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LOAN AGREEMENT
between
G&E HEALTHCARE
REIT COUNTY LINE ROAD, LLC,
a Delaware limited liability company
and
WACHOVIA BANK,
NATIONAL ASSOCIATION
dated as of
December 19,
2007
1
LOAN AGREEMENT
This Loan
Agreement is made as of December 19, 2007 by and between
WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking
association, whose address is Wachovia Bank, N.A., Real Estate
Financial Services, General Banking Group, Mail Code: CA 6233,
15750 Alton Parkway, Irvine, California 92618 (“
Lender ”), and G&E HEALTHCARE REIT COUNTY LINE
ROAD, LLC , a Delaware limited liability company, whose address
is c/o Triple Net Properties, LLC, 1551 N. Tustin Avenue,
Suite 300, Santa Ana, California 92705 (“ Borrower
”).
RECITALS
A. Borrower has acquired or will acquire fee simple title to
that certain real property located in Highlands Ranch, Colorado, as
more particularly described in Exhibit A attached
hereto (collectively, the “ Property ”),
commonly known as 200 and 206 West County Line Road, Highlands
Ranch, Colorado.
B. Borrower has requested that Lender extend credit to it for
the financing and operation of the Project (as defined herein).
C. Lender is prepared to extend such credit in accordance with
and subject to the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions . As used herein, the following terms shall have
the meanings set forth below:
"
Adverse Survey Matters ” shall have the meaning
assigned in Section 10.18 of this Agreement.
"
Affiliate ” of any Person means any other Person
directly or indirectly controlling, controlled by or under direct
or indirect common control with such Person. For purposes of this
definition, “control” when used with respect to any
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have
meanings correlative to the foregoing.
"
Agreement ” shall mean this Loan Agreement, as the
same may be amended, modified, supplemented, renewed and restated
from time to time.
"
Appraisal ” shall mean an appraisal of the “as
is” value of the Property and the Improvements
(i) ordered by Lender, (ii) prepared by an appraiser
satisfactory to Lender, (iii) in compliance with all federal
and state standards for appraisals, (iv) reviewed by Lender
and (v) in form and substance satisfactory to Lender in its
sole and absolute discretion; provided, however, that in reviewing
such appraisals and applying such discretion, Lender will act in
good faith and will consistently apply the standards generally used
by Lender in the normal course of its real estate lending business
in order to review and evaluate appraisals.
"
Borrower ” shall mean G&E Healthcare REIT County
Line Road, LLC, a Delaware limited liability company, whose address
is as set forth in the introductory paragraph to this
Agreement.
"
Budget ” shall mean the cost breakdown/budget for the
Loan attached hereto as Exhibit B , which shall set
forth the costs to be paid with the Loan.
"
Business Day ” shall mean a day of the year other than
Saturdays, Sundays and legal holidays on which banks are required
to be closed in California, Colorado or North Carolina.
"
Calendar Month ” shall mean any of the
twelve (12) calendar months of the year. With respect to any
payment or obligation that is due or required to be performed
within a specified number of Calendar Months, then such payment or
obligation shall become due on the day in the last of such
specified number of Calendar Months that corresponds numerically to
the date on which such payment or obligation was incurred or
commenced; provided, however, that with respect to any obligation
that was incurred or commenced on the 29th, 30th or 31st day of any
Calendar Month and if the Calendar Month in which such payment or
obligation would otherwise become due does not have a numerically
corresponding date, such obligation shall become due on the first
Business Day of the next succeeding Calendar Month.
"
CC&R’s ” shall mean any and all covenants,
conditions, restrictions, maintenance agreements or reciprocal
easement agreements affecting the Project or any of the
Property.
"
Change in Law ” means the occurrence, after the date
of this Agreement, of any of the following: (a) the adoption
or taking effect of any law, rule, regulation or treaty,
(b) any change in any law, rule, regulation or treaty or in
the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any
request, guideline or directive (whether or not having the force of
law) by any Governmental Authority.
