Actions.
-------
There is no action, suit, proceeding or arbitration, before or by any
Governmental Agency or other Person, pending or, to Borrower's best knowledge,
threatened against or affecting Borrower, any of the Principals or any
properties or rights of Borrower or any of the Principals, which might adversely
affect Lender's rights or remedies under the Loan Documents or the Environmental
Indemnity, the business, assets, operations or financial condition of any such
party or its ability to perform its obligations under the Loan Documents or the
Environmental Indemnity. As of the date hereof, there are no
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<PAGE>
outstanding judgments against the Related Parties or their property in excess of
Twenty-Five Thousand Dollars ($25,000) as to any individual judgment or Fifty
Thousand Dollars ($50,000) in the aggregate.
6.4 Financial Position.
------------------
A. Financial Information. The Application Information and all
financial statements and financial data delivered to Lender in connection with
the Loan and/or relating to Borrower and the Principals are true, correct and
complete in all material respects and accurately present the financial position
of such parties as of the date thereof. No material adverse change has occurred
in the financial position disclosed by the Application Information or in any
other financial statements or financial data delivered to Lender.
B. Bankruptcy and Insolvency. Neither Borrower nor any of the Related
Parties has filed or been the subject of any bankruptcy, Insolvency,
reorganization, dissolution or similar proceeding or any proceeding for the
appointment of a receiver or trustee for all or any substantial part of their
respective property. Neither Borrower nor any of the Related Parties has
admitted in writing its inability to pay its debts when due, made an assignment
for the benefit of creditors or taken other similar action.
C. Other Borrowing. Except for the Loan, no borrowings have been made
by Borrower which are secured by the Project or any other assets of Borrower or
which might give rise to any Lien other than the Liens created by the Loan
Documents.
6.5 Liens.
-----
Borrower is the sole owner of the Project and the Personal Property
free from any adverse Liens, except for Liens in favor of Lender. Borrower has
paid or will pay in full all contractors, materialmen, laborers, architects or
other such Persons hired by Borrower to perform services or work with respect to
the Project and all statutory lien periods have expired with respect to any such
services or work. No previous assignment, sale, pledge, encumbrance or other
hypothecation of the Leases or the Project Documents has been made (except for
pledges and encumbrances which have been released in full prior to the date
hereof or will be released in full concurrently with the funding of the Loan).
6.6 Compliance with Laws.
--------------------
The Project and the use thereof are in material compliance with all
Laws. The Property consists of legal and separate lot(s) for tax assessment
purposes and under the California Subdivision Map Act (California Government
Code Sections 66410 et. seq., as amended from time to time). All Permits,
easements and rights of way necessary for the occupancy, operation, ownership
and use of the Project have been obtained by Borrower and are in full force and
effect.
6.7 Defects.
-------
There are no defects, facts or conditions affecting the Project or any
portion thereof which would make the Project unsuitable for the occupancy,
operation, use or sale thereof. There are no surface or subsurface soils
conditions adversely affecting the Property. Including, without limitation,
unstable soil or landfills.
6.8 Utilities.
---------
All utilities necessary for the full enjoyment of the Project,
including, without limitation, trash collection, police and fire protection,
sewer and storm drain, water, telephone, gas and electricity, are
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<PAGE>
available to the Project and are not subject to any conditions which would limit
the use of such utilities, other than the payment of normal charges to the
utility supplier.
6.9 No Condemnation.
---------------
No Condemnation Event (as defined in the Deed of Trust) is pending
against the Project or any portion thereof. To Borrower's best knowledge, no
Condemnation Event is threatened against the Project which would impair the full
utilization of the Project in any material manner.
6.10 Hazardous Substances.
--------------------
To the best of Borrower's knowledge, after due and diligent Inquiry,
except as set forth in the Environmental Report and in a writing delivered to
Lender prior to the Closing Date, there are no Hazardous Substances on, in,
under or at the Project. The Project and each portion thereof is in full
compliance with all Environmental Laws. There are no above or below ground
storage tanks located at the Project. Borrower has not received written notice
from any Governmental Agency or other third party alleging that the Project or
any portion thereof does not comply with any Environmental Laws.
6.11 No Defaults.
-----------
No Potential Default or Event of Default exists under this Agreement
or any of the other Loan Documents. No default by Borrower exists under any
Contractual Obligation which would have a material adverse effect on Borrower's
ability to repay the Loan or to perform its obligations under any of the Loan
Documents or under the Environmental Indemnity.
6.12 Disclosure.
----------
No representation or warranty of Borrower contained in this Agreement,
any Loan Document, or any Application Information contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
6.13 Single Purpose Entity.
---------------------
Borrower (a) has not engaged and does not engage in any business
unrelated to the Project, (b) has not had and does not have assets other than
those related to its interest in the Project, (c) has not had and does not have
any indebtedness other than as permitted by this Agreement, (d) has its own
books and records separate and apart from any other person, (e) holds itself
out as being and conducts all business as a legal entity, separate and apart
from any other person, partnership, corporation, limited liability company,
trust or other entity, with separate stationary, invoices and checks, (f) has
not guarantied the debts or obligations of any other person, partnership,
corporation, limited liability company, trust or other entity, and (g) has not
commingled its assets or funds with those of any other person, partnership,
corporation, limited liability company, trust or other legal entity. Borrower's
Formation Documents provide that any dissolution or winding up or insolvency
-------
filing for Borrower requires the unanimous consent of all members.
ARTICLE 7
BORROWER'S COVENANTS
--------------------
Borrower covenants and agrees that, until the Loan and all other
amounts owing to Lender under the Loan Documents have been paid in full and all
Secured Obligations have been satisfied. Borrower shall perform all of the
covenants in this Article 7.
---------
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<PAGE>
7.1 No Liens.
--------
Except as expressly provided in Section 1.12 of the Deed of Trust,
------------
Borrower shall not permit any Lien to be made or filed. Borrower shall be the
sole owner of the Project and Personal Property, free from any adverse Liens,
except for Liens in favor of Lender. Borrower shall not assign, sell, pledge,
encumber or otherwise hypothecate all or any portion of the Leases or the
Project Documents.
7.2 Compliance with Laws.
--------------------
Borrower will comply with all Laws applicable to Borrower, its
property, the Project, the Personal Property and/or the occupancy, operation,
ownership or use thereof.
7.3 Inspection.
----------
Subject to the rights of tenants at the Project. during normal
business hours and upon reasonable advance notice (except in the event of an
emergency, in which event entry shall not be limited to normal business hours
and no advance notice shall be necessary) Borrower shall permit Lender and any
Person designated by Lender to visit and inspect the Project.
7.4 Leasing of Space.
----------------
A. Unless otherwise approved by Lender in writing in advance, all
Leases shall be entered into with bona fide third party tenant financially
capable of performing their obligations thereunder and shall reflect arms-length
transactions at the then current market rate for comparable space. Borrower
shall perform all obligations required to be performed by it as landlord under
any Lease. Borrower shall not accept any rent (however denominated) or other
charges under any of the Leases more than one (1) month in advance.
