Substitution of Properties. (a) So long as no Default or Event of Default has occurred and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice). (b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38: (i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports. (ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38. (iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located. (iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto. (v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid. (vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons. (c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c). (d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Section 2.19, Borrower shall have the right, only after the earlier of the date the entire Loan has been included in a Securitization (aincluding each and every Note) So long as no Default or Event January 1, 2007, on one or more occasions, to obtain the release of Default has occurred one or more individual Mortgaged Property from the lien of the Mortgage and is continuing hereunderthe Loan Documents (for purposes of this section only, in the event (ihereinafter referred to as, “Substituted Property”) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest substituting therefor its fee interest in any Leased Property one or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property more manufactured housing communities located in the United States and of like kind and quality (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice which shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth hereingeographic diversity of the Substituted Property vis-à-vis the other Properties) acquired by Borrower (individually, a “Replacement Property” and (E) specify collectively, the date for “Replacement Properties”). In addition, any such substitution (which shall be subject, in each case, to the Installment Payment Date no less than 14 nor more than 45 days after satisfaction of the date following conditions precedent:
(a) No Event of such Substitution Notice)Default shall have occurred and be continuing and Lender shall have received a certificate from the Borrowers, in form and substance acceptable to Lender, confirming the foregoing.
(b) Each proposed Exchange Property The Borrowers shall be approved by have given Lender at least sixty (60) days prior written notice of its election to substitute the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:Substituted Property.
(ic) Lessor, Indenture Trustee and LC Issuer The Borrowers shall have paid to Lender a processing fee in an amount equal to $10,000.
(d) Lender shall have received an Appraisal Appraisals (from a state certified appraiser engaged by Lender) that satisfy the Prudent Lender Standard for the Replacement Property and a "Phase I" Environmental Report of the Exchange Substituted Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 dated no more than forty-five (45) days prior to the date of such proposed substitution and shall indicate substitution, indicating that the fair market value and useful life of the Exchange Replacement Property at equals or exceeds the time greater of the proposed substitution and prospectively for the end of each remaining year fair market value of the Maximum Lease Term (assuming in each case that Substituted Property based upon such appraisal and the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Substituted Property based on the appraisal prepared and delivered in connection with the commencement closing of the Lease Loan.
(e) The Underwritten Net Cash Flow for the Replacement Property immediately preceding the substitution must be equal or greater than the Underwritten Net Cash Flow of the Substituted Property as determined in accordance with the Prudent Lender Standard.
(f) The Debt Service Coverage Test is satisfied.
(g) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report from an Independent environmental consultant approved by Lender in accordance with the Prudent Lender Standard dated not more than forty-five (45) days prior to such release and substitution, which conclude that the Replacement Property does not contain any Hazardous Materials in violation of Environmental Laws, is not subject to any risk of contamination from any off-site Hazardous Materials, and is not in violation of any Environmental Laws.
(h) Lender shall have received a physical conditions report with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 the Replacement Property from an independent architect or engineer approved by Lender in accordance with the Prudent Lender Standard in form and substance acceptable to Lender in accordance with the Prudent Lender Standard, dated not more than forty-five (45) days prior to such release and substitution, stating that the Replacement Property is in good condition and repair and free of material damage or waste. If the physical conditions report recommends that any material repairs be made with respect to the Replacement Property, Lender may condition (in accordance with the Prudent Lender Standard) its approval of such Replacement Property on the Borrowers depositing into the Replacement Reserve Account an amount equal to one hundred twenty-five percent (125%) of the estimated cost of such repairs.
(i) Lender shall have received annual operating statements and occupancy statements for the Replacement Property for the three (3) most recently completed Fiscal Years (or, if the Replacement Property has been acquired by Borrower or an Affiliate thereof within 12 months of the proposed date of such proposed the substitution, the most recent Fiscal Year) and a current operating statement for the Substituted Property. Each of the statements required under this clause (i) shall speak be certified to Lender as of a date not more than six months prior being true and correct in all material respects to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date Borrower and accompanied by a certificate from the applicable Borrower certifying that there has been no adverse change in the environmental status financial condition of the Exchange Replacement Property from that described in since the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results date of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reportsoperating statements.
(j) Borrower shall have executed, acknowledged and delivered to Lender (i) a Mortgage, an Assignment of Rents and Leases and financing statements with respect to the Replacement Property, (ii) Lessoran Environmental Indemnity Agreement with respect to the Replacement Property, Indenture Trustee (iii) written confirmation from each Guarantor regarding such substitution, (iv) modifications to the Loan Documents as Lender deems necessary or desirable in accordance with the Prudent Lender Standard to properly reflect the substitution and LC Issuer (vi) such other documents and agreements as may be reasonably requested by Lender in accordance with the Prudent Lender Standard to evidence the substitution. The Mortgage, Assignment of Rents and Leases, financing statements and Environmental Indemnity Agreement with respect to the Replacement Property shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the Substituted Property on the date hereof. The Mortgage encumbering the Replacement Property shall be cross-defaulted and cross-collateralized with the other Mortgages encumbering the other Properties and shall secure all amounts evidenced by the Note. The amount of the Loan allocated to the Replacement Property (such amount being hereinafter referred to as the “Substitute Allocated Loan Amount”) shall equal the Allocated Loan Amount of the Substituted Property.
(k) Lender shall have received (i) a “tie-in” or similar endorsement to each Title Insurance Policy insuring the lien of the other Mortgages as of the date of the substitution with respect to the Title Insurance Policy insuring the lien of the Mortgage on the Replacement Property to the extent available, and (ii) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the lien of the Mortgage on the Replacement Property, issued by the title company that issued the Title Insurance Policies insuring the liens of the other Mortgages encumbering the other Properties and dated as of the date of the substitution. The Title Insurance Policy issued with respect to the Replacement Property shall (i) provide coverage in the amount of the Substitute Allocated Loan Amount if the “tie-in” or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Allocated Loan Amount of the Replacement Property (or a lesser percentage that satisfies the Prudent Lender Standard but is not less than one hundred ten percent (110%) of the Substitute Allocated Loan Amount of the Replacement Property), (ii) insure Lender that the Mortgage creates a valid first lien on the Replacement Property, free and clear of all exceptions from coverage other than Permitted Encumbrances determined in accordance with the Prudent Lender Standard, (iii) contain such endorsements and affirmative coverages as are contained in each Title Policy insuring the lien of the existing Mortgages and (iv) name Lender as the insured.
(l) Lender shall have received a Lease Supplement in current survey for the Replacement Property, certified to the title company providing such Title Insurance Policy and Lender and its successors and assigns pursuant to Lender’s standard form of Schedule H annexed hereto andcertification prepared in accordance with the Prudent Lender Standard, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, prepared by a professional land surveyor licensed in the state in which the Exchange Replacement Property is located and acceptable to Lender in accordance with the minimum standard detail requirements as most recently adopted by ALTA/ACSM and the Prudent Lender Standard. Said survey shall show no state of facts or conditions reasonably objectionable to Lender in accordance with the Prudent Lender Standard.
(m) Lender shall have received valid certificates of insurance evidencing the insurance coverages required to be maintained hereunder with respect to the Replacement Property, together with endorsements reasonably satisfactory to Lender in accordance with the Prudent Lender Standard and naming Lender as an additional insured and loss payee as required by Lender in accordance with the Prudent Lender Standard under such policies.
(n) The Borrowers shall deliver or cause to be delivered to Lender (i) updates certified by the Borrowers of all organizational documentation related to the Borrowers and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the closing date; (ii) good standing certificates, certificates of qualification to do business in the state in which the Replacement Property is located (if required in such state) and (iii) if applicable, resolutions of the General Partner authorizing the substitution and any actions taken in connection with such substitution.
(o) Lender shall have received the following opinions of Borrowers’ counsel, all of which shall be in form and substance and delivered by counsel reasonably acceptable to Lender in accordance with the Prudent Lender Standard: (i) an opinion of counsel in the state in which the Replacement Property is located as to the enforceability of the Mortgage and Assignment of Rents and Leases delivered with respect to the Replacement Property and such other matters as Lender may reasonably request; (ii) an opinion of counsel with respect to the enforceability of the other Loan Documents delivered with respect to the Replacement Property and any modifications to the existing Loan Documents and such other matters as Lender may reasonably request; (iii) an opinion of counsel stating that the substitution does not constitute a “significant modification” of the Loan or “deemed exchange” of the Note under Section 1001 of the Code or otherwise cause any “real estate mortgage investment conduit” within the meaning of Section 860D of the Code (“REMIC”) to fail to maintain its status as a REMIC as a result of such substitution and (iv) such other opinions as Lender may reasonably request in accordance with the Prudent Lender Standard.
(p) Lender shall have received a current rent roll of the Replacement Property certified by Borrower as being true and correct.
(q) Lender shall have received and approved in accordance with the Prudent Lender Standard the Management Agreement and Manager relating to the Replacement Property or evidence reasonably acceptable to Lender in accordance with the Prudent Lender Standard that the Replacement Property is included under the existing Management Agreement.
(r) Lender shall have received certified copies of all material contracts and agreements relating to the leasing and operation of the Replacement Property.
(s) Lender shall have received such other and further approvals, opinions, documents and information in connection with the substitution as Lender may have reasonably requested in accordance with the Prudent Lender Standard.
(t) Lender shall have received Rating Confirmations from each of the Rating Agencies.
(u) The Borrowers shall have paid or reimbursed Lender for all third party out-of-pocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the substitution and the Borrowers shall have paid all fees and expenses of the Rating Agencies, recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution.
(v) The applicable Borrower shall submit to Lender, not less than ten (10) days prior to the date of such Substitution, a release of lien and all other required documents for the Substituted Property for execution by Lender which is in a form appropriate for the jurisdiction in which the Substituted Property is located.
(ivw) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard On or prior to the Exchange date of substitution, the Borrowers shall deliver an Officer’s Certificate dated as of the date of substitution certifying that the requirements set forth in this Section 2.19 have been satisfied, together with detailed backup for all required calculations, all of which shall be satisfactory to Lender in accordance with the Prudent Lender Standard. Upon the satisfaction of the foregoing conditions precedent, as reasonably determined by Lender in accordance with the Prudent Lender Standard, Lender will release its lien from the Substituted Property and the Replacement Property shall have received evidence satisfactory be deemed to each such Person that be the Exchange applicable Mortgaged Property complies with all zoning for purposes of the Mortgages and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction the Allocated Loan Amount with respect to the transactions contemplated by this Article 38 Substituted Property shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is deemed to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated Allocated Loan Amount with respect to the Replacement Property for all purposes hereunder. Notwithstanding anything to the contrary contained herein, the parties hereto hereby acknowledge and agree that after all or any portion of the Loan has been included in a Securitization, with respect to any Lender approval or similar discretionary rights over any matters contained in this Section (any such difference (the Substitution Adjustment) and the ----------------------- Lease matter, a “Lender Approval Item”), such rights shall be modified as set forth in Article 16(c).
(d) If all construed such that Lender shall only be permitted to withhold its consent or approval with respect to any Lender Approval Item if the same fails to meet the Prudent Lender Standard. Notwithstanding the foregoing, during the term of the conditions set forth Loan the Borrowers may not substitute Replacement Properties for any Mortgaged Property or Mortgaged Properties the aggregate initial Allocated Loan Amount(s) of which individually, or in this Article 38 have been satisfiedthe aggregate, then, upon payment exceed 75% of the Substitution Adjustment, if applicable, and Principal Indebtedness on the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunderClosing Date.
Appears in 1 contract
Sources: Loan Agreement (Affordable Residential Communities Inc)
Substitution of Properties. (a) So long as no Default or Event During the Term, the Tenant shall have the right, with the prior written consent of Default has occurred and is continuing hereunder, in the event Landlord (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property not to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(aunreasonably withheld or delayed) and the corresponding section of the Indenture, Agent (B) state that Lessee proposes to substitute such Leased Property in accordance with Section 9.06(a)(vii) of the provisions of this Article 38Reimbursement Agreement), (C) include, if a substitution shall occur under and on the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the terms and conditions set forth hereinin this Section 4.4, and subject to the limitations set forth in paragraph (Ed) specify of this Section 4.4, to substitute a Substitute Property for any Individual Property which is subject to the date for such substitution (which shall be terms of this Lease at the Installment Payment Date no less than 14 nor more than 45 days after the date time of such Substitution Notice)substitution.