"
Closing Date ” shall mean the date the Mortgage is
recorded in the official records of the County.
"
Collateral ” shall mean all real and personal property
(whether tangible or intangible) in which a lien, encumbrance or
security interest is granted in favor of Lender pursuant to the
Loan Documents.
"
County ” shall mean Douglas County, Colorado.
"
Day ” or “ Days ” shall mean
calendar days unless expressly stated to be Business Days.
“Debt Service Coverage Ratio” shall mean a
fraction, the numerator of which is the Net Operating Income from
the Project before payment of debt service for the three-month
period in question, and the denominator of which is an amount
equivalent to the sum of (a) an amount, as reasonably
determined by Lender, equivalent to the interest that would accrue
on the Loan during such three-month period at a rate of interest
equal to the greater of (i) seven percent (7.0%) per annum, or
(ii) the rate of one and one-half percent (1.50%) per annum
above the Treasury Note Rate (herein defined), and (b) an
amount for such period, as reasonably determined by Lender,
equivalent to the amount of principal that would be payable during
such three-month period according to a schedule that would fully
amortize the Loan over a 30-year period given the foregoing rate of
interest.
"
Default Rate ” shall have the meaning assigned in the
Note.
"
Environmental Indemnity ” shall mean that certain
Environmental Indemnity Agreement executed by Borrower and
Guarantor of even date herewith.
" Event
of Default ” shall mean the occurrence of any of the
events listed in Section 11.1 of this Agreement.
"
ERISA ” shall mean Employee Retirement Income Security
Act of 1974, as the same may, from time to time, be amended.
"
Federal Funds Rate ” means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided , however , that
(a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such
rate is not so published for any Business Day, the Federal Funds
Rate for such Business Day shall be the average rate charged to
Lender on such Business Day on such transactions as determined by
Lender.
"
Financing Statement ” shall mean one or more UCC-1
financing statements authorized by Borrower, as debtor, in favor of
Lender, as secured party, and perfecting Lender’s security
interest in the collateral described therein, each in form and
substance satisfactory to Lender, to be filed in the Office of the
Secretary of State of Delaware, and in such other offices for
recording or filing such statements in such jurisdictions as Lender
shall desire to perfect Lender’s security interest or reflect
such interest in appropriate public records.
" First
Extended Maturity Date ” shall mean an extended maturity
date determined in accordance with Section 2.4 of this
Agreement.
" First
Extension ” shall have the meaning assigned in
Section 2.4 of this Agreement.
"
Governmental Authority ” shall mean (a) any
governmental municipality or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department instrumentality or public
body, or (c) any court, administrative tribunal or public
utility.
"
Guarantor ” shall mean Grubb & Ellis Healthcare
REIT, Inc., a Maryland corporation.
"
Guaranty ” shall mean that certain Repayment Guaranty
of even date herewith executed by the Guarantor, in form and
content satisfactory to Lender.
"
Improvements ” shall mean all on-site and off-site
improvements to the Property, if any, and appurtenances now or
later to be located on the Land and/or in such improvements.
"
Indebtedness ” means, as to any Person
(a) indebtedness created, issued, incurred or assumed by such
Person for borrowed money or evidenced by bonds, debentures, notes
or similar instruments; (b) all obligations of such Person to
pay the deferred purchase price of property or services and all
other accounts payable; (c) all indebtedness secured by a lien
on any asset of such Person whether or not such indebtedness is
assumed by such Person; (d) all obligations, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
indebtedness or other obligation of any other Person or in any
manner providing for the payment of any indebtedness or other
obligation of any other Person or otherwise protecting the holder
of such indebtedness against loss (excluding endorsements for
collection or deposit in the ordinary course of business);
(e) the amount of all reimbursement obligations and other
obligations of such Person (whether due or to become due,
contingent or otherwise) in respect of letters of credit, drafts,
notes, bankers’ acceptances, surety or other bonds and
similar instruments; (f) all capitalized lease obligations;
(g) all other obligations that would be included as
liabilities on a balance sheet prepared in accordance with GAAP;
(h) all payables of such Person relating to minority
interests; (i) net liabilities under Swap Contracts.