B. Borrower shall not enter into, or modify, amend, terminate or
accept a surrender or cancellation of, any Lease, or consent to any assignment
or subletting under any Lease, without Lender's prior written consent except as
follows:
{i) Borrower may terminate Leases other than Major Leases without
Lender's prior written consent for the non-payment of rent if Borrower would in
good faith terminate such Lease in the ordinary course of its business.
(ii) Lender's prior written consent shall not be required for any
new Lease (a) which is not a Major Lease, (b) which does not include any
Material Lease Provisions, (c) where the term of the Lease (including any
options to extend the initial term of the Lease) does not exceed ten (10) years,
and (d) where the proposed use of the portion of the Project leased does not
involve the use, storage, processing, manufacture, transportation, disposal or
release of Hazardous Substances other than Hazardous Substances used by Aspect
communications in the ordinary course of its business as disclosed to Lender in
writing prior to the Closing Date.
(iii) Lender's prior written consent shall not be required for
any amendment or modification of a Lease if the amendment or modification
contains no provision which, had the provision been included in the original
Lease, would require Lender's prior written consent.
(iv) Lender's prior written consent shall not be required in
connection with any sublease or assignment of any Lease if either (a)(1) the
assignee or subtenant meets the requirements of Section 7.4(A), and (2) the
--------------
proposed use of the Project by such assignee or subtenant does not involve the
use, storage, processing, manufacture, transportation, disposal or release of
Hazardous Substances (other than Hazardous Substances used by Aspect
Communications in the ordinary course of its business
-16-
<PAGE>
as disclosed to Lender in writing prior to the Closing Date), or (b) such
sublease or assignment does not require Borrower's consent under the terms of
the Lease executed by Borrower in accordance with the terms of this Agreement.
C. Borrower shall promptly deliver to Lender such Leases, rent rolls,
leasing reports, operating statements or other leasing information as Lender
may from time to time request. Borrower shall promptly notify Lender of (i) any
material tenant dispute, (ii) any material default by Borrower or the tenants
under any of the Major Leases, (iii) any material adverse change in leasing
activity for the Project and (iv) any notice received by Borrower relating to
any material default by Borrower under any Lease.
D. With respect to any Major Lease, and if requested by Lender with
respect to any other Lease, Borrower shall, within twenty (20) days after
Lender's request, execute and deliver to Lender, and cause the tenants under the
Leases (and any other party to, or guarantor of, the Leases) to execute and
deliver to Lender, nondisturbance and attornment agreements and/or estoppel
certificates, in form and substance reasonably satisfactory to Lender.
E. As used herein, "Material Lease Provision" means a provision which
materially increases the landlord's obligations under a Lease, which provides
the tenant with material rights or recourse against the landlord or with the
right to terminate the Lease, or which adversely affects Lender's security in
the Lease. Without limiting the generality of the foregoing, each of the
following shall constitute a Material Lease Provision: (i) any provision which
affects Lender's rights with respect to the Lease, which affects the relative
priority of the Lease and the Deed of Trust without Lender's consent, or which
requires Lender to agree to or provide any nondisturbance agreement to the
tenant; (ii) the grant of an option, right of first offer or refusal or other
right to purchase all or any portion of the Project, (iii) the grant of an
option, right of first offer or refusal or other right to lease any additional
space in the Project at a rent less than market rent, (iv) the grant of any
early termination option, (v) any provision which provides for the application
of insurance or condemnation proceeds in a manner contrary to the Loan
Documents, (vi) the grant of any offsets, or the agreement for the payment of
any amounts by the landlord, if such offset or payment obligation would be
applicable to any subsequent owner of the Project, including, without limitation
any owner succeeding to the landlord's interest by foreclosure or a deed in lieu
or in aid thereof, (vii) a limit to the expense reimbursements due from the
tenant for increases in taxes or expenses, or (viii) an environmental, hazardous
substance or other indemnification binding on the landlord that would be
applicable to any subsequent owner of the Project, including, without
limitation, any owner succeeding to landlord's interest by foreclosure or a deed
in lieu or in aid thereof.
7.5 Environmental Matters.
---------------------
A. Borrower shall, at its own expense, comply and cause all persons
entering the Project to comply with all Environmental Laws applicable thereto
and Borrower shall not use, store, process, manufacture, transport, dispose or
release any Hazardous Substances on or adjacent to any part of the Project or
permit any of the foregoing to occur other than Hazardous Substances used by
Aspect Communications in the ordinary course of its business as disclosed to
Lender in writing prior to the Closing Date and in accordance with all
Environmental Laws. Borrower shall immediately advise Lender in writing of any
(i) discovery of Hazardous Substances on the Project or any portion thereof
other than Hazardous Substances used by Aspect Communications in the ordinary
course of its business as disclosed to Lender in writing prior to the Closing
Date; or (ii) any claim, action or order threatened or instituted by any third
party (including any Governmental Agency) against the Project or Borrower
relating to damages, cost recovery, loss or injury resulting from any Hazardous
Substances. Borrower shall provide Lender with copies of all communications with
any third party (including any Governmental Agency) relating to any
Environmental Law or any claim, action or order relating to Hazardous Substances
at, on, under or in the Project or any portion thereof. If any remedial action
is required to bring the Project into compliance with Environmental Laws,
Borrower shall immediately notify Lender of such situation and shall prepare a
written plan setting forth a description of such situation (and all
environmental reports
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<PAGE>
relating thereto) and the remedial action that Borrower proposes to implement to
bring the Project into compliance with all Environmental Laws, Borrower shall,
at its own expense, thereafter diligently and continuously pursue the
remediation of the condition necessary to bring the Project into compliance with
all Environmental Laws and cause all liens or encumbrances against the Project
in connection therewith to be removed and satisfied.
B. Lender shall have the right to retain a professional environmental
consultant to conduct tests and investigations of the Project (including,
without limitation, ground water and soils testing) with respect to Hazardous
Substances or the Project's compliance with Environmental Laws. Borrower hereby
grants to Lender, its agents, employees, consultants and contractors, an
irrevocable license and authorization to enter upon and inspect the Project and
to conduct such tests and investigations on the Project or any portion thereof
as Lender, in its sole discretion, determines necessary. Such tests and
investigations shall be at Lender's expense unless (i) Lender reasonably
believes that a breach of the provisions of Section 6.10 or this Section 7.5 has
------------ -----------
occurred, (ii) a breach of the provisions of Section 6.10 or this Section 7.5
------------ -----------
has in fact in occurred, or (iii) an Event of Default or Potential Default has
occurred. Borrower acknowledges and agrees that, as between it and Lender, only
Borrower owns and operates the Project and only Borrower has the responsibility
for compliance with this Section 7.5 and neither Lender's enforcement of, or
-----------
failure to enforce, Section 7.5 shall be deemed to affect the obligations or
-----------
provisions of this Section.7.5.