(b) Each proposed Exchange Property shall be approved by As a condition precedent to the Indenture Trustee (acting on instructions from all effectiveness of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant a Substitute Property for an Individual Property, the Tenant shall deliver to this Article 38the Landlord, the Agent and the Trustee:
(i) Lessor, Indenture Trustee and LC Issuer shall have received A certificate from an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject independent certified public accountant reasonably acceptable to the approval of Lessor Landlord and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to Agent stating that the date consummation of such proposed substitution and shall indicate will not have a material adverse effect on the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms treatment or status of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.for tax purposes;
(ii) LessorA certificate, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered signed by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason an Authorized Representative of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to LessorTenant, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show stating that the fair market value of the Exchange Substitute Property on and as of the effective date of the substitution is less greater than or equal to the fair market value of the Leased Individual Property for which being replaced thereby (as determined by the appraisal delivered to the Landlord and the Agent pursuant to Section 6(b) of the Agency and Development Agreement and as confirmed pursuant to Section 7(e)(v) of the Agency and Development Agreement), accompanied by an appraisal of the Substitute Property, prepared (in accordance with FIRREA and all other regulatory requirements applicable to the Agent) and certified by an independent MAI appraiser acceptable to the Landlord and the Agent, setting forth the estimated fair market value of the Substitute Property on and as of the effective date of such Exchange Property is substitution (on an "as-completed" basis);
(A) All of the documents and other items required to be substituted, then Lessee shall be required delivered by the Tenant as a condition to pay each Land Acquisition Disbursement pursuant to Lessor, Section 7(c) of the Agency and Development Agreement as an adjustment to Basic Rent hereunder, if the amount of such difference, plus an amount equal to the Reinvestment Premium calculated Tenant were requesting a Land Acquisition Disbursement with respect to such difference the Substitute Property, and (B) all of the Substitution Adjustmentdocuments and other items required to be delivered by the Tenant as a condition to each Final Disbursement pursuant to Section 7(e) of the Agency and Development Agreement as if the Tenant were requesting a Final Disbursement with respect to the Substitute Property; and
(iv) An opinion of counsel reasonably acceptable to the Landlord and the ----------------------- Agent stating that the substitution of the Substitute Property for the Individual Property being replaced qualifies as a tax-free like kind exchange pursuant to Section 1031 of the Internal Revenue Code, and that such substitution will have no adverse tax consequences for the Landlord.
(c) On the effective date of the substitution:
(i) The Landlord shall acquire, and the Tenant shall convey, the Substitute Property in the same manner as if such Substitute Property were acquired by the Landlord prior to the Final Project Completion Date;
(ii) The Landlord and the Tenant shall enter into a Lease Supplement with respect to the Substitute Property;
(iii) The Landlord shall be modified as set forth convey its interest in Article 16(c)and to the Individual Property being replaced by the Substitute Property to the Tenant; and
(iv) The Landlord shall execute and deliver to the Agent an Applicable Mortgage and an Applicable Assignment of Rents with respect to the Substitute Property.
(d) If all of Notwithstanding anything to the conditions set forth contrary contained in this Article 38 Section 4.4, the Tenant shall have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property no right to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereundersubstitute more than two (2) Substitute Properties during any five (5) year period.
Appears in 1 contract
Sources: Master Lease (Helmstar Group Inc)
Substitution of Properties. (a) So long as no Default or Event of Default has occurred Subject to the terms and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth hereinin Section 2.4.2 and this Section 2.4.4, and Borrower may obtain a release of Lender's Lien against one or more individual Properties by substituting therefor other property(ies) (E) specify the date for a "Substitute Property"), provided that such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval Properties shall not be unreasonably withheld, conditioned or delayedallowed more than once per year during the Term. The following additional conditions Any such substitution shall be satisfied prior subject, in each case, to any substitution the satisfaction of properties pursuant to this Article 38the following conditions precedent:
(i) Lessor, Indenture Trustee and LC Issuer Lender shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made any due diligence materials reasonably requested by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease Lender with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to Substitute Property(ies) and the date of such proposed substitution and shall not disclose any conditions which same are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change Lender in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reportsall respects.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement The Substitute Property(ies) are satisfactory to Lender in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38all respects in Lender's sole discretion (after Lender's due diligence investigation).
(iii) Lessee After giving effect to the substitution, the overall Debt Service Coverage Ratio for the Loan is not less than the overall Debt Service Coverage Ratio for the Loan as of the date hereof and as of the date immediately preceding the substitution.
(iv) Lender shall have caused received evidence in writing from the applicable Rating Agencies to the effect that such substitution will not result in a qualification, withdrawal or downgrading of the ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization which are then outstanding.
(v) If required by the applicable Rating Agencies, Borrower shall also deliver or cause to be delivered a non-consolidation opinion with respect to the Borrower in form and substance satisfactory to Lender and the applicable Rating Agencies.
(vi) No Event of Default shall exist.
(vii) Lender shall have received from Borrower fully executed and acknowledged counterparts of Mortgages, the Assignment of Leases and the Assignments of Agreements relating to each of the Substitute Properties and evidence that counterparts of the Mortgages and Assignment of Leases have been delivered to Lessorthe title company for recording, Indenture Trustee in the reasonable judgment of Lender, so as to effectively create upon such recording valid and LC Issuer enforceable Liens upon such Substitute Properties, of the requisite priority, in favor of Lender (w) a special warranty deedor such other trustee as may be required or desired under local law), sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described and such other Liens as are permitted pursuant to the Loan Documents.
(viii) Lender shall have received with respect to each Substitute Property (A) a Title Insurance Policy and evidence that all premiums in clauses (a)respect of such Title Insurance Policy has been paid, (b)B) an "ALTA Survey" satisfactory to Lender, (c)C) valid certificates of insurance for the policies of insurance required hereunder and evidence of the payment of all premiums payable for the existing policy period which period shall not be less than one month in advance, (D) an environmental report reasonably satisfactory to Lender indicating that there are no hazardous materials present at the Substitute Property and no environmental condition affecting the Substitute Property requiring remediation, (E) an engineering report reasonably satisfactory to Lender, (F) an appraisal reasonably satisfactory to Lender, and (hG) one of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessorfollowing, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇Lender: (i) letters or other evidence from the appropriate municipal authorities (or other Persons) concerning applicable zoning and building laws, ▇▇ Issuer (ii) an ALTA 3.1 zoning endorsement for the applicable Title Insurance Policy, or (iii) a zoning opinion letter.
(ix) Borrower shall deliver an opinion of counsel for Borrower in form and Indenture Trustee substance satisfactory to Lender and the applicable Rating Agencies stating, among other things, that the substitution does not violate the rules applicable to a REMIC.
(x) Borrower shall deliver an Officer's Certificate certifying that the requirements set forth in connection with the transactions contemplated by this Article 38 Section 2.4.4 and Section 2.4.2 have been satisfied.
(xi) Borrower shall deliver such other certificates, documents or instruments as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee Lender may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee .
(xii) Borrower shall pay all fees reasonable costs and expenses of Lender incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Personssubstitution.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of Notwithstanding anything to the contrary contained in this Article 38 shall show that Section 2.4.4, upon the fair market value substantial completion of the Exchange Property is less than the fair market value proposed expansion of the Leased Property for which such Exchange Property is to be substitutedlocated in Smithfield, then Lessee shall be required to pay to LessorNorth Carolina, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal subject to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all satisfaction of the conditions set forth in this Article 38 have been satisfiedcontained above, then, upon payment Borrower may obtain a release of Lender's Lien against any two of the Substitution Adjustment, if applicableSpecial Release Properties, and the conveyance completed expansion of the Exchange Property to Lessor located in accordance with the terms hereofSmithfield, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and North Carolina shall be effective as to deemed the Substitute Property for such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunderreleased Property(ies) for all purposes contained herein.
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Section, at any time following the commencement of the Defeasance Period, Borrower may obtain a release of the Lien of the Mortgage (and the related Loan Documents) to the extent it encumbers one or more Mortgaged Properties (a "SUBSTITUTED PROPERTY") by substituting therefor one or more office properties acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the "SUBSTITUTE PROPERTIES"), provided that (a) So long as the Substitution Conditions are satisfied with respect to the Substitute Properties, (b) no Default or Event such substitution may occur after the Anticipated Repayment Date, (c) such substitution shall not be allowed more than two (2) times during the term of Default has occurred the Loan and is continuing hereunder, in (d) not more than five (5) Mortgaged Properties may be released from the event Lien of the Mortgage (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (related Loan Documents) during the Substitution Notice) term of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property Loan pursuant to this Article 38(a)SECTION 11. Such notice Any such substitution shall (A) refer specifically be subject, in each case, to this Article 38(a) and the corresponding section satisfaction of the Indenture, following conditions precedent (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereofcollectively, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:"SUBSTITUTION CONDITIONS"):
(i) LessorLender shall have received a copy of a deed conveying all of Borrower's right, Indenture Trustee title and LC Issuer interest in and to the Substituted Property or Substituted Properties then being Released to an entity other than Borrower and a letter from Borrower countersigned by the Title Company acknowledging receipt of such deed or assignment and assumption, as applicable, and agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located or in the counties in which the Substituted Properties are located;
(ii) Lender shall have received an Appraisal and a "Phase I" Environmental Report appraisal of the Exchange Substitute Property made or Substitute Properties, as applicable, dated no more than sixty (60) days prior to the substitution by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject appraiser acceptable to the approval Rating Agencies, indicating an appraised value of Lessor and LC Issuerthe Substitute Property or Substitute Properties, which approval shall not be unreasonably withheldas applicable, which Appraisal and Environmental Report shall have been made at that is equal to or greater than the expense Release Price of Lessee. Such Appraisal the Substituted Property or Substituted Properties, then being Released, determined by Lender as of the Closing Date;
(iii) after giving effect to the substitution, the Debt Service Coverage Ratio for the Mortgaged Properties (including the Substitute Properties but excluding the Substituted Properties) shall be delivered at least 30 days equal to the greater of (i) 2.22:1 (on or before April 16, 2003) or 1.81:1 (on or after April 17, 2003), and (ii) the Debt Service Coverage Ratio for the Loan for all of the Mortgaged Properties immediately preceding the substitution;
(iv) the Net Operating Income for any Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease or, with respect to a Substitute Property for which information regarding the Net Operating Income of such Leased Property. Such Environmental Report shall be delivered at least 30 days Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such proposed substitution, shall speak as period of a date not more than six months time immediately prior to the date of substitution as may be determined from the information regarding such proposed substitution and Net Operating Income available (which period of time, in any event, shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference one (the Substitution Adjustment1) and the ----------------------- Lease shall be modified as set forth in Article 16(cyear).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.;
Appears in 1 contract
Sources: Loan Agreement (Arden Realty Inc)
Substitution of Properties. Subject to the terms of this Section 2.6 and after the expiration of the Lockout Period, Borrower agrees that Mortgage Borrower may obtain a release of the Lien of a Security Instrument (and the related Loan Documents) encumbering an Individual Property (a "Release Property") by substituting therefor another hotel property of like kind and quality acquired by Mortgage Borrower (individually, a "Substitute Property" and collectively, the "Substitute Properties"), provided that the following conditions precedent are satisfied:
(a) So long Mortgage Borrower shall not have the right to release and substitute (i) more than one (1) Individual Property in accordance with this Section in any twelve (12) month period and (ii) any Properties after such time as Mortgage Borrower has released and substituted Properties which in the aggregate had an appraised value of more than thirty-five percent (35%) of the aggregate appraised values of the Properties subject to the Lien of the Security Instruments as of the Closing Date.
(b) Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Release Property.
(c) Borrower has delivered to Lender evidence satisfactory to Lender that all of the conditions set forth in the Section 2.6 of the Mortgage Loan Agreement have been satisfied, including, without limitation, all documents and information required to be delivered to Mortgage Lender by Mortgage Borrower, in form and substance acceptable to Lender in its reasonable discretion and if any such documents and information is certified to Mortgage Lender, then such documents and information shall also be certified to Lender.
(d) Mortgage Borrower shall own the Substitute Property.
(e) Lender shall have received a certificate of Borrower certifying, together with other evidence satisfactory to Lender that, the Debt Service Coverage Ratio for the twelve (12) months immediately preceding the substitution with respect to the Substitute Property is at least equal to the Debt Service Coverage Ratio for the twelve (12) full calendar months immediately preceding the date of the proposed substitution with respect to the Release Property, which Debt Service Coverage Ratio shall be based upon the Allocated Loan Amounts of the Substitute Property and the Release Property.
(f) Unless such event or condition relates solely to the Release Property and will be fully cured by the release and substitution, no Default or Event of Default has shall have occurred and be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and warranties contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the release and substitution with respect to Borrower, the Properties and the Substitute Property and containing any other representations and warranties with respect to Borrower, the Properties, the Substitute Property or the Loan as Lender, such certificate to be in form and substance satisfactory to Lender.
(g) Borrower shall (A) have executed, acknowledged and delivered to an Environmental Indemnity with respect to the Substitute Property from Indemnitor and (B) have caused Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Environmental Indemnity shall be the same in form and substance as the Environmental Indemnity executed and delivered with respect to the related Release Property subject to modifications reflecting only the Substitute Property as the Individual Property and such modifications reflecting the laws of the State in which the Substitute Property is continuing hereunderlocated. The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the "Substitute Allocated Loan Amount") shall equal the Allocated Loan Amount of the related Release Property.
(h) Mortgage Borrower shall have received and delivered to Lender an Owner's Title Policy (or a marked, signed and redated commitment to issue such Owner's Title Policy) insuring the Substitute Property, issued by the title company that issued the Owner's Title Policy insuring the existing Individual Properties and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Owner's Title Policy insuring the Release Property. The Owner's Title Policy issued with respect to the Substitute Property shall (1) provide coverage in the event amount of the fair market value of the Substitute Property, (2) insure the title on the Substitute Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), and (3) contain such endorsements and affirmative coverages as are then available and are contained in the Owner's Policies insuring the existing Individual Properties, and such other endorsements or affirmative coverage that a prudent institutional property owner would require. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(i) Lessee Borrower shall deliver or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold delivered to a Person that is not an Affiliate Lender (A) updates certified by Mortgage Borrower of any party all organizational documentation related to any Operative DocumentMortgage Borrower and/or the formation, Lessee may give Lessor and structure, existence, good standing and/or qualification to do business delivered to Lender on the Indenture Trustee an irrevocable written notice Closing Date; (the Substitution NoticeB) good standing certificates, certificates of Lessee's intention qualification to ------------------- substitute a new property located do business in the United States jurisdiction in which the Substitute Property is located (if required in such jurisdiction); and (C) resolutions of Mortgage Borrower authorizing the substitution and any actions taken in connection with such substitution.