"
Indemnified Taxes ” means Taxes other than Excluded
Taxes.
"
Interest Rate ” shall have the meaning assigned in the
Note.
"
Leases ” means all leases, and other occupancy or use
agreements (whether oral or written), now or hereafter existing,
which cover or relate to the Property or any part thereof, together
with all options therefor, amendments thereto and renewals and
modifications thereof.
"
Lender ” shall mean Wachovia Bank, National
Association, a national banking association, whose address is as
set forth in the introductory paragraph to this Agreement, and its
successors and assigns.
"
Lending Office ” means the office, branch, subsidiary
or affiliate of Lender selected by Lender, from time to time, for
the funding or booking of the Loan.
"
Loan ” shall mean the loan made by Lender to Borrower
pursuant to this Agreement for the refinancing of the Property and
the operation of the Project.
" Loan
Amount ” shall mean Eight Million Eight Hundred
Fifty-Three Thousand and No/100 Dollars ($8,853,000.00).
" Loan
Documents ” shall mean this Agreement, the Note, the
Mortgage, Financing Statements, the Guaranty, the Environmental
Indemnity, the Subordination of Property Management Agreement and
all other documents and instruments (other than any Swap Contracts)
now or hereafter executed and delivered in connection with this
Agreement and the Loan described herein.
"
London Banking Day ” means a day on which dealings in
dollar deposits are conducted by and between banks in the London
interbank eurodollar market.
"
Maturity Date ” shall mean the date upon which the
Loan becomes due and payable, which date shall be December 31,
2010, subject to possible extensions as set forth in
Section 2.4.
"
Mortgage ” shall mean a Deed of Trust, Assignment,
Security Agreement and Fixture Filing executed by Borrower, as
trustor, and naming Lender as beneficiary, creating a first lien on
the Property, the Improvements, and all other buildings, fixtures
and improvements now or hereafter owned or acquired by Borrower and
situated on the Property, and all rights and easements appurtenant
thereto, securing indebtedness and obligations pursuant to the Loan
Documents and any Swap Contracts with Lender or its Affiliates, all
in form and substance acceptable to Lender, as such Mortgage may be
amended, modified, supplemented, renewed and restated from time to
time.
" Net
Operating Income ” shall mean the amount of
(a) Rental Income for the applicable three (3) month
period of time in question, less (b) the amount of
Operating Expenses for such period of time.
"
Non-Related Party ” shall mean a person or entity that
is not an Affiliate of Borrower.
"
Note ” shall mean the Promissory Note of even date
herewith evidencing the Loan and secured by the Mortgage, as such
note may be amended, modified, supplemented, renewed or restated
from time to time.
"
Operating Expenses ” shall mean any and all costs and
expenses incurred in connection with the Project (or which should
have been incurred to operate and maintain the Project in a first
class manner) during the applicable three-month time period in
question as reasonably determined by Lender, including without
limitation (a) taxes and assessments imposed upon the Project
which are reasonably allocable to such time period, (b) bond
assessments which are reasonably allocable to such time period,
(c) insurance premiums for casualty insurance and liability
insurance carried in connection with the Project which are
reasonably allocable to such time period, (d) operating
expenses incurred by Borrower for the management, operation,
cleaning, leasing, maintenance and repair of the Project which are
reasonably allocable to such time period, including a management
fee as approved by Lender, and (e) a sufficient replacement
reserve (based on an annual rate of $0.15 per foot), but excluding
depreciation, debt service and capital expenditures). Operating
Expenses shall not include any depreciation, interest, principal,
loan fees, extension fees or other payments on the Loan.
"
Permitted Exceptions ” means the matters approved by
Lender as permitted exceptions of title with respect to the
Property and set forth as exceptions to title in the Title
Insurance Policy approved by Lender.