-----------
C. To the fullest extent permitted by law, Borrower hereby indemnifies
and agrees to defend, and hold harmless the indemnitees from and against any and
all loss, claim, damage or liability of any kind or nature and from any suits,
actions, claims or demands, including without limitation, all amounts described
in Section 7.5(D), arising directly or indirectly, in whole or in part, out of
--------------
(i) the existence or alleged existence of any Hazardous Substances at, on under
or in the Project or any portion thereof, (ii) the removal of or failure to
remove any Hazardous Substances from the Project or any portion thereof, (iii)
any activity involving Hazardous Substances with respect to the Project carried
on or undertaken on or off the Project, (iv) any residual contamination on or
under the Project, or (v) any contamination of any property or natural resources
arising in connection with any activity involving Hazardous Substances, in each
case whether prior to or during the term of the Loan, and whether by Borrower or
any predecessor-in-title or any employees, agents, contractors or subcontractors
of Borrower or any predecessor-in-title, or any third parties occupying or
present on the Project. Upon receiving knowledge of any suit, action, claim or
demand asserted by a third party that Lender believes is covered by this
indemnity, Lender shall give Borrower written notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel reasonably satisfactory to Lender. Lender may also require Borrower to
so defend the matter. The obligations of Borrower under this Section 7.5(C) are,
--------------
without limitation, intended to operate as a binding valid indemnity agreement
under 42 U.S.C. Section 9607(e)(1) and shall survive the closing of the Loan
and the repayment of the Loan and the satisfaction of all other Secured
Obligations.
D. The indemnity set forth in Section 7.5(C) shall include, without
--------------
limitation, (i) loss, claims, damage or liability for, or arising from,
personal injury and property damage, (ii) compensation for lost wages, business
income, profits or other economic loss, (iii) all consequential damages; (iv)
all damages to any natural resources and the environment, the costs of any
required or necessary repair, clean up, response cost, or remediation of the
Property and the Project, and the preparation and implementation of any closure,
remedial or other required plans; and (v) all costs and expenses incurred in
connection with any of the foregoing, including reasonable attorneys' fees and
costs.
7.6 Insurance Requirements
----------------------
A. Borrower shall procure and maintain, or cause to be procured and
maintained, at all times until the repayment of the Loan and the satisfaction of
the Secured Obligations, policies of insurance in form and amounts reasonably
satisfactory to Lender, and issued by companies having a Best's rating of at
least B+, Class VI and otherwise reasonably satisfactory to Lender, covering (i)
such
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<PAGE>
casualties, risks, perils, liabilities and other hazards as may be reasonably
required by Lender and (ii) such casualties, risks, perils, liabilities and
other hazards which are at the time commonly insured against or required by
institutional lenders to be insured against with respect to properties similar
to the Project. All policies shall expressly protect Lender's interest as
required by Lender. Without limiting the generality of the foregoing, Borrower
shall maintain or cause to be maintained the insurance coverage described in
Section 7.6(B). If Borrower fails to maintain the insurance coverage required
--------------
hereunder, Lender may, but shall have no obligation to, obtain such insurance,
and Borrower will pay all amounts expended by Lender, together with interest
thereon at the Default Interest Rate, within ten (10) days after demand by
Lender. In the event of any foreclosure of the Deed of Trust or a deed in lieu
or in aid thereof, all interest under the insurance policies required by this
Section 7.6 and then in force shall pass to the new owner of the Project.
-----------
B. Without limiting the generality of Section 7.6(A). Borrower shall
--------------
maintain or cause to be maintained the following insurance coverages:
(i) property insurance for the full replacement cost of the
Project (excluding the Property), on an "all risks" basis (including fire,
extended coverage, vandalism and malicious mischief);
(ii) commercial general liability insurance on an "occurrence"
basis, including contractual liability and automobile liability, in the minimum
amount of Two Million Dollars ($2,000,000) for personal injury to any one
person. Four Million Dollars ($4,000,000) for any one accident and Two Hundred
Fifty Thousand Dollars ($250,000) for property damage;
(iii) twelve (12) months of business interruption or loss of
rents coverage in an amount not less than the Minimum Rent Loss Coverage;
(iv) flood insurance in an amount equal to the greater of the
full replacement cost of the Project (excluding the Property), or the maximum
flood insurance available, if either (a) the Property is located in an area now
or hereafter designated as having special flood hazards under the Flood Disaster
Protection Act of 1973, as amended from time to time, or any other Law, or (b)
flood insurance is required by any Law applicable to Borrower, Lender or the
Project or by any federal or state regulatory agency having jurisdiction over
Lander ; and
(v) earthquake insurance if required by any Law applicable to
Borrower, Lender or the Project or by any federal or state regulatory agency
having jurisdiction over Lender or if otherwise required by this Section 7.6.
-----------
C. All original policies, or certificates thereof, and endorsements
and renewals thereof, shall be delivered to and retained by Lender unless Lender
agrees otherwise. In case of insurance about to expire, Borrower shall deliver
renewal policies to Lender not less than thirty (30) days prior to the
expiration thereof. All policies of insurance to be furnished hereunder (i)
shall be in form reasonably satisfactory to Lender, (ii) shall have a deductible
of not more then Fifty Thousand Dollars ($50,000) with respect to any insurance
other than earthquake insurance and, with respect to earthquake insurance shall
have a deductible acceptable to Lender, (iii) shall include a Standard Mortgage
Clause/ Lender's Loss Payable Endorsement and Chattel Mortgage Clause in favor
of, and in form reasonably satisfactory to, Lender, including a provision
requiring that the coverage evidenced thereby shall not be terminated or
materially modified without thirty (30) days' prior written notice to Lender,
and (iv) may be in the form of blanket policies in amount, form and substance
satisfactory to Lender. Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained hereunder.
D. Notwithstanding anything to the contrary contained in the Loan
Documents, Borrower waives any and all right to claim or recover against
Lender, or its directors, officers, employees, agents and representatives, for
loss of or damage or injury to the Project, Borrower, Borrower's property,
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<PAGE>
or the property of others under Borrower's control, from any cause insured
against or required to be insured against under this Section 7.6 or coverable by
-----------
insurance.
E. Borrower shall, at its expense, provide from time to time at the
written request of Lender, not more frequently than once per year, satisfactory
evidence of the insurable value of the Project. Such evidence may be in the form
of an insurance appraisal or valuation report prepared by an insurance company,
appraiser or other consultant approved by Lender.