(j) Lender shall have received the following opinions of Borrower's counsel: (A) an Exchange Property) ----------------- for such Leased opinion of counsel acceptable to stating that the Environmental Indemnity delivered with respect to the Substitute Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction ofSection, among other things, is valid and enforceable in accordance with the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trusteeterms, subject to the approval of Lessor laws applicable to creditors rights and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal equitable principles and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by LesseeBorrower and that the execution and delivery of such Environmental Indemnity and the performance by Borrower of its obligations thereunder will not cause a breach of, as lesseeor a default under, adding any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason (C) an update of the transactions contemplated by this Article 38Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein.
(iiik) Lessee Borrower shall have caused Mortgage Borrower to be executed pay or reimburse Lender for all reasonable costs and delivered expenses incurred by Lender (including, without limitation, reasonable attorneys' fees and disbursements) in connection with the release and substitution and Borrower shall have caused Mortgage Borrower to Lessorpay all recording charges, Indenture Trustee filing fees, taxes or other expenses (including, without limitation, mortgage and LC Issuer intangibles taxes and documentary stamp taxes) payable in connection with the substitution.
(wl) Lender shall have received a special warranty deedcurrent Appraisal of (i) the Substitute Property and (ii) the Release Property, sufficient to convey to Lessor good and marketable title each prepared within sixty (60) days prior to the Exchange release and substitution, showing an appraised value of the Substitute Property subject only equal to or greater than one hundred percent (100%) of (A) the Permitted Encumbrances described in clauses (a), (b), (c)appraised value of the Release Property as of the Closing Date, and (hB) the appraised value of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Release Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days immediately prior to the date of the proposed substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(ivm) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and Lender shall have received evidence satisfactory to each such Person that an estoppel and recognition letter from the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to franchisor under the transactions contemplated by this Article 38 shall have been obtained and all taxes (whichFranchise Agreement, if permitted by lawany, may be paid in installments)for the Substitute Property, fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer Lender
(n) Lender shall have received a Replacement Management Agreement for the Substitute Property and Indenture Trustee the Manager thereunder shall have executed and delivered to Lender a conditional assignment of management agreement with respect to such new Management Agreement on substantially the same terms as used in connection with the transactions contemplated by this Article 38 Release Property or such other terms as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments are acceptable Lender;
(o) Lender shall have received a subordination of operating lease for the Substitute Property in form and substance reasonably satisfactory to Lender and
(p) Borrower shall deliver an Officers Certificate certifying that the requirements set forth in this Section 2.6 have been duly recorded by Lesseesatisfied. Lessee shall pay all fees and expenses incurred All due diligence required to be delivered to Lender in connection with this Section 2.6 shall be in form, scope and substance satisfactory to Lender. Upon the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trusteesatisfaction of the foregoing conditions precedent, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided Substitute Property shall be deemed to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) be an Individual Property for purposes of this Article 38 shall show that Agreement and the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated Substitute Allocated Loan Amount with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease Substitute Property shall be modified as set forth in Article 16(c).
(d) If all of deemed to be the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance Allocated Loan Amount with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as respect to such affected Leased Substitute Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default for all purposes hereunder.
Appears in 1 contract
Sources: Junior Mezzanine Loan Agreement (Felcor Lodging Trust Inc)
Substitution of Properties. Subject to the terms and conditions set forth in this Section 2.6, Borrower may obtain a release of the Lien of the Security Instrument (and the related Loan Documents) encumbering an Individual Property (a Substituted Property) by substituting therefor another property of like kind and quality acquired by Borrower (individually, a Substitute Property and collectively, the Substitute Properties), provided that the following conditions precedent are satisfied:
(a) So long as no Default or Event of Default has occurred and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is The Maturity Date shall have not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice)occurred.
(b) Each proposed Exchange Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Substituted Property.
(c) Lender shall be approved by the Indenture Trustee (acting on instructions from have received a copy of a deed conveying all of Borrower's right, title and interest in and to the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior Substituted Property to any substitution of properties an entity other than Borrower pursuant to this Article 38:an arms length transaction and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county in which the Substituted Property is located.
(id) Lessor, Indenture Trustee and LC Issuer Lender shall have received a fee in the amount of $10,000 with respect to each Substituted Property.
(e) Lender shall have received an Appraisal and a "Phase I" Environmental Report appraisal of the Exchange Substitute Property made by an Appraiser and environmental engineerSubstituted Property, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 dated no more than one hundred eighty (180) days prior to the date substitution date, by an appraiser acceptable to the Rating Agencies if the Loan is part of such proposed substitution and shall indicate a Securitization, or the fair market Lender if the Loan is not part of a Securitization, which demonstrates that the appraised value and useful life of the Exchange Substitute Property shall be equal to or greater than the appraised value of the Substituted Property.
(f) All or substantially all of the Substitute Property shall be subject to a Lease to a tenant which has a senior unsecured long term credit rating (or whose obligations under the Lease are guaranteed by a guarantor which has a senior unsecured long term credit rating) at least equal to, for each Rating Agency, the lower of (i) the credit rating of Bank of America, N.A. at the time of the proposed substitution by such Rating Agency and prospectively for (ii) “A+” in the end case of each remaining year S&P, “AA-” in the case of Fitch and “Aa2” in the case of ▇▇▇▇▇’▇, which Lease shall (A) provide that every monetary and non-monetary obligation associated with managing, owning, developing and operating such Substitute Property is an obligation of the Maximum Lease Term tenant thereunder (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this i.e., a “triple net” Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement , (B) have a term substantially similar or longer than that of the Lease then encumbering the applicable Substituted Property, (C) provide offset and termination rights in favor of the tenant thereunder substantially similar (or more favorable to Borrower, as landlord thereunder) to those in favor of Bank of America, N.A. provided for by the BofA Lease then encumbering the applicable Substituted Property, and (D) provide for annual cash flow equal to or in excess of the Underwritten Net Cash Flow on an annual basis of the Substituted Property. In the event the tenant’s obligations under the Lease are guaranteed by such guarantor, the Lender shall have approved the form of guarantee. Lender shall have received copies of all Leases affecting the Substitute Property certified by Borrower as being true and correct.
(g) After giving effect to the substitution, the DSCR for the Loan for all of the Properties (excluding the Substituted Property and including the Substitute Property) is not less than the greater of (1) the DSCR for the Loan for all of the Properties as of the Closing Date and (2) the DSCR for the Loan for all of the Properties as of the date immediately preceding the substitution.
(h) After giving effect to the substitution, the aggregate Allocated Loan Amount of the Substituted Properties shall not exceed (A) during any twelve (12) consecutive month period, 5.00% of the initial Principal Amount of the Loan or (B) during the term of the Loan, 30.00% of the initial Principal Amount of the Loan; provided, that for purposes of the aforementioned calculation in clause (A) of the maximum 5.00% of the initial Principal Amount of the Loan, as calculated by reference to the Allocated Loan Amount of the Substituted Properties, that may be substituted during any twelve consecutive month period, such calculation shall exclude any substitution of any Individual Property for which a reserve amount has been allocated on Schedule IX hereto or the Individual Property referred to on Schedule II attached hereto as “Las Vegas Operations Center”, which substitution occurs in connection with, as a result of and simultaneous with the exercise of the right to repurchase such Individual Property granted to Bank of America, N.A. in the documentation pursuant to which Borrower acquired the Property.
(i) The quotient of Underwritten Net Cash Flow (for the most recent twelve (12) month period immediately preceding the substitution for which the Borrower has delivered financial statements to the Lender pursuant to this Agreement (or in the event the Borrower has not yet delivered financial statements for a twelve (12) month period, such shorter period for which Borrower has delivered financial statements to the Lender pursuant to this Agreement annualized)) divided by an amount equal to Allocated Loan Amount multiplied by the DSCR Constant shall be calculated separately with respect to each of the Substituted Property and the Substitute Property (replacing for this purpose all references to Property in the definitions of Underwritten Net Cash Flow, Operating Income and Operating Expenses with Substituted Property and Substitute Property, as applicable) and the result of such Leased Property. Such Environmental Report calculation for the Substitute Property shall be delivered at least 30 days prior equal to or greater than the date result of such proposed substitution, shall speak as of a date not more than six months prior to calculation for the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental ReportsSubstituted Property.
(iij) LessorBorrower shall have obtained a Rating Agency Confirmation in writing. If any subordinate or mezzanine financing has been obtained with respect to the Property (including, Indenture Trustee without limitation, under Article XIV hereof), the Borrower shall have obtained the consent of the lender under such subordinate or mezzanine financing in writing to such substitution.
(k) No Event of Default shall have occurred and LC Issuer be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a Lease Supplement certificate from Borrower confirming the foregoing, stating that the representations and warranties of Borrower contained in this Agreement and the form other Loan Documents are true and correct in all material respects on and as of Schedule H annexed hereto and, if appropriate, a memorandum or short form the date of lease the substitution with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property fromto Borrower, the terms of this Lease, Properties and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38Substitute Property.
(iiil) Lessee Borrower (A) shall have caused to be executed executed, acknowledged and delivered to Lessor, Indenture Trustee and LC Issuer Lender (wI) a special warranty deed, sufficient to convey to Lessor good Security Instrument and marketable title shall have approved UCC-1 Financing Statements with respect to the Exchange Substitute Property, and shall have executed, acknowledged and delivered to Lender a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Security Instrument and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Security Instrument and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statements in the office of the Secretary of State (or other central filing office) of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances described in clauses (a)and such other Liens as are permitted pursuant to the Loan Documents, (b)B) shall have executed, (c), acknowledged and (h) of the definition thereof (delivered to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits Lender an Environmental Indemnity with respect to the Exchange Substitute Property and (C) shall have caused the Guarantor to acknowledge and confirm its respective obligations under the Loan Documents. The Security Instrument, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as existed the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting only the Substitute Property as the Individual Property that is the subject of such substituted Leased documents and such modifications reflecting the laws of the state in which the Substitute Property is located as shall be recommended for similar transactions by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (r) below. The Security Instrument encumbering the Substitute Property shall secure all amounts evidenced by the Notes, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such Security Instrument shall be equal to one hundred twenty-five percent (125%) of the fair market value of the Substitute Property. Lessor, Indenture Trustee and LC Issuer The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the Substitute Release Amount) shall equal the Allocated Loan Amount of the related Substituted Property.
(m) Lender shall have received (aA) to the extent available any “tie-in” or similar endorsement to each title insurance policy insuring the Lien of an owner's and a mortgagee's policy existing Security Instrument as of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if date of the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) substitution with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, title insurance policy insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss the Lien of the Security Instrument with respect to the Exchange Substitute Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (bB) a survey title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) insuring the Lien of the Exchange Security Instrument encumbering the Substitute Property, satisfactory in form issued by the title company that issued the title insurance policies insuring the Lien of the existing Security Instrument and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the title insurance policy insuring the Lien of the Security Instrument encumbering the Substituted Property. The title insurance policy issued with respect to the Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the “tie-in” or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Release Amount, (2) insure Lender that the relevant Security Instrument creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are then available and are contained in the title insurance policies insuring the Liens of the existing Security Instruments, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(n) Lender shall have received a current Survey for each Substitute Property, certified to the Title Company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Exchange Substitute Property is located.
(iv) Lessorlocated and, Indenture Trustee and LC Issuer shall have had if the opportunity to conduct customary due diligence with regard Loan is the subject of a Securitization, acceptable to the Exchange Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property (unless such real property has been satisfactorily designated by lot number on a recorded plat). The surveyor’s seal shall be affixed to each Survey and each Survey shall certify that the surveyed property is not located in a “one-hundred-year flood hazard area.”
(o) Lender shall have received evidence satisfactory to each such Person valid certificates of insurance indicating that the Exchange requirements for the policies of insurance required for an Individual Property complies with all zoning and other land use requirements and that all necessary permits and licenses hereunder have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction satisfied with respect to the transactions contemplated by this Article 38 Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(p) Lender shall have been obtained and all taxes (whichreceived a Phase I environmental report acceptable to Lender and, if permitted by lawrecommended under the Phase I environmental report, may a Phase II environmental report acceptable to Lender, which conclude that the Substitute Property does not contain any Hazardous Materials and is not subject to any risk of contamination from any off-site Hazardous Materials. If any such report discloses the presence of any Hazardous Materials or the risk of contamination from any off-site Hazardous Materials, such report shall include an estimate of the cost of any related remediation and Borrower shall deposit with Lender an amount equal to one hundred twenty-five percent (125%) of such estimated cost, which deposit shall constitute additional security for the Loan and shall be released to Borrower upon the delivery to Lender of (A) an update to such report indicating that there is no longer any Hazardous Materials on the Substitute Property or any danger of contamination from any off-site Hazardous Materials that has not been fully remediated and (B) paid in installments), fees and other charges payable in connection therewith shall receipts indicating that the costs of all such remediation work have been paid.