"
Person ” shall mean a natural person, a partnership, a
joint venture, an unincorporated association, a limited liability
company, a corporation, a trust, any other legal entity, or any
Governmental Authority.
"
Project ” shall mean the Property and the
Improvements.
"
Property ” shall mean the real property described in
Exhibit A attached hereto.
"
Rental Income ” shall mean the rental income received
by Borrower, as reasonably determined by Lender, for the
three (3) month period of time in question from the tenant
Leases of the Improvements which are then in effect (and as to
which the tenants thereunder are in possession and paying rent, and
are not in default) or any other income, if any, generated by
Borrower’s ownership and operation of the Project.
"
Second Extended Maturity Date ” shall mean an extended
maturity date determined in accordance with Section 2.4 of
this Agreement.
"
Second Extension ” shall have the meaning assigned in
Section 2.4 of this Agreement.
"
Subordination of Property Management Agreement ” shall
mean that certain Subordination of Property Management Agreement of
even date herewith executed by Borrower and property manager, in
form and content satisfactory to Lender.
" Swap
Contract ” shall mean any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond, note or bill option,
interest rate option, forward foreign exchange transaction,
interest cap, collar or floor transaction, currency swap,
cross-currency rate swap, swap option, currency option or any other
similar transaction (including any option to enter into the
foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any form of master agreement
published by the International Swaps and Derivatives Association,
Inc., or any other master agreement, together with any related
schedules and confirmations, as amended, supplemented, superseded
or replaced from time to time, relating to or governing any or all
of the foregoing.
" Title
Company ” shall mean Lawyers Title Insurance Company, or
such other title insurance company as Lender may approve from time
to time.
" Title
Insurance Policy ” shall mean a title insurance policy in
the form of an American Land Title Association Loan Policy
(1992) extended coverage (without revision, modification or
amendment) issued by the Title Company, in form and substance
satisfactory to Lender and containing such endorsements as Lender
may require.
"
Unmatured Event of Default ” shall mean an event or
condition which with notice or lapse of time, or both, would become
an Event of Default.
1.2
Accounting Terms . For purposes of this Agreement, all
accounting terms not otherwise defined herein or in the Recitals
shall have the meanings assigned to them in conformity with
generally acceptable accounting standards and principles,
consistently applied (“ GAAP ”).
ARTICLE II
THE LOAN
2.1 Agreement
to Lend and Borrow . Subject to the terms and conditions of
this Agreement, Lender agrees to lend to Borrower and Borrower
agrees to borrow from Lender the Loan Amount (or such lesser amount
as Borrower requests that Lender advance). The Loan proceeds shall
be used for the purposes of financing the Property and operating
the Project in accordance with this Agreement, and other uses
reasonably approved by Lender. All amounts advanced under the Loan
and repaid shall not be re-borrowed.
2.2 Evidence
of Indebtedness . The Loan shall be evidenced by the Note. In
the event of any inconsistency between the Note and this Agreement,
the provisions of this Agreement shall prevail.
2.3 Interest
Rate .
(a)
Payment . The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum equal to the Interest
Rate. Interest shall be payable in arrears and shall be due on the
first day of each calendar month and on the Maturity Date (as it
may be extended) and on the date the outstanding principal amount
of the Note is repaid in full.
(b) Rate
after Default . If all or a portion of the principal amount of
the Loan made hereunder or any installment of interest on the Loan
shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise and after any applicable opportunity to
cure), any such overdue principal amount and, to the extent
permitted by applicable law, any overdue installment of interest on
the Loan shall, without limiting any other rights of Lender, bear
interest, payable on demand, for each day until paid at the Default
Rate. After the occurrence and during the continuance of an Event
of Default, the principal amount of the Loan (and, to the extent
permitted by applicable law, all accrued interest thereon) may, at
the election of Lender, bear interest at the Default Rate.