F. Without limiting Borrower's obligations under this Section 7.6 and
-----------
without limiting Lender's rights and remedies if Borrower fails to comply with
the provisions hereof, (i) Lender may at its sole discretion and at any time and
from time to time as provided herein conduct a seismic risk review of the
Project (the "Seismic Review"), which, if required by Lender, shall be prepared
by an engineer and in a manner acceptable to Lender at Borrower's sole cost and
expense, and (ii) If the Seismic Review demonstrates in Lenders sole discretion
a Probable Maximum Loss in excess of thirty percent (30%) of the Replacement
Cost or an Average Loss in excess of twenty percent (20%) of the
Replacement Cost. Borrower shall either (a) maintain earthquake insurance
throughout the remaining term of the Loan in an amount, with a deductible, and
otherwise in form and substance acceptable to Lender, or (b) If Borrower
provides evidence reasonably satisfactory to Lender that an earthquake retrofit
of the Project will reduce the Probable Maximum Loss to thirty percent (30%) of
the Replacement Cost or less and the Average Loss to twenty percent (20%) of the
Replacement Cost or less, cause the Project to be earthquake retrofitted (which
retrofitting shall be subject to Lender's prior written approval) in compliance
with all applicable laws, and maintain earthquake insurance in an amount with a
deductible, and otherwise in form and substance acceptable to Lender until a new
Seismic Review demonstrates in Lender's sole discretion a Probable Maximum Loss
which does not exceed thirty percent (30%) of the Replacement Cost, and an
Average Loss which does not exceed twenty percent (20%) of the Replacement Cost,
and (iii) in the event that Borrower fails at any time to maintain such
earthquake insurance if required herein. Borrower shall, within ten (10) days
after demand by Lender, pay to Lender an amount equal to the greater of (a) five
percent (5%) of the Loan Amount, or (b) the amount by which the Probable Maximum
Loss exceeds thirty percent (30%) of the Replacement Cost, or (c) the amount by
which the Average Loss exceeds twenty percent (20%) of the Replacement Cost (the
"Seismic Principal Payment"). Such payment shall be applied first to the
outstanding principal balance of the Loan, than to accrued and unpaid interest
on the Loan, and then to any other amounts owed to Lender under the Loan
Documents, and such payment shall be in addition to all other payments required
to be made by Borrower under the terms of the Loan Documents; provided, however
that as a result of such payment, the Monthly Installments (as defined in the
Note) shall be adjusted effective with the Monthly installment due immediately
following payment of the amount equal to the Seismic Principal Payment. Lender
may obtain a Seismic Review in connection with the Loan closing, following any
earthquake of a magnitude of 6.0 or higher or following significant physical
damage to the Project as determined by Lender in its sole discretion. As used
herein, "Probable Maximum Loss" shall mean the product of (1) the then estimated
replacement cost of the Improvements as determined by Lender in its sole
discretion and (2) the "90% Confidence Damage Ratio" calculated in such Seismic
Review based upon a 475 year return interval. As used herein, "Average Loss"
shall mean the product of (1) the estimated replacement cost of the improvements
as determined by Lender in its sole discretion and (2) the "Average Damage
Ratio" calculated in such Seismic Review based upon a 475 year return interval.
As used herein, "Replacement Cost" shall mean, at any given time, the
replacement cost of the Project as determined at such time by Lender in its sole
discretion.
7.7 Notice of Proceeding.
--------------------
Borrower will promptly notify Lender of any action, suit, proceeding
or arbitration (including, without limitation, any judicial or nonjudicial
foreclosure proceeding, any voluntary or involuntary bankruptcy proceeding or
any proceeding for the appointment of a receiver), commenced or threatened
against Borrower, any of the Principals, or the Project or any portion thereof
or interest therein. Borrower shall deliver to Lender copies of all notices and
other information in connection with any action suit, proceeding or arbitration
promptly upon receipt or transmittal thereof.
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<PAGE>
7.8 Financial and Other Information.
-------------------------------
Borrower shall maintain full and complete books of account and other
records reflecting the results of operations of the Project in accordance with
generally accepted accounting principles consistently applied (or such other
accounting method approved in writing by Lender). Borrower shall furnish or
cause to be furnished to Lender such financial information concerning Borrower,
the Principals and the Project as Lender may reasonably request from time to
time. Lender shall also have access to such books and records and Borrower's
corporate books, during regular business hours and upon reasonable advance
notice to Borrower and shall have the right to make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of Borrower with
Borrower and its independent public accountants, all as Lender may reasonably
request. Without limiting the generality of the foregoing, each year Borrower
shall furnish to Lender, Without prior request or demand:
A. If Borrower and/or any Principal is not a natural person or a
trust, within ninety (90) days after the end of each Loan Year and at such other
times within thirty (30) days after request by Lender, Borrower shall provide
Lender with annual financial statements (including, without limitation, a
balance sheet and a profit and loss statement) for such party's previous fiscal
year and the current fiscal year-to-date, each of which shall (i) be in form
reasonably acceptable to Lender, (ii) contain comparative information for the
two (2) previous fiscal years, (iii) be certified as true, correct and complete
by Borrower or such Principal, and (iv) at Lender's election after the
occurrence of an Event of Default or Potential Default, be certified by a
certified public accountant acceptable to Lender.
B. If Borrower and/or any Principal is a natural person or trust,
Borrower shall provide Lender with (i) annual financial statements, in form
reasonably acceptable to Lender, for each such party within ninety (90) days
after the end of each Loan Year and at such other times within thirty (30) days
after request by Lender, and (ii) copies of the tax returns for each such party,
together with all supporting schedules, within thirty (30) days after the filing
thereof. Such financial statements and tax returns shall be certified as true,
correct and complete by Borrower or such Principals.
C. Within ninety (90) days after the end of each Loan Year and at such
other times within thirty (30) days after request by Lender, Borrower shall
provide Lender with annual operating statements for the Project for the previous
fiscal year and the current fiscal year-to-date, which shall (i) be in form
reasonably acceptable to Lender, (ii) contain comparative information for the
two (2) previous fiscal years, (iii) be certified as true, correct and complete
by Borrower, and (iv) at Lender's election after the occurrence of an Event of
Default or Potential Default, be certified by a certified public accountant
acceptable to Lender.
D. Within ninety (9O) days after the end of each Loan Year and at such
other times within thirty (30) days after request by Lender, Borrower shall
provide Lender with an updated rent roll for the Project, in form satisfactory
to Lender and containing such information as is reasonably required by Lender.
E. Without limiting any of Lender's rights or remedies in the event of
any failure by Borrower to comply with the provisions of this Section 7.8, if
-----------
Borrower fails to deliver to Lender any of the financial statements or other
information required herein on or before the date required in this Section 7.8
-----------
(the "Information Delivery Date"), then commencing on the information Delivery
Date the Variable Rate Margin (as defined in the Note) shall be increased by
one-half percent (.50%) until such time as Borrower has delivered, and Lender
has approved, all of the financial statements or other information required to
be delivered by Borrower pursuant to this Section 7.8. In addition to such
-----------
increase in the Variable Rate Margin, the Monthly Installments (as defined in
the Note) shall be adjusted effective with the Monthly Installment due
immediately following the Information Delivery Date to reflect such increase.
Once Borrower has delivered, and Lender has approved, all of the financial
statements and other information
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<PAGE>
required to be delivered by Borrower pursuant to this Section 7.8, the Monthly
-----------
Installments shall be readjusted effective with the Monthly Installment due
immediately thereafter.
7.9 Representations and Warranties.
------------------------------
Until repayment of the Loan and all other amounts owing to Lender
under the Loan Documents and the satisfaction of all other Secured Obligations,
the representations and warranties set forth in Article 6 shall remain true and
---------
complete.