(viq) ▇▇▇▇▇▇Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, ▇▇ Issuer structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction); and Indenture Trustee (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(r) Lender shall have received such other instruments and such certificates, including without limitation, the following opinions of Borrower’s counsel: (A) an estoppel certificate from Lessee, evidence Opinion or Opinions of Counsel admitted to practice under the laws of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each State in which the Substitute Property is located in substantially the same form and substance reasonably satisfactory as the Opinion of Counsel originally delivered with respect to ▇▇▇▇▇▇the Substituted Property on the Closing Date, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person includingstating, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated Loan Documents delivered with respect to such difference the Substitute Property pursuant to clause (the Substitution Adjustmentl) above are valid and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor enforceable in accordance with their terms, subject to the terms hereoflaws applicable to creditors’ rights and equitable principles, Lessor shall convey that Borrower is qualified to do business and in good standing under the affected Leased laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to Lessee qualify to do business in accordance such jurisdiction; (B) an Opinion of Counsel acceptable to the Rating Agencies if the Loan is part of a Securitization, or the Lender if the Loan is not part of a Securitization, stating that the Loan Documents delivered with respect to the provisions Substitute Property pursuant to clause (l) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of Article 16 such Loan Documents and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Noticeperformance by Borrower of its obligations thereunder will not cause a breach of, or such later date as Lessora default under, Lesseeany agreement, Indenture Trustee document or instrument to which Borrower is a party or to which it or its properties are bound; and LC Issuer shall mutually agree(C) if the Loan is the subject of a Securitization, such failure shall immediately an Opinion of Counsel reasonably acceptable to the Rating Agencies that the substitution does not constitute an Event a “significant modification” of Default hereunder.the Loan under Section 1001 of the Code or
Appears in 1 contract
Sources: Loan and Security Agreement (KBS Real Estate Investment Trust, Inc.)
Substitution of Properties. Borrower shall have the right to request that Lender accept additional, substitute real estate and related personal property collateral for one or more of the Properties included in the security for the Loan. Lender agrees to approve such request if (and only if) the following conditions and requirements are satisfied:
(a) So long as no Default or Event of Default has occurred and is continuing hereunder, in Requests for substitution may be made on not more than three (3) occasions during the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section term of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth hereinLoan, and (E) specify the date for any such substitution (which shall be must occur prior to the Installment Payment Date no less than 14 nor more than 45 days after last 24 months of the date term of such Substitution Notice).the Loan;
(b) Each proposed Exchange The substitute property is a full-service hotel property comparable (or better) in class and market position to the Properties and located within the continental United States in a comparable (or better) market area as the Property for which it is being substituted, with acceptable license and management agreements as determined by Lender in its reasonable judgment;
(c) Following the substitution, the real estate collateral securing the Loan shall be approved by located in at least four (4) different states;
(d) The substitute property must comply with the Indenture Trustee (acting on instructions from all requirements of the Registered Owners)Application in all respects, which approval including, without limitation, those relating to Loan Documents, title, survey, compliance with zoning, building, environmental and land use laws, management and license agreement requirements, construction and engineering, insurance, leases, licenses, real estate taxes, legal opinions, estoppel certificates, and all other terms and conditions of the Application;
(e) The NOI from the substitute Property for the twelve (12) month period preceding the substitution shall equal or exceed the NOI from the Property being replaced;
(f) The physical condition of the collateral being considered for substitution must not be unreasonably withheldof lesser quality, conditioned or delayed. The following additional conditions as determined by Lender in its reasonable judgment (it being agreed that Lender's representatives and/or a third party engineering consultant retained by Lender, at Borrower's expense, shall be satisfied prior entitled to any substitution inspect the substitute property verify its physical condition); and the Fair Market Value of properties pursuant such property must not be materially less than that of the Property being replaced (Fair Market Value to be determined in the manner described in this Article 38:Agreement);
(ig) LessorThe Debt Service Coverage Ratio calculated with respect to the Properties (including the substitute property, Indenture Trustee but excluding the Property being replaced and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report all other Properties previously released from the lien of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject Mortgages) is equal to or greater than 2.50 to 1.00 for the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days most recent full twelve (12) month period prior to the date of such the proposed substitution substitution;
(h) The Loan to Value Ratio (determined as of a date within sixty (60) days prior to the effective date of the release), calculated with respect to the Properties, including the substitute property but excluding the Property being replaced and all other parcels previously released from the lien of the Mortgage, does not exceed fifty percent (50%);
(i) Borrower shall pay all reasonable costs and expenses incurred by Lender (including attorneys' fees and costs, costs of obtaining appraisals, engineering consultants, and other third-party costs, but excluding travel and other internal costs of Lender), and shall indicate the fair market value and useful life pay a $40,000 servicing fee, of the Exchange Property which one-half shall be paid at the time of such request for release and the proposed substitution and prospectively for the end other half of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value which shall be determined paid if (and only if) the release is approved by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto Lender; and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Substitution of Properties. Subject to the terms of this Section 2.9, Borrower may cause Mortgage Borrower to obtain, from time to time, a release of one or more Individual Properties (aeach, a “Release Property”) So long as no Default by substituting therefor one or Event more luxury residential apartment building properties of Default has occurred like kind and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property quality located in the United States of America acquired by Mortgage Borrower or an Affiliate of Mortgage Borrower (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and provided, however, that if the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Substitute Property shall be approved owned by an Affiliate of Mortgage Borrower, such Affiliate (i) shall be wholly owned, directly or indirectly, by a Borrower Entity, (ii) shall assume all the obligations of Mortgage Borrower under the Mortgage Loan Agreement, the Mortgage Note and the other Mortgage Loan Documents (subject, however, to the exculpatory provisions of Section 9.4 hereof) and (iii) shall become a party to the Mortgage Note and the other Mortgage Loan Documents and shall be bound by the Indenture Trustee terms and provisions thereof as if it had executed the Mortgage Note and the other Mortgage Loan Documents and shall have the rights and obligations of Mortgage Borrower thereunder) (acting on instructions from all of individually, a “Substitute Property” and collectively, the Registered Owners“Substitute Properties”), which approval provided that the following conditions precedent are satisfied or, in Lender’s sole discretion, waived:
(a) Lender shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied have received at least thirty (30) days’ prior to any written notice requesting the substitution of properties pursuant to this Article 38:and identifying the Substitute Property and the Release Property.
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject All conditions to the approval release of Lessor such Individual Property and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report substitution of such Substitute Property shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated satisfied in accordance with the terms of this Lease). Fair market value shall be the Mortgage Loan Documents (as independently determined by Lender in its reasonable discretion) and (ii) all conditions to the same methodology as was employed by release of such Individual Property and substitution of such Substitute Property shall have been satisfied in accordance with the appraiser in the original appraisal terms of Section 2.9 of the replaced Leased Property delivered in connection with the commencement of the Lease Mezzanine A Loan Agreement with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed release and substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided Mortgage Borrower Entity that owns the Release Property will continue to Lessorown an Individual Property subject to the Lien of a Security Instrument, Indenture Trustee and LC Issuer pursuant to paragraph (b) Lender shall have received (i) a copy of this Article 38 shall show that a deed conveying all of such Mortgage Borrower Entity’s right, title and interest in and to the fair market value Release Property to a Person other than Mortgage Borrower or Mortgage Principal and (ii) a letter from Mortgage Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the Exchange real estate records for the county in which the Release Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c)located.
(d) If all Lender shall have received a current Appraisal of the conditions set forth in this Article 38 have been satisfied, then, upon payment Substitute Property prepared not earlier than one (1) year prior to the release and substitution showing an appraised value for the Substitute Property equal to or greater than the appraised value of the Substitution Adjustment, if applicable, and the conveyance Release Property as of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunderClosing Date.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Archstone Smith Operating Trust)
Substitution of Properties. From and after the date twelve (a12) So long months after the Closing Date, Borrower from time to time (not to exceed six (6) occasions) may offer to Lender as collateral for the Loan (a "Substitution") one or more substitute properties (each, a "Substitute Property" and, collectively, "Substitute Properties"; each Substitute Property to be considered a Property for all purposes of this Agreement) as replacements for Properties ("Replaced Properties"), subject to there then being no Default or Event of Default has occurred and is continuing hereunder(excepting non-monetary defaults relating solely to the Replaced Property, including, but not limited to, a breach of one or more representations or warranties, but not excepting any default relating to financial statements or their delivery or representations or warranties in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(arespect thereof) and the corresponding section of the Indenture, (B) state that Lessee proposes subject further to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, of all the conditions set forth hereinbelow with respect to each Substitution and to Borrower making the representations and warranties in Section 5.1 hereof as to each Substitute Property and to Borrower satisfying the closing conditions of Section 3.1 hereof as to each Substitute Property. Any proposed Substitution shall be submitted by Borrower to Lender in writing, together with copies of all reports and other due diligence materials necessary to enable Lender to ascertain compliance with the conditions below, at least ninety (90) days prior to the proposed date of Substitution. No Substitute Property may qualify as a Replaced Property and, after giving effect to the Substitution, no Property may share its tax parcel with any property not secured by the applicable Mortgage. No Property may be substituted if it includes property which is needed to comply with a tenant's expansion right from an adjoining Property onto such Property unless all of the Properties related to the tenant's expansion right are contemporaneously substituted.
(a) For each Substitution, the Substitute Property or Substitute Properties must have an aggregate NOI of not less than the greater of (i) the aggregate NOI of the Replaced Property or Properties as of the Closing Date as set forth on Schedule 1 attached hereto, and (Eii) specify the date aggregate NOI of the Replaced Property or Replaced Properties for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).immediately preceding 12 month period;
(b) For each Substitution, the Substitute Property or Substitute Properties must have an aggregate FMV of not less than the greater of (i) the FMV of the Replaced Property or Replaced Properties as of the Closing Date as set forth on Schedule 1 attached hereto, and (ii) the FMV of the Replaced Property or Replaced Properties immediately prior to the Substitution;
(c) As evidenced by estoppel certificates reasonably acceptable to Lender and the Rating Agencies, all tenants in each Substitute Property that lease more than 20,000 s.f. (or whose rent constitute greater than thirty percent (30%) of the Gross Income for the Substitute Property) must be occupying their space, open for business and paying rent (after any free rent, credit or rent abatement periods) and not in arrears more than 30 days, and all free rent or rental grace periods shall have expired, and the tenants shall not be in bankruptcy (provided, however, the impact of any tenant not qualifying under this subparagraph (c) would be the disqualification of the income associated with that tenant for purposes of calculating NOI, or establishing FMV for the affected Substitute Property, not the elimination of the property as a potential Substitute Property);
(d) With respect to each Substitute Property, leases affecting at least 90% of the net rentable area must have average remaining terms of five (5) years or more, as of the date of Substitution;
(e) Borrower must hold fee title to the Substitute Properties and the Substitute Properties must be free of all encumbrances, easements and other title exceptions (except those expressly permitted by Lender in its reasonable discretion);
(f) Borrower must continue to be a bankruptcy-remote single purpose entity and, immediately prior to each such Substitution, Borrower shall deliver bankruptcy (including, but not necessarily limited to, non-consolidation) and other legal opinions as reasonably required by Lender;
(g) Borrower must deliver an environmental report for each Substitute Property in form, findings and substance acceptable to Lender in its reasonable discretion and the Rating Agencies;
(h) Borrower must (i) deliver to Lender and the Rating Agencies an engineering report (including, but not limited to, analysis of seismic risk for any Substitute Property situated in a seismic zone, and which analysis must show that the Substitute Property does not have a probable maximum loss percentage that exceeds the probable maximum loss percentage of the Replaced Property and in no event shall such Substitute Property have a probable maximum loss of more than 15%) in form, findings and substance acceptable to Lender and the Rating Agencies in their reasonable discretion, and (ii) deposit 125% of estimated deferred maintenance cost (if any) into a reserve account with Lender where the estimated cost of such deferred maintenance exceeds $100,000 per Substitute Property;
(i) Each proposed Exchange Substitute Property shall be approved must comply with all title, land use, legal, environmental and insurance requirements provided in the Loan Documents, and Lender must receive title insurance, surveys, casualty insurance, and other due diligence items, all acceptable to Lender in its reasonable discretion; and with respect to the remaining Properties encumbered by the Indenture Trustee applicable Mortgage, Borrower shall provide Lender with title insurance endorsements reasonably acceptable to Lender to the effect that such release will not impair the priority of such Mortgage on the remaining Properties encumbered by the Mortgage;
(acting on instructions from j) After giving effect to the Substitution, not more than sixty (60%) percent of the rentable square footage of the Property Pool would be located in Los Angeles, Riverside, San Bernardino and Orange Counties in California;
(k) The Rating Agencies must have confirmed in writing that such Substitution would not result in a downgrade, qualification, or withdrawal of the ratings of the securities issued pursuant to any Securitization. Except as provided in Subsection 2.12 (m) and Section 2.15 below, however, Rating Agency confirmation shall not be so required if all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38are satisfied:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report The Replaced Property's Allocated Loan Amount is not among that of the Exchange Property made top ten (10) Properties ranked by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology Allocated Loan Amount as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely set forth on such Environmental Reports.Schedule 1 attached hereto;
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason The Allocated Loan Amount of the transactions contemplated by this Article 38.Replaced Property is less than five percent (5%) of the then-current principal amount of the Loan immediately preceding the proposed Substitution; and
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title After giving effect to the Exchange Property subject only to proposed Substitution, the Permitted Encumbrances described in clauses (a), (b), (c), and (h) aggregate Allocated Loan Amount for all Substitute Properties substituted since the Closing Date is less than 15% of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment original principal amount of the Assignment of Lease, including the legal description Loan for all Properties as of the Exchange Property, (y) a supplement Closing Date. If the Substitution is to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days occur prior to the date Securitization, the Substitution is subject to Lender's prior written consent. Borrower acknowledges and agrees that Lender's decision to approve or disapprove of substitutionany Substitution shall be in Lender's reasonable discretion, by which may include consideration of the impact such Substitution will have on the Rating Agencies review, analysis and concerns in connection with a surveyor licensed in the state in which the Exchange Property is locatedSecuritization.