(c)
Computation of Interest . Interest in respect of the Loan
shall be calculated on the basis of a 360-day year for the actual
days elapsed. Each determination of an interest rate by Lender
pursuant to any provision of this Agreement shall be conclusive and
binding on Lender and Borrower in the absence of manifest
error.
(d) No
Deductions . All payments of principal or interest under the
Note shall be made without deduction of any present and future
taxes, levies, imposts, deductions, charges or withholdings, which
amounts shall be owed and paid by Borrower. Borrower will pay the
amounts necessary such that the gross amount of the principal and
interest received by Lender is not less than that required by the
Note.
(e) Order of
Application . Any payments received by Lender will be applied
in the following order: (1) late charges; (2) impound
payments for taxes and insurance (if any); (3) interest; and
(4) principal.
2.4 Maturity
of the Loan . All principal owing on the Loan, and all accrued
interest and other sums owing under the Loan Documents not
otherwise paid when due, shall be due and payable in full on the
Maturity Date. Borrower shall have the option to extend the term of
the Loan (the “ First Extension ”) from the
Maturity Date (for purposes of this Section, the “
Original Maturity Date ”) to a date that is
twelve (12) months following the Original Maturity Date (for
purposes of this Section, the “ First Extended Maturity
Date ”), and upon the expiration of the First Extension,
Borrower shall have the option to extend the term of the Loan (the
“ Second Extension ”) from the First Extended
Maturity Date to a date that is twelve (12) months following
the First Extended Maturity Date (for purposes of this Section, the
“ Second Extended Maturity Date ”), each such
Extension being subject to the satisfaction of each of the
following conditions precedent:
(a) Borrower shall provide Lender with written notice of
Borrower’s request to exercise its option to extend the
maturity date not more than ninety (90) days but not less than
sixty (60) days prior to (i) the Original Maturity Date,
in the case of the First Extension, and (ii) the First
Extended Maturity Date, in the case of the Second Extension;
(b) As of
the date of Borrower’s delivery of notice of request to
exercise its option to extend, and as of the date of the
commencement of the applicable extension, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing,
and Borrower shall so certify in writing;
(c) Borrower shall certify in writing that all representations
and warranties set forth in the Loan Documents remain true and
correct;
(d) The
Debt Service Coverage Ratio for the Project for the three month
period immediately preceding the then applicable Maturity Date
shall have been at least 1.25 to 1.0;
(e) Immediately prior to the commencement of each extension,
Borrower shall pay to Lender an extension fee in the amount of one
eighth of one percent (0.125%) of the total outstanding plus
undisbursed Loan proceeds, as determined on the Original Maturity
Date, in the case of the First Extension, and as determined on the
First Extended Maturity Date, in the case of the Second
Extension;
(f) Borrower shall deliver to Lender, at Borrower’s sole
cost and expense, such title insurance endorsements reasonably
required by Lender; and
(g) Borrower shall have paid all costs and expenses of Lender
in connection with such extension.
Notwithstanding the
foregoing, the Second Extension may not come into effect unless the
First Extension shall have been in effect. If each of the foregoing
conditions precedent are satisfied, and the Original Maturity Date
is extended as provided above to the First Extended Maturity Date
or the Second Extended Maturity Date, as applicable, as used herein
and in the other Loan Documents, the term “Maturity
Date” or “Extended Maturity Date” shall
thereafter mean the First Extended Maturity Date or the Second
Extended Maturity Date, as applicable.
2.5
Prepayment . Upon not less than thirty (30) days’
prior written notice to Lender, Borrower may prepay the Loan, in
whole or in part (provided Lender shall have no obligations to
readvance any repaid principal), without prepayment premium (but
subject to any costs set forth in any Swap Contract should Lender
in its sole discretion elect to terminate any such Swap Contract
provided by Lender or its Affiliate upon any such prepayment).