7.10 Further Assurances.
------------------
Borrower shall execute and deliver from time to time, within ten (10)
days after any request by Lender, any and all instruments, agreements and
documents and shall take such other action as may be reasonably necessary or
desirable in the opinion of Lender to maintain, perfect or insure Lender's
security provided for herein and in the other Loan Documents, including, without
limitation, the execution of UCC-1 renewal statements, the execution of such
amendments to the Deed of Trust and the other Loan Documents and the delivery of
such endorsements to the Title Policy, all as Lender shall reasonably require,
and shall pay all fees and expenses (including reasonable attorney's fees)
related thereto.
7.11 Distribution of Assets.
----------------------
From and after the occurrence of an Event of Default or Potential
Default, Borrower shall not make any distribution of its assets, directly or
indirectly, to its partners, shareholders, members or other owners. As used
herein, the distribution of assets shall include, without limitation, the
repayment of any loans made to Borrower or any interest or other charges payable
in connection therewith, the return of capital contributions and distributions
upon the termination, liquidation or dissolution of Borrower and the payment of
fees, including management, leasing, brokerage and other fees to the extent such
fees exceed the amounts payable in arms' length transactions with third parties.
Borrower shall maintain and preserve its existence and all rights and franchises
material to its business.
7.12 Construction.
------------
(a) Borrower shall cause construction of the Improvements (as such
term is defined in the Note) to be prosecuted with due diligence and in good
faith in accordance with the terms of this Agreement, the Note and the other
Loan Documents, and without delay, so that the same will be fully completed and
ready for occupancy not later than April 1, 2002 (the "Completion Date").
(b) On or before the Completion Date (i) Lender shall have received
evidence satisfactory to Lender that (A) all Entitlements, in form and substance
satisfactory to Lender, have been obtained, (B) Borrower has recorded a Notice
of Completion in form and substance satisfactory to Lender in connection with
the Improvements, (C) all hard and soft costs associated with the construction
of the Improvements have been paid in full, including, without limitation,
unconditional lien releases for all costs and expenses incurred in connection
with the Improvements (as defined in the Note), and (ii) Aspect Communications
shall have taken one hundred percent (100%) occupancy of the Project.
7.13 Cash Collateral Account and/or Letter of Credit.
-----------------------------------------------
A. On the Closing Date, Borrower shall (a) establish a cash collateral
account with Lender (the "Cash Collateral Account"), and (b) deposit the sum of
Three Million Dollars ($3,000,000) (the "Deposit") into the Cash Collateral
Account. Borrower shall have the right to withdraw funds from the Cash
Collateral Account pursuant to the terms and conditions set forth in the Cash
Collateral Pledge
-22-
<PAGE>
Agreement. Within ten (10) days after Lender's request, Borrower shall execute
any and all documents reasonably requested by Lender in connection with the Cash
Collateral Account and the Deposit.
B. As long as no Event of Default or Potential Default shall have
occurred under the Loan Documents, Borrower shall have a one-time right to
deliver to Lender one (1) Letter of Credit in the face amount of the Minimum
Balance, issued by an Issuer acceptable to Lender in its sole discretion and
otherwise in form and substance acceptable to Lender in its sole discretion but
acting in good faith, and upon Lender's receipt of such Letter of Credit and any
and all other documents as Lender shall reasonably require in connection with
the delivery of such Letter of Credit, Lender shall permit the disbursement of
from the Cash Collateral Account of all proceeds in the Cash Collateral Account.
The Letter of Credit so delivered shall be additional security for the Secured
Obligations.
C. Borrower shall promptly deliver to Lender upon receipt a copy of
any communication received from any Issuer to the effect that the Issuer will
not extend the expiry date of the Letter of Credit or otherwise to the effect
that the Letter of Credit will not at any time be in force or effect. In
addition, Borrower shall from time to time, upon request, certify to Lender that
it has not received any such communication.
D. If for any reason the Letter of Credit expires or is revoked or
withdrawn, Borrower shall immediately cause the Letter of Credit to be replaced
by a letter of credit, issued by Issuer, containing substantially the same terms
as those of the Letter of Credit and otherwise in form and substance acceptable
to Lender in its sole discretion, and shall deliver, as applicable, such
substitute Letter of Credit to Lender upon the same terms as the assignment and
delivery to Lender of the Letter of Credit.
E. Lender shall promptly deliver to Borrower the Letter of Credit if
the Letter of Credit has not theretofore been drawn down in full upon the
earlier to occur of (i) full repayment of the Loan and all amounts owed to
Lender under the Loan Documents, as determined by Lender, or (ii) as long as no
Potential Default or Event of Default shall have occurred under the Loan
Documents, Lenders receipt of evidence satisfactory to Lender in its sole
discretion that the Guarantor shall have received a long-term credit rating of
at least "BBB-" from Standard & Poor's Rating Service or Baa1 from Moody's
Investor Service. Lender shall not be required, however, to deliver to Borrower
any amounts drawn by Lender under the Letter of Credit.
F. Lender shall be entitled to draw upon the Letter of Credit upon the
occurrence of the following:
(i) Borrower fails to make any payment required by the Loan
Documents on the due date thereof,
(ii) an Event of Default under any of the Loan Documents;
(iii) if the Letter of Credit has not been replaced within sixty
(60) days prior to the expiration date of the Letter of Credit, by a letter of
credit in the form of the Letter of Credit (A) having a term of not less than
the later to occur of (1) twelve (12) months or (a) the remaining term under
the then existing Letter of Credit, and (B) issued by an Issuer acceptable to
Lender in its sole discretion, and (C) otherwise in form and substance
acceptable to Lender in its sole discretion; and
(iv) if the Letter of Credit has not been replaced by a letter
of credit in the form of the Letter of Credit having a term equal to the then
remaining term of the Letter of Credit and issued by Issuer, within fifteen (15)
days following the occurrence of any of the following events:
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<PAGE>
(a) the Issuer of the Letter of Credit shall admit in
writing its inability to pay its debts generally as they become due, shall file
a petition in bankruptcy where a petitioner can take advantage of any insolvency
statute, shall consent to the appointment of a receiver or conservator of itself
or the whole or any substantial part of its property, shall file a petition or
answer seeking reorganization or arrangement under the Federal Bankruptcy laws,
or
(b) Lender's determination (as evidenced by Lender's written
notification to Borrower) that the issuer of the Letter of Credit is not
sufficiently creditworthy or shall become subject to operational supervision by
any federal or state regulatory authority.
Any and all amounts drawn under the Letter of Credit as provided in this
Section 7.13 (F) shall, at Lender's sole discretion, be applied to the amounts
----------------
owing to Lender under the Loan Documents in such order as Lender may elect.
Notwithstanding anything to the contrary contained herein, Lender shall have no
obligation to draw upon the Letter of Credit to pay any amount due under the
Loan Documents and Lender's right to draw upon the Letter of Credit shall not be
deemed or construed to affect or limit Borrower's obligations under any of the
Loan Documents.