(ivl) LessorThe Substitute Property must be income producing and developed property and similar in quality, Indenture Trustee nature and LC Issuer shall have had the opportunity to conduct customary due diligence with regard property type to the Exchange Replaced Property and shall have received evidence satisfactory to each such Person that ("Like for Like") (except for the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇▇ and the Properties known as Home Depot, ▇▇ Issuer or Indenture Trustee may reasonably request. Where requiredPak N' Save and Kmart, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees located in Emeryville, California (identified as Properties numbered 67, 69, 70 and expenses incurred in connection with the transaction contemplated by this Article 3871, by any Person includingrespectively, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(con Exhibit A attached hereto) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to Substitute Properties may be substitutedeither industrial, then Lessee shall office (except office Properties may not be required to pay to Lessorsubstituted for retail Properties), as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(cresearch & development or grocery anchored retail properties).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.;
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Section, at any time following the commencement of the Defeasance Period, Borrower may obtain a release of the Lien of the Mortgage (and the related Loan Documents) to the extent it encumbers one or more Mortgaged Properties (a "SUBSTITUTED PROPERTY") by substituting therefor one or more office properties acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the "SUBSTITUTE PROPERTIES"), provided that (a) So long the Substitution Conditions are satisfied with respect to the Substitute Properties, (b) no such substitution may occur after the Anticipated Repayment Date, (c) such substitution shall not be allowed more than two (2) times during the term of the Loan and (d) not more than five (5) Mortgaged Properties may be released from the Lien of the Mortgage (and the related Loan Documents) during the term of the Loan pursuant to this SECTION 11. Any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent (collectively, the "SUBSTITUTION CONDITIONS"):
(i) Lender shall have received a copy of a deed conveying all of Borrower's right, title and interest in and to the Substituted Property or Substituted Properties then being Released to an entity other than Borrower and a letter from Borrower countersigned by the Title Company acknowledging receipt of such deed or assignment and assumption, as applicable, and agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located or in the counties in which the Substituted Properties are located;
(ii) Lender shall have received an appraisal of the Substitute Property or Substitute Properties, as applicable, dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property or Substitute Properties, as applicable, that is equal to or greater than the Release Price of the Substituted Property or Substituted Properties, then being Released, determined by Lender as of the Closing Date;
(iii) after giving effect to the substitution, the Debt Service Coverage Ratio for the Mortgaged Properties (including the Substitute Properties but excluding the Substituted Properties) shall be at least equal to the greater of (i)
2.22:1 (on or before April 16, 2003) or 1.81:1 (on or after April 17, 2003), and (ii) the Debt Service Coverage Ratio for the Loan for all of the Mortgaged Properties immediately preceding the substitution;
(iv) the Net Operating Income for any Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of substitution or, with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available (which period of time, in any event, shall not be less than one (1) year); The Net Operating Income for a Substitute Property shall be deemed to show a downward trend, if the Net Operating Income for the Substitute Property for each Determination Period (as defined below) was less than the Net Operating Income for the immediately preceding Determination Period, commencing with the Determination Period that commenced on the date that is three (3) years prior to the first day of the calendar month in which the substitution is to occur. A "Determination Period" is a twelve (12) month period that commences on a prior anniversary of the first day of the calendar month in which the substitution is to occur and ends on the last day of the calendar month (or prior anniversary thereof) immediately preceding the month in which the substitution is to occur;
(v) the Net Operating Income and Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substitute Property or Substituted Properties, as applicable, is greater than one hundred twenty-five percent (125%) of the Net Operating Income and Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substituted Property or Substituted Properties then being substituted. For purposes of this clause (v), the Debt Service Coverage Ratio with respect to a Substitute Property (or Substitute Properties, as applicable) or a Substituted Property (or Substituted Properties, as applicable) shall be calculated using the Net Operating Income with respect to such Substitute Property (or Substitute Properties, as applicable) or Substituted Property, (or Substituted Properties, as applicable) and the principal, if any, and interest due and payable on the Mortgage Note allocable to the Release Price for the Substitute Property or Substituted Property, as applicable (or the aggregate Release Prices for the Substitute Properties or Substituted Properties, as applicable);
(vi) Lender shall have received a Rating Comfort Letter from each Rating Agency with respect to the substitution;
(vii) no Default or Event of Default has shall have occurred and be continuing and Borrower shall be in compliance with all terms and conditions set forth in this Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as if made on the date of the substitution with respect to Borrower, the Mortgaged Properties and each Substitute Property and containing any other representations and warranties with respect to Borrower, the Mortgaged Properties, each Substitute Property and the Loan as the Rating Agencies may require, such certificate to be in form and substance satisfactory to the Rating Agencies;
(viii) Borrower shall have executed, acknowledged and delivered to Lender (A) a Mortgage, an Assignment of Leases and Rents and one or more UCC Financing Statements with respect to each Substitute Property, together with a letter from Borrower countersigned by the Title Company acknowledging receipt of such Assignment of Leases and Rents and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and, if applicable, one of the UCC-1 Financing Statements in the real estate records for the county in which such Substitute Property is continuing hereunderlocated and agreeing to file one of the UCC-1 Financing Statements in the office of the Secretary of State of the State in which such Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon such Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to Permitted Encumbrances and Permitted Liens and (B) a Security Agreement and an Environmental Indemnity Agreement with respect to such Substitute Property. The Mortgage, Assignment of Leases and Rents, UCC-1 Financing Statements, Security Agreement and Environmental Indemnity Agreement shall be the same in form and substance as the counterparts of such documents executed and delivered on the Closing Date subject to modifications reflecting such Substitute Property as a Mortgaged Property that is the subject of such documents and such modifications reflecting the laws of the state in which such Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (xv) below. Borrower shall also have executed, acknowledged and delivered any amendments to the Loan Documents required in connection with a substitution and, where applicable, a letter from Borrower countersigned by the Title Company agreeing to record such amendments in the real estate records for each county where the Mortgage was recorded. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Mortgage Note. The amount of the Loan allocated to the Substitute Property or Substitute Properties (such amount being hereinafter referred to as the "Substitute Release Amount") shall equal the Allocated Loan Amount of the Substitute Property or Substituted Properties then being Released (and, if applicable, equitably allocated among the Substitute Properties);
(ix) Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of the existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to each Substitute Property and (B) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the Lien of the Mortgage encumbering each Substitute Property, issued by the Title Company insuring the Lien of the existing Mortgage and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to each Substitute Property shall (1) provide coverage in the amount of the Loan Amount of the "tie-in" or similar endorsement described above, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgage, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid;
(x) Lender shall have received a current title survey for each Substitute Property, certified to the Title Company and Lender and their successors and assigns, in the event (i) Lessee or Guarantor or any Affiliate thereof is required same form and having the same content as the certification of the Survey of the Substituted Property prepared by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located professional land surveyor licensed in the United States (an Exchange Property) ----------------- for such Leased state in which the Substitute Property pursuant is located and acceptable to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property Rating Agencies in accordance with the provisions of this Article 38, (C) 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, a metes and bounds description of the conditions set forth herein, and (E) specify the date for real property comprising part of such substitution (which Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).surveyed property is not located in a "one hundred year flood hazard area;"
(bxi) Each proposed Exchange Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Mortgaged Property shall be approved by hereunder have been satisfied with respect to the Indenture Trustee (acting on instructions from all Substitute Property and evidence of the Registered Ownerspayment of all premiums payable for the existing policy period;
(xii) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report (in each case prepared by an environmental consultant acceptable to Lender), which approval shall conclude that the Substitute Property does not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior contain any Hazardous Materials (as defined in the Mortgage) and is not subject to any risk of contamination from any off-site Hazardous Materials;
(xiii) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the closing of the Loan; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution;
(xiv) Lender shall have received the following opinions of properties pursuant to this Article 38Borrower's counsel:
(iA) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report opinion or opinions of counsel admitted to practice under the laws of the Exchange state in which the Substitute Property made by an Appraiser is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (viii) above are valid and environmental engineer, respectively, selected by Indenture Trusteeenforceable in accordance with their terms, subject to the approval laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of Lessor the jurisdiction where the Substitute Property is located; (B) an opinion of counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (viii) above were duly authorized, executed and LC Issuerdelivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which approval shall Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel acceptable to the Rating Agencies stating that subjecting the Substitute Property to the Lien of the related Mortgage and the execution and delivery of the related Loan Documents does not be unreasonably withheld, which Appraisal and Environmental Report will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross-collateralization provided for thereunder; (D) an update of the Substantive Non-Consolidation Opinion indicating that the substitution does not affect the opinions set forth therein; (E) an opinion of counsel acceptable to the Rating Agencies stating that the substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws or other evidence pertaining thereto acceptable to the Rating Agencies and (F) an opinion of counsel acceptable to the Rating Agencies stating that the substitution would not adversely affect the status of the entity holding the interest in the Mortgage Note as a REMIC (assuming for such purpose that such entity otherwise qualifies as a REMIC) and that such substitution will not result in a deemed exchange of the Certificates pursuant to Section 1001 of the Code;
(xv) all real estate taxes due and payable with respect to the Substitute Property shall have been made at the expense of Lessee. Such Appraisal paid and Borrower shall be have delivered at least 30 days prior evidence thereof to the date of such proposed substitution Lender;
(xvi) Borrower shall have paid or reimbursed Lender for all costs and shall indicate the fair market value expenses incurred by Lender (including, without limitation, reasonable attorneys fees and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered disbursements) in connection with the commencement substitution and Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangible taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid all costs and expenses of the Lease Rating Agencies incurred in connection with respect the substitution;
(xvii) Lender shall have received annual operating statements and occupancy statements for each Substitute Property for the most recently completed Fiscal Year and an operating statement for each Substituted Property for all Accounting Periods and Accounting Quarters for which such statements have been prepared, each certified to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak Lender as of a date not more than six months prior to the date of such proposed substitution being true and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge correct and certificate from Borrower certifying that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results financial condition of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Substitute Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to since the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.operat
Appears in 1 contract
Sources: Loan Agreement (Arden Realty Inc)
Substitution of Properties. Borrower or Maryland Owner may obtain the release of one or more Individual Properties from the Lien of the Security Instrument thereon and the release of Borrower’s and/or Maryland Owner’s obligations under the Loan Documents with respect to such Individual Property (other than those expressly stated to survive) (each such Individual Property, a “Substituted Property”), by substituting therefor one or more properties (such properties, individually and collectively as the context requires, a “Substitute Property”), upon the satisfaction of each of the following conditions:
(a) So long as After giving effect to the proposed substitution, no Default or Event of Default has occurred shall exist and is be continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify on the date for such substitution (which shall be that Borrower and/or Maryland Owner request the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).substitution;
(b) Each proposed Exchange Property Borrower shall be approved by the Indenture Trustee (acting on instructions from have delivered to Lender all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties documentary deliveries required pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered Section 2.6 at least 30 twenty (20) days prior to the requested effective date of such proposed substitution and shall indicate (except as Lender may in its reasonable discretion shorten such period);
(c) The Allocated Loan Amount on the fair market value and useful life Closing Date of the Exchange Property at Substituted Property, when taken together with the time Allocated Loan Amounts on the Closing Date of all other Substituted Properties substituted pursuant to this Section 2.6, does not exceed fifteen percent (15%) of the proposed substitution and prospectively for original Principal Amount in the end of aggregate;
(d) Lender shall have received an Officer’s Certificate that each remaining year of the Maximum Lease Term representations and warranties contained in this Agreement and the other Loan Documents with respect to the Substituted Property and Substitute Property Borrower shall be true and correct in all material respects with respect to the Substitute Property Borrower and the Substitute Property as of the applicable Substitution Effective Date (assuming in each case as herein defined);
(e) The Substitute Property shall not have suffered a Casualty or Condemnation which has not been fully restored;
(f) The entity owning the Substitute Property (the “Substitute Property Borrower”) shall have indefeasible fee or ground leasehold title to the Substitute Property free and clear of any lien or other encumbrance except for Permitted Encumbrances and easements, restrictive covenants and other title exceptions and except to the extent that the affected Leased Property had been maintained and operated failure with respect hereto would not reasonably be expected to result in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease an Individual Material Adverse Effect with respect to such Leased Substitute Property. Such Environmental Report ;
(g) Either (i) the Substituted Property shall be delivered at least 30 days prior conveyed or (ii) the ownership interests in the Substituted Borrower owning such Substituted Property shall be Transferred, in either case, to a Person other than Borrower or Maryland Owner;
(h) After giving effect to the date of such proposed substitution, the Debt Service Coverage Ratio for the Properties (including the Substitute Property and excluding the Substituted Property) then remaining subject to the Liens of the Security Instrument (including the Substitute Property) shall speak as of a date not more be equal to or greater than six months the Debt Service Coverage Ratio immediately prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.substitution;
(iii) Lessor, Indenture Trustee and LC Issuer Borrower shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed obtained and delivered to Lessor, Indenture Trustee and LC Issuer (w) Lender a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture Rating Agency Confirmation/Notification with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of proposed substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.;
Appears in 1 contract
Sources: Loan and Security Agreement (Urban Edge Properties)
Substitution of Properties. Borrower may request ▇▇▇▇▇▇’s permission to substitute, for any one (a1) So long as no Default Parcel, a different parcel or Event parcels of Default has occurred real property together with improvements thereon and is continuing hereunderpersonal property related thereto (collectively, in the event (i) Lessee or Guarantor or “Substitute Parcel”). Lender shall reasonably consider any Affiliate thereof is required by applicable bank regulatory requirements such request; provided that, it shall not be considered unreasonable for Lender to divest withhold its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party consent to any Operative Documentsuch requested substitution, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to Borrower shall have no rights under this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the IndentureSection 12.5, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction ofif, among other thingsreasons, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor any one or more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior is true with respect to any substitution of properties pursuant to this Article 38such proposed substitution:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report Such proposed substitution would result in the occurrence of more than one (1) such substitution during the term of the Exchange Loan.