2.6
Security . Payment of the Notes shall be secured by the
following:
(a) The
Mortgage;
(b) To the
extent to which they may be assigned, all other rights, licenses,
permits, franchises, authorizations, approvals and agreements
relating to the use, occupancy or operation of the Project; and
(c) The
Financing Statement.
2.7 Fees
.
(a) Loan
Fee . On the Closing Date, Borrower shall pay to Lender a loan
fee in the amount of Thirty-Five Thousand Four Hundred Twelve and
No/100 Dollars ($35,412.00).
(b) Extension
Fees . Borrower shall pay all fees for any maturity date
extension as and when due pursuant to this Agreement.
2.8 Increased
Costs .
(a) If any
Change in Law shall: (i) impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the
account of, or credit extended or participated in by, Lender;
(ii) subject Lender to any tax of any kind whatsoever with
respect to this Agreement or the Loan, or change the basis of
taxation of payments to Lender in respect thereof; or
(iii) impose on Lender or the London interbank market any
other condition, cost or expense affecting this Agreement or the
Loan or participation therein; and the result of any of the
foregoing shall be to increase the cost to Lender of making or
maintaining the Loan (or of maintaining its obligation to make the
Loan), or to reduce the amount of any sum received or receivable by
Lender hereunder (whether of principal, interest or any other
amount) then, upon request of Lender, Borrower will pay to Lender
such additional amount or amounts as will compensate Lender for
such additional costs actually incurred or reduction actually
suffered.
(b) If
Lender determines that any Change in Law affecting Lender or any
Lending Office of Lender or Lender’s holding company, if any,
regarding capital requirements has or would have the effect of
reducing the rate of return on Lender’s capital or on the
capital of Lender’s holding company, if any, as a consequence
of this Agreement, the Loan to a level below that which Lender or
Lender’s holding company could have achieved but for such
Change in Law (taking into consideration Lender’s policies
and the policies of Lender’s holding company with respect to
capital adequacy), then from time to time Borrower will pay to
Lender such additional amount or amounts as will compensate Lender
or Lender’s holding company for any such reduction
suffered.
ARTICLE III
CONDITIONS
PRECEDENT
3.1
Closing . Lender’s obligations to close the Loan and
perform under this Agreement are expressly conditioned upon
(i) Borrower’s satisfaction of all of the conditions set
forth in Exhibit C hereto; (ii) Borrower’s
satisfaction of the conditions for disbursement set forth in
Article IV (as applicable); (iii) the Title
Company’s unconditional commitment to issue the Title
Insurance Policy; and (iv) Borrower’s delivery to Lender
of the following documents, in form and content satisfactory to
Lender, duly executed (and acknowledged where necessary) by the
appropriate parties thereto:
(a) This
Agreement;
(b) The
Note;
(c) The
Mortgage, which shall be duly recorded in the official records of
the County;
(d) The
Financing Statement, which shall be duly filed with the Delaware
Secretary of State;
(e) The
Guaranty;
(f) The
Environmental Indemnity;
(g) The
Subordination of Property Management Agreement;
(h) Assignments of all other agreements, contracts, rights,
permits, licenses, entitlements, authorizations, and franchises
relating to the Project, and consents to such assignments where
deemed appropriate by Lender; and
(i) Such
other documents that Lender may reasonably require.
ARTICLE IV
LOAN
DISBURSEMENTS
4.1
Recordation Disbursements . Upon recordation of the Mortgage
and satisfaction of all conditions set forth herein, provided that
the Title Company has issued or is irrevocably committed in writing
to issue to Lender the Title Insurance Policy referred to in
Section 5.1 hereof, Lender shall disburse to Borrower the
entirety of the Loan proceeds.
4.2
Intentionally Omitted .