G. So long as the Letter of Credit has not theretofor been drawn upon
by Lender in whole or in part, and as long as no Event of Default or Potential
Default shall have occurred under any of the Loan Documents, then on (i) the
First Reduction Date, the face amount of the Letter of Credit may be reduced to
Two Million Seven Hundred Thousand Dollars ($2,700,000), and (ii) each
anniversary of the First Reduction Date, the face amount of the Letter of Credit
may be reduced by an amount equal to ten percent (10%) of the face amount of the
Letter of Credit immediately prior to such reduction provided that on such
anniversary date and on the date of such reduction (if it does not actually
occur on the anniversary date), Lender shall have received evidence satisfactory
to Lender in its sole and absolute discretion that Lender shall have received
evidence satisfactory to Lender that during the immediately prior eight
consecutive fiscal quarters, (i) the Net Worth of the Guarantor was not less
than Two Hundred Million Dollars ($200,000,000), (ii) the Guarantor's EBITDA was
greater than zero (0), and (iii) there has been no adverse change in the
financial condition of Guarantor.
7.14 Single Purpose Entity.
---------------------
Borrower shall not do any of the activities or take any of the actions
proscribed in Section 6.13 above until the full and final repayment of the Loan
------------
and other obligations under the Loan Documents.
7.15 Proposed Subordination.
----------------------
Borrower anticipates obtaining a junior loan (the "Junior Loan")
secured by the Project from a third party institutional lender other than Lender
(the "Junior Lender"). Nothing contained herein shall be deemed or construed to
constitute an agreement by Lender to permit (a) Borrower to obtain the Junior
Loan unless and until all of the conditions set forth herein have been satisfied
in full, or (b) any financing or title matters or exceptions other than the
Junior Loan. Lender shall not unreasonably withhold its consent to the Junior
Loan provided that (a) no Potential Default or Event of Default shall have
occurred under any of the Loan Documents; (b) the interest of the Junior Lender
in the Project is expressly subordinated to the interest of Lender in the
Project, (c) the Junior Lender is not then granted and is not granted during the
term of the Loan (x) any option or right of first refusal to purchase, or (y) a
participation interest in, the ownership or benefits of ownership, directly or
indirectly, of the Project; (d) any default by Borrower under the documents
evidencing or securing the Junior Loan shall constitute an Event of Default
under the Loan Documents; (e) the Junior Lender is an institutional lender
approved in advance by Lender, including, without limitation, with respect to
its financial condition; (f) the amount of the Junior Loan, after taking into
account all advances to be made in connection therewith, shall not exceed Five
Million Dollars ($5,000,000); (g) all of the documentation for the Junior Loan
shall be satisfactory to Lender; (h) the Junior Loan shall contain an interest
reserve sufficient, in Lender's determination, to pay all
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<PAGE>
interest and other amounts due with respect to the Junior Loan if Lender
determines that net cash flow from the Project is insufficient to pay all debt
service on the Junior Loan, as determined by Lender, (i) Borrower, the Junior
Lender and Lender shall execute and deliver a subordination agreement for the
benefit of Lender, in form and substance acceptable to Lender in its sole
discretion (the "Subordination Agreement") pursuant to which the Junior Lender
expressly acknowledges and agrees (i) that the Junior Loan is subordinate to the
Loan and any and all future advances thereunder, (ii) after the occurrence of a
Potential Default under the Loan Documents, the Junior Lender shall have no
right to receive any payments in connection with the Junior Loan until all
outstanding obligations under the Loan have been satisfied in their entirety,
and (iii) the Junior Lender shall have no right to exercise any of its rights
and remedies following a default under the Junior Loan as long as the Loan
remains outstanding, (j) Borrower shall pay for all costs associated with
Lender's review and approval of the Junior Loan, including, without limitation,
reasonable attorneys' fees and costs; (k) if required by Lender, Borrower also
shall pay to Lender a fee for the appraisal in connection with the proposed
Junior Loan, (l) the disbursement of the proceeds from the proposed Junior Loan
shall be made upon such terms and conditions as may be reasonably required by
Lender; (m) the maturity date of such Junior Loan shall be at least three (3)
months after the Maturity Date (as defined in the Note); and (n) the loan
documents securing or evidencing the Junior Loan and/or the Subordination
Agreement shall expressly provide that:
(1) subject to the foregoing provisions, if any action or proceeding shall
be brought to foreclose on the Project, no action shall be taken with respect
to the Project which would terminate any occupancy or tenancy of the Project
without the prior written consent of Lender (and the Junior Lender will execute
such nondisturbance and attornment agreements as Lender may require to evidence
such provisions); (2) any insurance and/or condemnation proceeds payable with
respect to the Project will be applied in a manner consistent with the terms of
the Deed of Trust; (3) the Junior Lender and its assigns shall agree to be bound
by, and no consent shall be required for, any extensions, modifications or
amendments to the Deed of Trust or any of the other Loan Documents; and (4) the
Junior Lender and its assigns shall waive all rights, legal and equitable, it
may now or hereafter have to require the marshalling of assets or to require
upon foreclosure sales of assets in a particular order. All matters required to
be approved or delivered by or to Lender under this Section 7.14 , or in
------------
connection with the Subordination, shall be satisfactory to Lender in its sole
and absolute discretion.
ARTICLE 8
EVENTS OF DEFAULT: REMEDIES
---------------------------
8.1 Events of Default.
-----------------
The occurrence of any of the following events shall constitute an
Event of Default under this Agreement and the other Loan Documents:
A. Failure to Make Payments When Due. Borrower's, Completion
Guarantor's or Limited Recourse Obligations Guarantor's failure to pay any
principal, interest or other monies due under this Agreement or any of the other
Loan Documents within ten (10) days after such amount is due.
B. Breach of Certain Covenants. Borrower's, Completion Guarantor's or
Limited Recourse Obligations Guarantor's failure to perform or comply with any
term, obligation or condition contained in this Agreement or any of the other
Loan Documents, other than those terms, obligations and conditions otherwise
referred to in this Section 8.1 and other than Borrower's obligations under
-----------
Section 1.10(A) of the Deed of Trust, within thirty (30) days after the delivery
---------------
of written notice from Lender of such failure; provided that if such default is
not reasonably capable of being cured within such thirty (30) day period, such
failure shall not constitute an Event of Default so long as Borrower, Completion
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<PAGE>
Guarantor or Limited Recourse Obligations; Guarantor, as applicable, commences
the cure of such default within such thirty (30) day period and diligently
prosecutes such cure to completion within one hundred eighty (180) days after
such written notice from Lender.
C. Breach of Warranty. Any representation, warranty, certification or
other statement made by Borrower or any of the Principals herein or in any other
Loan Document or in any statement or certificate at any time given by Borrower
or any of the Principals to Lender in writing in connection with the Loan shall
be materially false or misleading.
D. Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having proper jurisdiction shall enter a decree or
order for relief with respect to Borrower or any of the Principals in an
involuntary case under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed within seven (7) days after entry and dismissed within
ninety (90) days after the entry of such order; or any other similar relief
shall be granted under any applicable federal or state 1aw; or
(ii) An involuntary case is commenced against Borrower or any of
the Principals, under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or a decree or order of a court for the appointment
of a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Borrower or any of the Principals or over all or a
substantial part of their respective property, shall be entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
Borrower or any of the Principals, for all or a substantial part of their
respective property; or the issuance of a warrant of attachment, execution or
similar process against any substantial part of the respective property of
Borrower or any of the Principals, and the continuance of any such event in this
clause (ii) for ninety (90) days unless dismissed or discharged.
E. Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Borrower or any of the Principals shall have an order for
relief entered with respect to them or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of their respective property; the making by Borrower or any of
the Principals of any assignment for the benefit of creditors; or
(ii) The inability or failure of Borrower or any of the
Principals, or the admission by Borrower or any of the Principals in writing of
its inability, to pay their respective debts as such debts become due.
F. Lien Priority. Except as expressly permitted by Section 1.8 of the
-----------
Deed of Trust, Lender fails to have a legal, valid binding and enforceable first
priority Lien on the Project and the Personal Property.
G. Unapproved Transfers. Any transfer (as defined in Section 1.10 of
------------
the Deed of Trust) of the Project or any interest in Borrower occurs without
Lender's prior written consent in accordance with Section 1.10 of the Deed of
------------
Trust.
H. Failure to Maintain Insurance. Borrower fails to maintain or cause
to be maintained the insurance coverage required by Section 7.6.
-----------
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<PAGE>
I. Other Liens. Without limiting the provisions of Section 7.1 of this
-----------
Agreement or Section 1.10 of the Deed of Trust, Borrower defaults under any Lien
------------
(other than the Liens created by the Loan Documents) or foreclosure or other
proceedings are commenced to enforce any Lien (other than the Liens created by
the Loan Documents).
J. Other Loan Documents. The occurrence of an Event of Default under
any of the other Loan Documents (as "Event of Default" is defined therein).
K. Cessation of Construction. The cessation of work on the
Improvements or, for any reason whatsoever, work does not progress continuously
in a manner satisfactory to Lender in its sole and subjective discretion while
acting in good faith.
L. Cash Collateral Account/Letter of Credit. Borrower's failure to
comply with any term, obligation or condition contained in Section 7.13 of this
------------
Agreement in the time and manner provided therein.
M. Subordination Borrower's failure to comply with any term,
obligation or condition contained in Section 7.15 of this Agreement in the time
------------
and manner provided therein.
8.2 General Remedies.
----------------
Notwithstanding anything to the contrary contained herein or in any of
the other Loan Documents, upon the occurrence of any Event of Default (i)
automatically without notice to Borrower as to Sections 8.1(D),(E)and(J), and
-------------------------
otherwise at the option of Lender upon written notice to Borrower as to any
other Event of Default, the unpaid principal amount of the Loan, all accrued and
unpaid interest and all other Secured Obligations shall become immediately due
and payable, without presentment, demand, protest, further notice or other
requirements of any kind, all of which are hereby expressly waived by Borrower,
(ii) Lender shall have the rights and remedies of a secured party under the
California Commercial Code, and under any other applicable law, (iii) Lender may
pursue all of its rights and remedies hereunder, under the other Loan Documents,
at law, in equity or otherwise, including without limitation, obtaining the
appointment of a receiver to perform any act of Lender permitted in this
Agreement and to perform such other duties as permitted by applicable Laws, (iv)
Lender may pursue any remedies available to it pursuant to California Code of
Civil Procedure Section 726.5, (v) all outstanding indebtedness and all other
amounts owing to Lender under the Loan Documents shall bear interest at the
Default Interest Rate, and (vi) Lender shall have no further obligation to
disburse Loan proceeds to Borrower.
8.3 Specific Performance
--------------------
Upon the occurrence of an Event of Default. Lender may commence and
maintain an action in any court of competent jurisdiction: for specific
performance of any of the covenants and agreements contained herein or in any of
the other Loan Documents, may obtain the aid and direction of the court in the
performance of any of the covenants and agreements contained herein or therein,
and may obtain orders or decrees directing the same and, In the case of any sale
under the Dead of Trust, directing, confirming or approving Lender's or the
trustee's actions.
8.4 Remedies as to Project Documents.
--------------------------------
Upon the occurrence of an Event of Default, Lender shall have the
right (and Borrower hereby irrevocably constitutes and appoints Lender as its
attorney-in-fact, which power is coupled with an interest, to do so) to (a)
demand, receive and enforce Borrowers rights with respect to the Project
Documents, (b) give appropriate receipts, releases and satisfactions for and on
behalf of Borrower with respect to any of the Project Documents, (c) do any and
all acts in the name of Borrower or in the name of
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Lender with the same force and effect as Borrower could do if the assignment in
Article 4 had not been made, and (d) perform and discharge each and every
---------
obligation, convenant, condition and agreement of Borrower under the Project
Documents.
8.5 Construction Remedies
---------------------
Upon the occurrence of an Event of Default, Lender will also have the
right, in its sole discretion, to enter the Property and take any and all
actions necessary in its sole and subjective judgment to complete construction
of the Project, including, but not limited to, making changes in Project
Documents, work, or materials, and entering into, modifying, or terminating any
contractual arrangements, subject to Lender's right at any time to discontinue
any work without liability. If Lender elects to complete the Project, it will
not thereby assume any liability to Borrower or to any other person for
completing the Project, or for the manner or quality of construction of the
Project, and Borrower expressly waives any such liability. Upon the occurrence
of an Event of Default, Borrower irrevocably appoints, designates, empowers, and
authorizes Lender as Borrower's attorney-in-fact, coupled with an interest, with
full power of substitution, to sign and file for record any notices of
completion, notices of cessation of labor, or any other notice or written
document that Lender may deem necessary to file or record to protect its
interests, and to complete construction in Borrower's name or in Lender's own
name. In any event, all sums expended by or on behalf of Lender in completing
construction (whether or not construction is, in fact, completed), plus a fee of
fifteen percent (15%) for supervision of construction in addition to any fees
charged by third party inspectors or architects to supervise construction, will
be considered to be disbursed to Borrower, and will be secured by the Deed of
Trust and the other Loan Documents, and any such sums that cause the principal
amount of the Loan to exceed the face amount of the Loan will be considered to
be an additional advance to Borrower, payable on demand, bearing interest at the
Default Interest Rate, and secured by the Deed of Trust and the other Loan
Documents.