(ii) The proposed Substitute Parcel:
(A) is not of a quality comparable to or greater than that of the Parcel released in connection with such substitution (the “Substitution Release Parcel”); or
(B) does not have a fair market value (as evidenced to Lender’s satisfaction based on appraisal reports of each of the Substitute Parcel and the Substitution Release Parcel that (w) are dated no earlier than sixty (60) days prior to the proposed substitution, (x) satisfy the requirements pertaining to appraisal reports set forth in the Commitment, (y) are otherwise reasonably satisfactory to Lender, and (z) are paid for by Borrower) equal to or greater than the greater of (1) the fair market value of the Substitution Release Parcel as of the date of recordation of this Deed of Trust, and (2) the fair market value of the Substitution Release Parcel immediately prior to such proposed substitution.
(iii) The annual Rents (excluding security deposits) under Leases in effect on the Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, that will remain subject to the approval liens and security interests of Lessor the Deed of Trust and LC Issuerthe other Loan Documents following the substitution, which approval shall excluding the Substitution Release Parcel and including the Substitute Parcel (the “Post-Substitution Property”) for the 12-month period following the substitution (as reasonably determined by Lender), do not be unreasonably withheldprovide debt service coverage for the annual Debt Service Payments on the Note (after payment of the annual Allocable Insurance Premium Amount, which Appraisal and Environmental Report shall have been made at annual Impositions and operating expenses) that is equal to or greater than the expense greater of Lessee. Such Appraisal shall be delivered at least (x) 1.70:1.0 and (y) the debt service coverage provided by the Property for the 12-month period prior to the substitution, and in connection therewith, not less than 30 days prior to the date of the substitution, Borrower will deliver to Lender certified rent rolls and certified operating statements for the preceding 12 calendar months for the Substitution Release Parcel and the Post-Substitution Property (prepared on a cash basis, using methodology satisfactory to Lender, with income and expenses treated consistently and in the ordinary course of business), together with such proposed substitution and shall indicate other information as Lender may require to make its determination;
(iv) The outstanding principal balance of the Note is not less than or equal to seventy percent (70%) of the fair market value and useful life of the Exchange Post-Substitution Property, as evidenced to Lender’s satisfaction based on an appraisal report of the Post-Substitution Property at that (w) is dated no earlier than sixty (60) days prior to the proposed substitution, (x) satisfies the requirements pertaining to appraisal reports set forth in the Commitment, (y) is otherwise reasonably satisfactory to Lender, and (z) is paid for by ▇▇▇▇▇▇▇▇).
(v) A Transfer hereunder (other than a Permitted Transfer) has occurred prior to the date of the proposed substitution.
(vi) The Substitute Parcel does not meet ▇▇▇▇▇▇’s then-current mortgage lending and underwriting criteria and standards (including, without limitation, standards relating to environmental and hazardous materials matters, engineering, title/land use, legal matters, leasing and other underwriting standards), as determined by Lender in its sole discretion.
(vii) At the time of the proposed substitution and prospectively for substitution, either the end of each remaining year Substitute Parcel or Borrower does not satisfy one or more of the Maximum Lease Term applicable requirements that were conditions to Lender’s obligation to make the Loan, as set forth in that certain Loan Application and Commitment Agreement by and between Borrower and Lender dated as of December 10, 2003 (assuming in each case that the affected Leased Property had been maintained “Commitment”) and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered executed in connection with the commencement Loan, that would have been applicable if the Substitute Parcel [rather than the Substitution Release Parcel] had been included as security for the Loan), including without limitation the requirement that Borrower be free from bankruptcy and solvent.
(viii) Borrower does not deliver to Lender, at least thirty (30) days prior to the requested date of ▇▇▇▇▇▇’s approval of the Lease proposed substitution, all due diligence materials and related information required by Lender to evaluate the Substitute Parcel and to confirm that the requirements referenced in Section 12.5 (vii) above have all been satisfied.
(ix) Borrower does not deliver to Lender endorsement(s) to ▇▇▇▇▇▇’s title insurance policy(ies), or new title insurance policy(ies), satisfactory to Lender that (A) extend the effective date of the title insurance policy(ies) obtained by Lender with respect to the Property to the effective date of the substitution; (B) insure Lender that Lender holds a first priority lien on the Substitute Parcel (subject only to such Leased Property. Such Environmental Report shall be delivered at least 30 days exceptions as Lender may have approved prior to the date of such proposed the substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been ); (C) confirm no adverse change in the environmental status priority of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits (with respect to the Exchange Property as existed with respect to such substituted Leased balance of the Property. Lessor, Indenture Trustee and LC Issuer shall have received other than the Substitution Release Parcel) or in the aggregate amount of coverage; (aD) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect consent to the Exchange Property substitution; (or a commitment thereforE) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to waive any defense resulting from the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer substitution; and (bF) a survey of confirm that the Exchange Property, satisfactory in form Substitution Release Parcel and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Post-Substitution Property is locatedconstitute separate tax lots.
(ivx) LessorBorrower does not deliver to Lender, Indenture Trustee and LC Issuer shall have had prior to or concurrently with the opportunity to conduct customary due diligence with regard to substitution: (i) either (A) a deed of trust which is sufficient to, upon recordation, create a first priority lien against the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents Substitute Parcel in favor of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer an assignment of leases and Indenture Trustee shall have received such rents, a financing statement, an environmental indemnity agreement, and any other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence documents required by Lender in connection with the release of the insurance required by this Lease, certificates as to representations Property and warranties, and opinions the substitution of counselthe Substitute Parcel, each of which is substantially in the form delivered by ▇▇▇▇▇▇▇▇ as of the date of recordation of this Deed of Trust and otherwise in form and substance reasonably satisfactory to Lender, or (B) amendments to the Loan Documents in effect as of the date of recordation of this Deed of Trust in form reasonably satisfactory to Lender that accomplish the same purposes as the documents described in clause (A) immediately above, and (ii) legal opinions of counsel acceptable to Lender opining on the due authorization, execution, delivery, enforceability and such other matters as Lender shall require with respect to the documents described in clause (i) immediately above.
(xi) The Substitute Parcel is not in an asset class or is not in a geographic location that Lender is investing in at the time of the proposed substitution.
(xii) The Substitute Parcel is not located in California.
(xiii) Lender is not reasonably satisfied that no creditors’ rights issues will arise in connection with the substitution.
(xiv) Prior to or concurrently with such proposed substitution, Borrower does not pay all costs and expenses, including reasonable attorneys’ fees if outside counsel is engaged by ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated any other reasonable third party costs, incurred by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with any proposed substitution.
(xv) Not less than 10 days prior to the transaction contemplated by this Article 38, by any Person including, without limitationdate of the proposed substitution, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, does not deliver to Lender consents to the Registered Owners, Beneficiarysubstitution and concurrent release of the Substitution Release Parcel by entities holding liens affecting the Property or holding any other interest in the Property that would be affected by the substitution and concurrent release, including reasonable attorneys' fees and disbursements of such Personsparties to any Property Documents or to any Leases.
(cxvi) If Borrower does not deliver to Lender a fully executed amendment to each reciprocal easement agreement affecting the Appraisal provided Property that is satisfactory to Lessor, Indenture Trustee Lender and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that joins the fair market value transferee of the Exchange Property is less than Substitution Release Parcel as a party to the fair market value agreement and that provides for any additional easements, restrictions and payment obligations that Lender deems reasonably necessary for the continued operation and maintenance of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Post-Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c)Property.
(dxvii) If Borrower does not deliver to Lender evidence satisfactory to Lender that (A) the Post-Substitution Property and the Substitution Release Parcel each separately conforms to and is in compliance with Law, and (B) the Post-Substitution Property and the Substitution Release Parcel each constitutes a self-contained unit, having direct on-site connection to all of utilities and direct access to one or more public streets.
(xviii) Borrower does not deliver to Lender evidence satisfactory to Lender that following the conditions set forth in this Article 38 have been satisfied, then, upon payment proposed substitution and the concurrent release of the Substitution AdjustmentRelease Parcel, if applicable, and the conveyance parking provided to the Post-Substitution Property will continue to satisfy the applicable requirements of the Exchange Property Loan Documents (as such requirements may be adjusted by Lender, in its reasonable discretion, to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to account for such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Noticesubstitution), or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunderdoes not deliver evidence satisfactory to Lender that the parking provided to the Substitute Parcel satisfies Lender’s then-current underwriting standards.
Appears in 1 contract
Sources: Promissory Note (Kilroy Realty Corp)
Substitution of Properties. (a) So long as no Default or Event of Default has occurred and is continuing hereunder, in In the event of the occurrence of a Substitution Event (defined below) prior to Closing, Purchaser may, at its option, by written notice to Seller (“Event Notice”) within ten (10) days after the date on which Purchaser is given or obtains actual knowledge of the occurrence of a Substitution Event, elect to either (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements ignore the Substitution Event and proceed to divest its interest Closing with no adjustment in any Leased Property the Purchase Price, or (ii) Lessee desires request that Seller offer a Substitute Property or Substitute Properties (both as hereinafter defined) to cause Purchaser valued in the aggregate amount of the Purchase Price allocated to the Property or Properties (“Removed Property” or “Removed Properties”) subject to the Substitution Event. In the event that Purchaser elects under (ii) above to have Seller provide a Leased Substitute Property or Substitute Properties, Seller, if it chooses to be sold do so, in its sole and absolute discretion, shall have a period of thirty (30) days from the date of Purchaser’s Event Notice to correct the condition giving rise to the Substitution Event, and further, provided, however, if such condition is of a Person that nature which is not an Affiliate capable of any party cure within said thirty (30) day period and Seller has commenced to any Operative Documentcure within such thirty (30) day period, Lessee may give Lessor then Seller shall have such reasonable period of time from and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by Purchaser’s Event Notice to correct the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject condition giving rise to the approval of Lessor Substitution Event. In the event Purchaser exercises its rights under (ii) above, and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal Seller elects to and Environmental Report shall have been made at cures the expense of Lessee. Such Appraisal shall be delivered at least 30 days condition giving rise to the Substitution Event prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits Closing with respect to the Exchange Substitute Property as existed with respect occurs, the Scheduled Closing Date for the Removed Property shall be extended to the fifteenth (15th) day after the condition giving rise to the Substitution Event has been cured. In the event that Purchaser fails to elect (i) or (ii) above within ten (10) days after Purchaser is given or obtains actual knowledge of a Substitution Event, Purchaser shall be deemed to have elected to waive such substituted Leased Property. Lessor, Indenture Trustee condition and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, proceed to Closing on the standard ALTA form formerly known Closing Date with no adjustment in the Purchase Price. In the event that within said ten (10) day period Purchaser elects its rights under (ii) above and Seller elects not to cure or elects to cure the condition but fails to do so within the time period set forth above, Seller shall use reasonable efforts to provide a Substitute Property or Substitute Properties as 1970 form described in Section 9.9.2. Notwithstanding any other term or condition contained herein, (or if i) in no event shall the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) Closing with respect to the Exchange Property (or Properties which are not subject to a commitment therefor) with mechanics' lien coverage and containing no survey exceptionSubstitution Event be delayed, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (bii) a survey in the event of the Exchange Propertyoccurrence of a Substitution Event, satisfactory Seller shall not be in form default under this Agreement, Seller shall not be liable for damages and substance to Lessor, Indenture Trustee Purchaser’s sole right and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee remedy shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c)exercise its rights under this Section 9.9.1.