4.3
Limitations and Conditions on Disbursements . In addition to
the conditions precedent set forth in Sections 3.1 and 4.1
above, Borrower shall be entitled to disbursement of the Loan only
in accordance with the terms and conditions of this Agreement
(unless waived or modified by Lender) and, in addition, the
following conditions (unless waived or modified by Lender):
(a) The
representations and warranties of Borrower contained in all of the
Loan Documents shall be correct in all material respects on and as
of the date of the disbursement as though made on and as of that
date and no Event of Default or Unmatured Event of Default shall
have occurred and be continuing as of the date of the
disbursement;
(b) No
mechanics’ lien shall have been recorded against the
Property; and
(c) Lender
shall be satisfied that the advance will not be junior in priority
to any mechanics’ or materialmen’s liens or any
intervening or other liens on the Property other than Permitted
Exceptions.
4.4 Debt
Service Coverage Ratio . At all times during the term of the
Loan, the Debt Service Coverage Ratio shall equal or exceed
1.25:1.00 as determined by Lender in its sole and absolute
discretion. If for any reason the applicable Debt Service Coverage
Ratio is not met, then Borrower shall, within thirty (30) days
after Lender’s demand, immediately reduce the unpaid
principal balance of the Loan in an amount which would cause the
applicable Debt Service Coverage Ratio to be met.
ARTICLE V
TITLE
INSURANCE
5.1 Basic
Insurance . Concurrently with the recording of the Mortgage,
Borrower shall, at Borrower’s sole cost and expense, deliver
or cause to be delivered to Lender the Title Insurance Policy
issued by the Title Company (and such reinsurers and coinsurers as
Lender may require) with a liability limit of not less than the
full amount of the Loan and with coverage and in form satisfactory
to Lender, insuring Lender’s interest under the Mortgage as a
valid first lien on the Project, together with such reinsurance or
coinsurance agreements or endorsements to the Title Insurance
Policy as Lender may require, which policy shall contain only the
Permitted Exceptions from its coverage, and thereafter Borrower
shall, at its own cost and expense, do all things necessary to
maintain the Mortgage as a valid first lien on the Property.
5.2
Intentionally Omitted .
ARTICLE VI
OPERATION AND
MAINTENANCE OF THE PROJECT
6.1 Operation
as First Class Medical/Commercial Office Buildings . At
all times during the term of this Agreement, Borrower shall itself
(or through a manager satisfactory to Lender) operate the Project
as first class medical/commercial office buildings.
6.2
Maintenance . Borrower shall at all times maintain the
Project in good condition and repair (as is more fully set forth in
the Mortgage).
ARTICLE VII
LIABILITY, RISK, AND
FLOOD INSURANCE
At all
times throughout the Loan term Borrower shall, at its sole cost and
expense, maintain insurance, and shall pay, as the same becomes due
and payable, all premiums in respect thereto, including, but not
necessarily limited to:
7.1
Property . “Special Cause of Loss” insurance on
the Improvements in an amount not less than the full insurable
value on a replacement cost basis of the insured Improvements and
personal property related thereto.
7.2
Liability . Insurance protecting Borrower and Lender against
loss or losses from liability imposed by law or assumed in any
written contract and arising from personal injury, including bodily
injury or death, having a limit of liability of not less than One
Million Dollars ($1,000,000) (combined single limit for personal
injury and property damage) and an umbrella excess liability policy
in an amount not less than Fifteen Million Dollars ($15,000,000)
protecting Borrower and Lender against any loss or liability or
damage for personal injury, including bodily injury or death, or
property damage. Such policies must be written on an occurrence
basis so as to provide blanket contractual liability, broad form
property damage coverage, and coverage for products and completed
operations.
7.3
Additional Insurance . Borrower shall provide such other
policies of insurance as Lender may reasonably request in
writing.
7.4 Other
Requirements . All required insurance shall be procured and
maintained in financially sound and generally recognized
responsible insurance companies selected by Borrower and subject to
the approval of Lender. Such companies should be authorized to
write such insurance in the State of Colorado. The company issuing
the policies shall have a financial and performance rating of
“A-IX” or better by A.M. Best Co., in Bests’ Key
Guide, or such other rating acceptable to Lender. All property
policies evidencing the required insurance shall name Lender as
first mortgagee, and all liability policies evidencing the
insurance required shall name Lender as additional insured, shall
provide for payment to Lender (or its assignee, as directed by
Lender) of the net proceeds of insurance resulting from any claim
for loss or damage thereunder, shall not be cancelable as to the
interests of Lender due to the acts of Borrower, and shall provide
for at least thirty (30) days prior written notice of the
cancellation or modification thereof to Lender.