ARTICLE 9
MISCELLANEOUS PROVISIONS
------------------------
9.1 Nonforeign Status
-----------------
Section 1446 of the Internal Revenue Code of 1985, as amended (the
"Internal Revenue Code") and Sections 18662, 18668 and 18669 of the California
Revenue and Taxation Code (the "California Tax Code") provide that a transferee
of a U.S. real property interest, or California property interest, as the case
may be, must withhold, tax under the circumstances described therein. To inform
Lender that the withholding of tax will not be required in the event of the
disposition of the Project pursuant to the terms of the Deed of Trust, Borrower
hereby certifies, under penalty of perjury, that: (a) Borrower is not a foreign
corporation, foreign partnership, foreign trust or foreign estate, as those
terms are defined in the Internal Revenue Code and/or California Tax Code and
the regulations promulgated thereunder. and (b) Borrowers U.S. employer
identification number is the Tax Identification Number; (c) Borrowers principal
place of business is at the address set forth in Section 9.10. and (d) Borrower
-------------
is qualified to do business in the State of California. Lender may disclose the
contents of this Section 9.1 to the Internal Revenue Service or any other
-----------
Governmental Agency and Borrower acknowledges that any false statement contained
herein could be punished by fine, imprisonment or both. Borrower covenants and
agrees to execute further certificates, which shall be signed under penalty of
perjury, as Lender shall reasonably require in connection with the
certifications set forth herein. The covenant set forth herein shall survive the
foreclosure of the lien of the Deed of Trust or acceptance of a deed in lieu or
in aid thereof.
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9.2 Assignments and Participations in Loan and Note.
-----------------------------------------------
Lender may assign its rights and delegate its obligations under this
Agreement or any of the other Loan Documents and further may assign, or sell
participations in, all or any part of the Loan, the Loan Documents, or any other
interest herein or in the Note to any Person, all without notice to or the
consent of Borrower. To the extent of any such assignment, Lender shall be
relieved of its obligations with respect to the Loan and the assignee shall have
the same rights, benefits and obligations as it would if it were Lender
hereunder and a holder of the Note. Lender may furnish any information
(including, without limitation, financial information) concerning the Project,
Borrower, Principals and any of their assets to third parties from time to time
for legitimate business purposes.
9.3 Expenses.
--------
Borrower agrees to pay, within ten (10) days after demand by Lender,
all reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and costs, fees of any consultants, and fees for any
environmental audits, appraisal, inspections or other review required by Lender)
incurred by Lender in connection with the Loan, the enforcement of any of the
Secured Obligations, the enforcement of any of Lender's rights and remedies
under the Loan Documents, the collection of any payments owing to Lender
hereunder or under any of the other Loan Documents, whether or not such
enforcement and collection includes the filing of a lawsuit, or the retaking,
holding, preparing for sale or selling the Project or any portion thereof or any
interest therein. Such costs and expenses shall include, without limitation,
Lender's reasonable attorneys' fees and costs, including without limitation
attorneys' fees and costs incurred by Lender in connection with any insolvency,
bankruptcy, reorganization, arrangement or other similar proceedings involving
Borrower or any of the Principals which in any way affect the exercise by Lender
of its rights and remedies hereunder, under any of the other Loan Documents, at
law or in equity.
9.4 Joint and Several 0bligations.
-----------------------------
The liability of Borrower under this Agreement and under each of the
other Loan Documents shall be joint and several. Any married person signing the
Loan Documents as Borrower or its general partner agrees that recourse may be
had against community assets and against his or her separate property for the
satisfaction of all obligations under the Loan Documents.
9.5 Indemnity.
---------
Borrower hereby indemnifies and agrees to defend and hold harmless the
Indemnitees from and against any and all expenses, loss, claims, damage or
liability, including, without limitation, architects', engineers' and attorneys'
fees and costs by reason of: (a) the construction of any improvements on the
Project, (b) any capital improvements, other work or things done in, on or about
the Project or any part thereof, (c) any use, nonuse, misuse, possession,
occupation, alteration, operation, maintenance or management of the Project or
any part thereof or any street, drive, sidewalk, curb passageway or space
comprising a part thereof or adjacent thereto, (d) any negligence or willful act
or omissions on the part of Borrower or its agents, contractors, servants,
employees, licensees or invitees, (e) any accident, injury (including death) or
damage to any person or property occurring in, on or about the Project or any
part thereof, (f) any Lien or claim which may be alleged to have arisen on or
against the Project or any part thereof or any liability asserted against Lender
with respect thereto, (g) any tax attributable to the execution, delivery,
filing or recording of the Deed of Trust, the Note or the other Loan Documents,
(h) any contest due to Borrower's actions or failure to act, (i) any default
under the Note or the other Loan Documents, or (j) any claim by-or liability to
any contractor or subcontractor performing work or any party supplying materials
in connection with the Project.
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9.6 Waiver of Offset.
----------------
All sums payable by Borrower pursuant to any of the Loan Documents
shall be paid without notice, demand, counterclaim, setoff, deduction or defense
and without abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Borrower under the Loan Documents shall in no way
be released, discharged or otherwise affected (except as expressly provided in
the Loan Documents) by reason of: (a) any damage to or destruction of the
Project or any Condemnation Event (as defined is the Deed of Trust) affecting
the Project or any part thereof; (b) any restrictions or prevention of or
interference by any third party with any use of the Project or any part
thereof, (c) any title defect or encumbrance or any eviction from the Project or
any part thereof by title paramount or otherwise; (d) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to Lender, or any action taken with respect to
any of the Loan Documents by any trustee or receiver of Lender, or by any court,
in any such proceeding; (e) any claim which Borrower has or might have against
Lender; (f) any default or failure on the part of Lender to perform or comply
with any of the terms hereof or of any other agreement with Borrower; or (g) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing;
whether or not Borrower shall have notice or knowledge of any of the foregoing.
Except as expressly provided herein, Borrower waives all rights now or hereafter
conferred by statute or otherwise to any abatement, suspension, deferment,
diminution or reduction of any of the Secured Obligations.
9.7 Amendments and Waivers.
----------------------
This Agreement and the other Loan Documents may only be modified in
writing signed by all of the parties hereto or thereto or their respective
successors and assigns. No waiver of any provision of this Agreement or of any
of the other Loan Documents, or consent to any departure by Borrower therefrom,
shall in any event be effective without the written agreement of Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. Except as expressly required by the
terms of the Loan Documents, no notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances.
9.8 WAIVER OF JURY TRIAL.
--------------------
BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY 1N RESPECT TO
ANY TORT OR CONTRACT LITIGATION BASED HEREON OR ON ANY OF THE OTHER LOAN
DOCUMENTS, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE NOTE, ANY OTHER
LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION THEREWITH.
9.9 Submission of Loan Documents.
----------------------------
The submission of this Agreement, any of the other Loan Documents or
the Environmental Indemnity to Borrower or its-agents or attorneys for review or
signature does not constitute a commitment by Lender to make the Loan to
Borrower, and the Loan Documents and the Environmental Indemnity shall have no
binding force or effect unless and until they are executed and delivered by
Borrower and Lender and all of the conditions set forth in Section 3.1 have been
-----------
satisfied.
9.10 Notices.
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Any notice, or other document or demand required or permitted under
this Agreement or any of the other Loan documents shall be in writing addressed
to the appropriate address set forth below and shall be deemed delivered upon
the earliest of (a) actual receipt, (b) the next Business Day after the
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date when sent by recognized overnight courier, or (c) the second Business Day
after the date when sent by registered or certified mail, postage prepaid. Any
party may, from time to time, change the address at which such written notice or
other documents or demands are to be sent, by giving the other party written
notice of such change in the manner hereinabove provided.
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