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Substitution of Properties. (a) So long as no Default or Event of Default has occurred and is continuing hereunder, in 9.9.1 In the event of the occurrence of a Substitution Event (defined below) prior to Closing, Purchaser may, at its option, by written notice to Seller (“Event Notice”) within ten (10) days after the date on which Purchaser is given or obtains actual knowledge of the occurrence of a Substitution Event, elect to either (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements ignore the Substitution Event and proceed to divest its interest Closing with no adjustment in any Leased Property the Purchase Price, or (ii) Lessee desires request that Seller offer a Substitute Property or Substitute Properties (both as hereinafter defined) to cause Purchaser valued in the aggregate amount of the Purchase Price allocated to the Property or Properties (“Removed Property” or “Removed Properties”) subject to the Substitution Event. In the event that Purchaser elects under (ii) above to have Seller provide a Leased Substitute Property or Substitute Properties, Seller, if it chooses to be sold do so, in its sole and absolute discretion, shall have a period of thirty (30) days from the date of Purchaser’s Event Notice to correct the condition giving rise to the Substitution Event, and further, provided, however, if such condition is of a Person that nature which is not an Affiliate capable of any party cure within said thirty (30) day period and Seller has commenced to any Operative Documentcure within such thirty (30) day period, Lessee may give Lessor then Seller shall have such reasonable period of time from and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by Purchaser’s Event Notice to correct the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject condition giving rise to the approval of Lessor Substitution Event. In the event Purchaser exercises its rights under (ii) above, and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal Seller elects to and Environmental Report shall have been made at cures the expense of Lessee. Such Appraisal shall be delivered at least 30 days condition giving rise to the Substitution Event prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits Closing with respect to the Exchange Substitute Property as existed with respect occurs, the Scheduled Closing Date for the Removed Property shall be extended to the fifteenth (15th) day after the condition giving rise to the Substitution Event has been cured. In the event that Purchaser fails to elect (i) or (ii) above within ten (10) days after Purchaser is given or obtains actual knowledge of a Substitution Event, Purchaser shall be deemed to have elected to waive such substituted Leased Property. Lessor, Indenture Trustee condition and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, proceed to Closing on the standard ALTA form formerly known Closing Date with no adjustment in the Purchase Price. In the event that within said ten (10) day period Purchaser elects its rights under (ii) above and Seller elects not to cure or elects to cure the condition but fails to do so within the time period set forth above, Seller shall use reasonable efforts to provide a Substitute Property or Substitute Properties as 1970 form described in Section 9.9.2. Notwithstanding any other term or condition contained herein, (or if i) in no event shall the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) Closing with respect to the Exchange Property (or Properties which are not subject to a commitment therefor) with mechanics' lien coverage and containing no survey exceptionSubstitution Event be delayed, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (bii) a survey in the event of the Exchange Propertyoccurrence of a Substitution Event, satisfactory Seller shall not be in form default under this Agreement, Seller shall not be liable for damages and substance to Lessor, Indenture Trustee Purchaser’s sole right and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee remedy shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c)exercise its rights under this Section 9.9.1.
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Paragraph 4, Borrower may obtain a release of the lien of a Security Instrument (and the related Loan Documents) encumbering an individual Property (a "Substituted Property") by substituting therefor another retail property owned by Borrower (individually, a "Substitute Property" and collectively, the "Substitute Properties"), provided that (a) So long the Property located in Westbury, New York may not be a Substituted Property and (b) no more than two (2) Substituted Properties shall be permitted during the term of the Loan. In addition, any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) Lender shall have received a copy of a deed conveying all of Borrower's right, title and interest in and to the Substituted Property to an entity other than Borrower (or any general partner of managing member of Borrower) and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county in which the Substituted Property is located;
(b) Lender shall have received an appraisal of the Substitute Property dated no more than sixty (60) days prior to the substitution by an licensed appraiser, indicating an appraised value of the Substitute Property that is equal to or greater than the value of the Substituted Property as no Default of the date hereof;
(c) Receipt of evidence that the Aggregate Debt Service Coverage, after giving effect to the substitution, shall be equal to or greater than the greater of (i) the Origination DSCR and (ii) the Current DSCR;
(d) The NOI (hereinafter defined) for the Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of substitution;
(e) The NOI and Debt Service Coverage Ratio (hereinafter defined), for the twelve (12) month period immediately preceding the substitution, for the Substitute Property is greater than one hundred fifteen percent (115%) of the NOI and Debt Service Coverage Ratio, for the twelve (12) month period immediately preceding the substitution, for the related Substituted Property. For purposes of this clause (e), the Debt Service Coverage Ratio with respect to a Substitute Property or a Substituted Property shall be calculated using the NOI with respect to such Substitute Property or the Substituted Property, as applicable, and the principal and interest due and payable on the Note with respect to the related Allocated Loan Amount;
(f) Receipt of a No Downgrade Letter;
(g) No Event of Default has shall have occurred and be continuing;
(h) Borrower shall have executed, acknowledged and delivered to Lender (A) a Security Instrument, an Assignment of Leases and UCC Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Security Instrument, Assignment of Leases and UCC Financing Statements and agreeing to record or file, as applicable, such Security Instrument, Assignment of Leases and Rents and one of the UCC Financing Statements in the real estate records for the county in which the Substitute Property is continuing hereunderlocated and to file one of the UCC Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law) and (B) such other Loan Documents as required by Lender, including, without limitation, an Environmental Indemnity, with respect to the event Substitute Property. The Security Instrument, Assignment of Leases, UCC Financing Statements, Environmental Indemnity and other Loan Documents shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting the Substitute Property as the individual Property that is the subject of such documents and such modifications reflecting the laws of the state in which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (n) below. The Security Instrument encumbering the Substitute Property shall secure, at Lender's option, (i) Lessee or Guarantor or any Affiliate thereof is required all amounts evidenced by applicable bank regulatory requirements to divest its interest in any Leased Property the Note or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice one hundred twenty five percent (the Substitution Notice125%) of Lessee's intention the applicable allocated loan amount, as determined by Lender. The amount of the Loan allocated to ------------------- substitute a new property located in the United States Substitute Property (an Exchange such amount being hereinafter referred to as the "Substitute Allocated Loan Amount") shall equal the Allocated Loan Amount of the related Substituted Property;
(i) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice Lender shall have received (A) refer specifically to this Article 38(a) and the corresponding section extent available, a "tie-in" or similar endorsement to each title insurance policy issued in connection with the closing of the Indenture, Loan (the "Title Insurance Policy") insuring the lien of an existing Security Instruments as of the date of the substitution with respect to the title insurance policy insuring the lien of the Security Instrument with respect to the Substitute Property and (B) a title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) insuring the lien of the Security Instrument encumbering the Substitute Property, issued by the title company that issued the Title Insurance Policy and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the lien of the Security Instrument encumbering the Substituted Property. The title insurance policy issued with respect to the Substitute Property shall (1) provide coverage in the amount of the Substitute Allocated Loan Amount if the "tie-in" or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Allocated Loan Amount, (2) insure Lender that the relevant Security Instrument creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policy insuring the liens of the existing Security Instruments, to the extent reasonably available in the state where the Substitute Property is located and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that Lessee proposes all premiums in respect of such endorsements and title insurance policies have been paid;
(j) Lender shall have received a current title survey for each Substitute Property, certified to substitute such Leased the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located in accordance with the provisions of this Article 38, (C) 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the title insurance policy relating to such Substitute Property and shall include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, a metes and bounds description of the conditions real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify, if appropriate, that the surveyed property is not located in a "one-hundred-year flood hazard area";
(k) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an individual Property pursuant to the Loan Documents have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period;
(l) Lender shall have received an acceptable Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Hazardous Substance (as defined in the Security Instrument) in violation of any Environmental Law (as defined in the Security Instruments) and is not subject to any risk of contamination from any off-site Hazardous Substance;
(m) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of the general partner or managing member, as applicable, of Borrower authorizing the substitution and any actions taken in connection with such substitution;
(n) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (h) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and subject to other reasonable and customary qualifications and assumptions, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of counsel stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (h) above were duly authorized, executed and delivered by Borrower and that, to the counsel's knowledge, the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel stating that subjecting the Substitute Property to the lien of the related Security Instrument and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross-collateralization provided for thereunder; (D) an update of the Non-Consolidation Opinion indicating that the substitution does not affect the opinions set forth herein, therein and (E) specify an opinion of counsel that the date for such substitution (which shall does not constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any "real estate mortgage investment conduit" within the Installment Payment Date no less than 14 nor more than 45 days after meaning of Section 860D of the date of such Substitution Notice).Code that holds the Note;
(bo) Each proposed Exchange Property Borrower shall be approved by have paid or deposited with Lender all costs associated with the Indenture Trustee (acting on instructions from all of the Registered Owners)Substitute Property, which approval shall not be unreasonably withheldincluding without limitation, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessoraccrued but unpaid Insurance Premiums (as defined in the Security Instruments), Indenture Trustee (ii) currently due Taxes (as defined in the Security Instruments) (including any in arrears) and LC Issuer (iii) currently due Other Charges (as defined in the Security Instruments);
(p) Borrower shall have received an Appraisal paid or reimbursed Lender for all costs and a "Phase I" Environmental Report of the Exchange Property made expenses incurred by an Appraiser Lender (including, without limitation, reasonable attorneys fees and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered disbursements) in connection with the commencement substitution and Borrower shall have paid all recording charges, filing fees, taxes or other out-of-pocket expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid all costs and expenses of the Lease Rating Agencies incurred in connection with respect the substitution;
(q) Lender shall have received annual operating statements and occupancy statements for the Substitute Property for the most current completed fiscal year and a current operating statement for the Substituted Property, each certified to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak Lender as of being true and correct and a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge certificate from Borrower certifying that as of the substitution date there has been no adverse change in the environmental status financial condition of the Exchange Substitute Property since the date of such operating statement;
(r) Borrower shall have delivered to Lender estoppel certificates from that described tenants at the Substitute Property which (1) occupy, in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lesseeaggregate, at its own expenseleast eighty percent (80%) of the gross leasable space at the Substitute Property and (2) provide, will provide such additional environmental assessments as are required by Lessorin the aggregate, Indenture Trustee or LC Issuer. The results at least eighty (80%) of such Environmental Reports the gross rental income at the Substitute Property, which estoppel certificates shall be satisfactory in substantially the same form as the estoppel certificates delivered to LessorLender prior to the closing of the Loan;
(s) Lender shall have received copies of all tenant leases and any ground leases affecting the Substitute Property certified by Borrower as being true and correct. Lender shall have received a current rent roll of the Substitute Property certified by Borrower as being true and correct;
(t) Lender shall have received subordination, Indenture Trustee nondisturbance and LC Issuer. Lessorattornment agreements (an "SNDA") in substantially the same form as the SNDAs delivered to Lender prior to the closing of the Loan with respect to Leases affecting the Substitute Property which are not subordinate by their terms;
(u) Lender shall have received (A) an endorsement to the title insurance policy insuring the lien of the Security Instrument encumbering the Substitute Property insuring that the Substitute Property constitutes a separate tax lot or, Indenture Trusteeif such an endorsement is not available in the state in which the Substitute Property is located, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting title insurance company issuing such Environmental Report, permitting such addressee to rely on such Environmental Reports.title insurance policy stating that the Substitute Policy constitutes a separate tax lot or (B) a letter from the appropriate taxing authority stating that the Substitute Property constitutes a separate tax lot;
(iiv) Lessor, Indenture Trustee and LC Issuer Lender shall have received a Lease Supplement property conditions report acceptable to Lender in its reasonable discretion with respect to the Substitute Property stating that the Substitute Property and its use comply in all material respects with all applicable laws, rules, regulations and orders (including, without limitation, zoning, subdivision and building laws),
(w) Lender shall have received a certified copy of an amendment to the Management Agreement (as defined in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting Security Instruments) reflecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason deletion of the transactions contemplated by this Article 38.
(iii) Lessee Substituted Property and the addition of the Substitute Property as a property managed pursuant thereto and Manager shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title Lender an amendment to the Exchange Property subject only Assignment of Management Agreement and Subordination of Management Fees reflecting such amendment to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), Management Agreement;
(x) a supplement to or amendment of Lender shall have received such other and further approvals, opinions, documents and information in connection with the Assignment of Lease, including the legal description of the Exchange Property, substitution as Lender may reasonably require;
(y) a supplement Lender shall have received copies of all material contracts and agreements relating to or amendment the leasing and operation of the Indenture Substitute Property together with respect a certification of Borrower attached to each such Exchange Property, contract or agreement certifying that the attached copy is a true and correct copy of such contract or agreement and all amendments thereto;
(z) a supplement Borrower shall submit to or amendment of the LC Deed of Trust with respect to such Exchange PropertyLender, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received not less than twenty (a20) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of such substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person certificate certifying that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 Paragraph 4 have been satisfied, then, upon payment . Upon the satisfaction of the Substitution Adjustmentforegoing conditions precedent, if applicable, Lender will release its lien from the Substituted Property to be released and the conveyance Substitute Property shall be deemed to be an encumbered Property for purposes of this Agreement and one hundred fifteen percent (115%) of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.Substitute Allocated Loa
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Section 2.8, Individual Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property (a “Substituted Property”) by substituting therefor another warehouse property of like kind and quality acquired by an Individual Borrower (individually, a “Substitute Property” and collectively, the “Substitute Properties”), provided that the following conditions precedent are satisfied:
(a) So The Maturity Date shall have not occurred.