7.5
Evidence . All policies of insurance, or certificates of
insurance evidencing that such insurance is in full force and
effect, shall be delivered to Lender on or before the closing date
(together with proof of the payment of the premiums thereof). At
least thirty (30) days prior to the expiration or cancellation
of each such policy, Borrower shall furnish Lender evidence that
such policy has been renewed or replaced in the form of a
certificate reflecting that there is in full force and effect, with
a term covering the next succeeding calendar year, insurance of the
types and in the amounts required.
ARTICLE VIII
RIGHTS OF INSPECTION;
AGENCY
Lender, or
its agent, shall have the right at any time and from time to time
to enter upon the Property for purposes of inspection and
conducting Appraisals.
ARTICLE IX
REPRESENTATIONS AND
WARRANTIES
9.1
Consideration . As an inducement to Lender to execute this
Agreement and to disburse the proceeds of the Loan, Borrower
represents and warrants to Lender that the following statements set
forth in this Article IX are true, correct and complete as of
the date hereof and will be true, correct and complete as of the
Closing Date and Borrower acknowledges that the truth and accuracy
of such representations and warranties is also a condition
precedent to Lender’s obligation to make each Loan
advance.
9.2
Organization, Powers and Good Standing .
(a)
Organization and Powers-Borrower . Borrower is a limited
liability company, duly organized and validly existing under the
laws of the State of Delaware and is duly qualified to transact
business as a limited liability company under the laws of the State
of Colorado. Borrower has all requisite power and authority and
rights to own and operate its properties, to carry on its
businesses as now conducted and as proposed to be conducted, and to
enter into and perform this Agreement and the other Loan Documents.
The address of Borrower’s principal place of business is
1551 N. Tustin Avenue, Suite 300, Santa Ana,
California 92705.
(b)
Organization and Powers-Guarantor . Guarantor is a
corporation, duly organized and validly existing under the laws of
the State of Maryland. Guarantor has all requisite power and
authority and rights to own and operate its properties, to carry on
its businesses as now conducted and as proposed to be conducted,
and to enter into and perform the Environmental Indemnity and the
other Loan Documents. The address of Guarantor’s principal
place of business is 1551 N. Tustin Avenue,
Suite 300, Santa Ana, California 92705.
(c) Good
Standing . Borrower has made all filings and is in good
standing in the States of Delaware and Colorado and in each other
jurisdiction in which the character of the property it owns or the
nature of the business it transacts makes such filings necessary or
where the failure to make such filings could have a materially
adverse effect on the business, operations, assets or condition
(financial or otherwise) of Borrower. Guarantor has made all
filings and is in good standing in the State of Maryland and in
each other jurisdiction in which the character of the property it
owns or the nature of the business it transacts makes such filings
necessary or where the failure to make such filings could have a
materially adverse effect on the business, operations, assets or
condition (financial or otherwise) of Guarantor.
(d)
Non-foreign Status . Borrower is not a “foreign
corporation,” “foreign partnership,”
“foreign trust,” or “foreign estate,” as
those terms are defined in the Internal Revenue Code and the
regulations promulgated thereunder. Borrower’s U.S. employer
identification number is as set forth on the signature page
hereof.
9.3
Authorization of Loan Documents .
(a)
Authorization . The execution, delivery and performance of
the Loan Documents by Borrower are within Borrower’s powers
and have been duly authorized by all necessary action by
Borrower.
(b) No
Conflict . The execution, delivery and performance of the Loan
Documents by Borrower will not violate (i) Borrower’s
operating agreement or articles of organiza
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