(b) Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Substituted Property. During the term of the Loan, the Borrower’s right to substitute Properties shall terminate if the Release Amount for all the Substituted Properties in the aggregate exceeds thirty percent (30%) of the original principal balance of the Loan.
(c) Lender shall have received a copy of a deed conveying all of the Individual Borrower’s right, title and interest in and to the Substituted Property to an entity other than a Restricted Party pursuant to an arms length transaction and a letter from the Individual Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county in which the Substituted Property is located.
(d) If the Loan is part of a Securitization, Lender shall have received an appraisal of the Substitute Property, dated no more than sixty (60) days prior to the substitution date, prepared by a senior commercial appraiser of the American Appraisal Institute acceptable to the Rating Agencies.
(e) The fair market value of the Substitute Property is not less than one hundred percent (100%) of the fair market value of the Substituted Property as of the Closing Date, which determination shall be made by (I) Lender in its reasonable discretion if the Loan is not part of a Securitization and (II) Lender based on the appraisal delivered pursuant to clause (d) above if the Loan is part of a Securitization.
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the Loan for all of the Properties (excluding the Substituted Property and including the Substitute Property) is not less than the greater of (i) the Closing Date DSCR and (ii) the Debt Service Coverage Ratio for the trailing twelve (12) full calendar months as of the date immediately preceding the substitution. Borrower shall be permitted to make a partial prepayment of the Loan in order to satisfy the conditions set forth in this Section 2.8(f) so long as no such prepayment is made in accordance with the terms and provisions of Section 2.4.1 hereof.
(g) If the Loan is part of a Securitization, Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities, or any class thereof, issued in connection with the Securitization that are then outstanding. If the Loan is not part of a Securitization, Lender shall have consented in writing to such substitution, which consent shall not be unreasonably withheld or delayed.
(h) No Default or Event of Default has shall have occurred and is continuing hereunderbe continuing. Lender shall have received an Officer’s Certificate certifying that, to such officer’s knowledge, the representations and warranties of such Individual Borrower contained in this Agreement and the event other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to the Substitute Property and containing any other representations and warranties with respect to the Substitute Property as the Rating Agencies may require, unless such certificate would be inaccurate, such certificate to be in form and substance satisfactory to the Rating Agencies.
(i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice Individual Borrower shall (A) refer specifically have executed, acknowledged and delivered to this Article 38(aLender (I) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereofMortgage, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, Assignment of Leases and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee Rents and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease two UCC-1 Financing Statements with respect to such Leased the Substitute Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report together with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from Individual Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and Rents and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement UCC-1 Financing Statements in the form real estate records for the county in which the Substitute Property is located and to file one of Schedule H annexed hereto andthe UCC-1 Financing Statements in the office of the Secretary of State (or other central filing office) of the state of its organization, if appropriateso as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, a memorandum of the requisite priority, in favor of Lender (or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms trustee as Lessormay be desired under local law), Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and such other Liens as are permitted pursuant to the Loan Documents and (hII) an Environmental Indemnity with respect to the Substitute Property and (B) have caused Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Mortgage, Assignment of Leases and Rents, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting only the Substitute Property as the Individual Property that is the subject of such documents and such modifications reflecting the laws of the state in which the Substitute Property is located as shall be recommended for similar transactions by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (o) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such Mortgage shall be equal to one hundred ten percent (110%) of the definition thereof fair market value of the Substitute Property. The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the “Substitute Release Amount”) shall equal the Release Amount of the related Substituted Property, subject to clause (B) in the second sentence of Section 2.8(r).
(j) Lender shall have received (A) unless Borrower shall have elected to provide title insurance in an amount equal to one hundred twenty-five percent (125%) of the Substitute Release Amount as set forth in subclause (1) of this Section 2.8(j), a “tie-in” or similar endorsement, but only to the extent available in such Permitted Encumbrances are acceptable jurisdiction, to Lessor, Indenture Trustee and LC Issuer), each title insurance policy insuring the Lien of an existing Mortgage (x) a supplement to or amendment which shall be tied in as of the Assignment of Lease, including the legal description of the Exchange Property, (yClosing Date) a supplement to or amendment of the Indenture with respect to such Exchange Property, existing Mortgages and (z) a supplement to or amendment as of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness date of the foregoing, such parties shall enjoy the same rights and benefits substitution with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's title insurance policy insuring the Lien of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) Mortgage with respect to the Exchange Substitute Property and (B) a title insurance policy (or a marked, signed and redated commitment thereforto issue such title insurance policy) insuring the Lien of the Mortgage encumbering the Substitute Property, issued by the title company that issued the title insurance policies insuring the Lien of the existing Mortgages and dated as of the date of the substitution, with mechanics' lien coverage reinsurance and containing no survey exception, direct access agreements that replace such agreements issued in connection with the title insurance policy insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss the Lien of the Mortgage encumbering the Substituted Property. The title insurance policy issued with respect to the Exchange Substitute Property shall (1) at Borrower’s option, provide coverage in the amount of the Substitute Release Amount if the “tie-in” or similar endorsement described above is available or, in lieu of a tie-in endorsement, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitute Property encumbered thereby, free and otherwise reasonably satisfactory clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are then available and are contained in the title insurance policies insuring the Liens of the existing Mortgages, but only to Lessorthe extent the same are available in the jurisdiction in which the Substitute Property is located, Indenture Trustee and LC Issuer and (b4) name Lender as the insured. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(k) Lender shall have received a current survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in substantially the same form and content as the certification of the survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, Substituted Property prepared by a professional land surveyor licensed in the state in which the Exchange Substitute Property is located.
(iv) Lessor, Indenture Trustee located and LC Issuer shall have had the opportunity to conduct customary due diligence with regard acceptable to the Exchange Rating Agencies, in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the title insurance policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property (unless such real property has been satisfactorily designated by lot number on a recorded plat). The surveyor’s seal shall be affixed to such survey and, if customary, such survey shall certify whether any portion of the surveyed property or the improvements thereon is located in a “one-hundred-year flood hazard area.”
(l) Lender shall have received evidence satisfactory to each such Person valid certificates of insurance indicating that the Exchange requirements for the policies of insurance required for an Individual Property complies with all zoning and other land use requirements and that all necessary permits and licenses hereunder have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction satisfied with respect to the transactions contemplated by this Article 38 shall Substitute Property and evidence of the payment of all premiums payable for the existing policy period (or if such Substitute Property is being added to Borrower’s existing policies, that such amounts have been obtained and all taxes (which, if permitted by law, may be paid in installmentsescrowed with Lender pursuant to Section 7.2 hereof), fees and other charges payable in connection therewith shall have been paid.
(vim) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee Lender shall have received a Phase I environmental report acceptable to a prudent lender and, if recommended under the Phase I environmental report, a Phase II environmental report acceptable to a prudent lender.
(n) Individual Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Individual Borrower of all organizational documentation related to Individual Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such other instruments jurisdiction); and (C) resolutions of Individual Borrower authorizing the substitution and any actions taken in connection with such certificatessubstitution.
(o) Lender shall have received the following opinions of Individual Borrower’s counsel: (A) an opinion or opinions of counsel, admitted to practice under the laws of the state in which the Substitute Property is located, stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (i) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors’ rights and equitable principles, and that Individual Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Individual Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of counsel acceptable to the Rating Agencies, if the Loan is part of a Securitization, or the Lender, if the Loan is not part of a Securitization, stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (i) above were duly authorized, executed and delivered by such Individual Borrower and that the execution and delivery of such Loan Documents and the performance by Individual Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Individual Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel acceptable to, the Rating Agencies if the Loan is part of a Securitization, or the Lender if the Loan is not part of a Securitization, stating that subjecting the Substitute Property to the Lien of the related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross-collateralization provided for thereunder; (D) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein; (E) an opinion of counsel acceptable to, the Rating Agencies if the Loan is part of a Securitization, or the Lender if the Loan is not part of a Securitization, stating that the substitution and the related transactions are arms length transactions and do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (F) if the Loan is part of a Securitization, an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a “significant modification” of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a “prohibited transaction” by the REMIC Trust holding the Loan. Such opinions, to the extent applicable, shall be substantially in the respective forms approved by Lender in connection with the origination of the Loan.
(p) Individual Borrower shall have paid, or escrowed with Lender, all Basic Carrying Costs relating to each of the Properties and the Substitute Property, including without limitation, an estoppel certificate from Lessee, evidence (i) accrued but unpaid insurance premiums relating to each of the insurance required by this Lease, certificates as to representations Properties and warrantiesthe Substitute Property, and opinions (ii) currently due and payable Taxes (including any in arrears) relating to each of counselthe Properties and the Substitute Property and (iii) currently due and payable maintenance charges and other impositions relating to each of the Properties and Substitute Property.
(q) Individual Borrower shall have paid or reimbursed Lender for all reasonable out-of-pocket costs and expenses incurred by Lender (including, each in form without limitation, reasonable attorneys fees and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee disbursements) in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably requestsubstitution. Where required, such instruments Individual Borrower shall have been duly recorded by Lesseepaid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Lessee If the Loan is part of a Securitization, Individual Borrower shall pay have paid all fees costs and expenses of the Rating Agencies incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Personssubstitution.
(cr) If Borrower shall be permitted to make a partial prepayment of the Appraisal provided Loan in an amount equal to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) the excess of this Article 38 shall show that the fair market value of the Exchange Substituted Property is less than as of the substitution date over the fair market value of the Leased Substitute Property for which such Exchange Property is as of the Closing Date in order to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of satisfy the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor Section 2.8(e) above so long as such prepayment is made in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the and provisions of Article 16 and Section 2.4.1 hereof. Upon such prepayment, (A) the Lease shall terminate as to such affected Leased fair market value of the Substitute Property and shall be effective as deemed equal to the fair market value of the Substituted Property for purposes of Section 2.8(e) above, (B) the Substitute Release Amount shall be equal to the Release Amount of the Substituted Property, less the amount of such Exchange Property. If Lessee fails to complete such substitution on or before prepayment, and (C) each of the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.P
Appears in 1 contract
Substitution of Properties. Borrower may request Lender's ------------ -------------------------- permission to substitute, for the Property, a different parcel of real property together with improvements thereon and personal property related thereto (a) So long as no Default or Event of Default has occurred and is continuing hereunder, in collectively the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate "Substitute Property"). Approval of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase request shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from ------------------- subject to all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38following:
(i) Lessor, Indenture Trustee and LC Issuer Under no circumstances shall have received an Appraisal and a "Phase I" Environmental Report more than two such substitutions occur under all of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval nine Deeds of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser Trust in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reportsaggregate.
(ii) Lessor, Indenture Trustee and LC Issuer shall The proposed Substitute Property shall:
(A) be of a quality comparable to that of the Property; and
(B) have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lesseefair market value, as lesseeevidenced to Lender's satisfaction, adding and subjecting of no less than the Exchange Property to, and releasing the affected Leased Property from, the terms greater of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii1) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than as of the date of recordation of this Deed of Trust, and (2) the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect immediately prior to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c)proposed substitution.
(diii) If all Any such substitution shall be on terms, conditions and documents acceptable to Lender and shall be subject to Lender's internal approval process.
(iv) The outstanding Principal at the time of such proposed substitution shall not exceed sixty-five percent (65%) of the conditions set forth fair market value of the proposed Substitute Property and the Other Property, as reasonably determined by Lender.
(v) The annual Rents (excluding security deposits) under Leases in this Article 38 have been satisfied, then, upon effect on the proposed Substitute Property shall provide debt service coverage for the annual Debt Service Payments on the Related Note (after payment of annual Insurance Premiums, Impositions and operating expenses) not less than the Substitution Adjustment, if applicabledebt service coverage provided by the Property, and the conveyance lease expiration profile of the Exchange proposed Substitute Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as acceptable to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth Lender.
(vi) Borrower shall pay all costs and expenses, including reasonable attorney's fees if outside counsel is engaged by Lender, incurred by Lender in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunderconnection with any proposed substitution.
Appears in 1 contract
Sources: Deed of Trust (Kilroy Realty Corp)
Substitution of Properties. Subject to the terms of this Section 2.6 and after the expiration of the Lockout Period, Borrower may cause Mortgage Borrower to obtain a release of the Lien of a Security Instrument (and the related Loan Documents) encumbering an Individual Property (a "Release Property") by substituting therefor another hotel property of like kind and quality acquired by Mortgage Borrower (individually, a "Substitute Property" and collectively, the "Substitute Properties"), provided that the following conditions precedent are satisfied:
(a) So long Mortgage Borrower shall not have the right to release and substitute (i) more than one (1) Individual Property in accordance with this Section in any twelve (12) month period and (ii) any Properties after such time as Mortgage Borrower has released and substituted Properties which in the aggregate had an appraised value of more than thirty-five percent (35%) of the aggregate appraised values of the Properties subject to the Lien of the Security Instruments as of the Closing Date.
(b) Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Release Property.
(c) Borrower has delivered to Lender evidence satisfactory to Lender that all of the conditions set forth in the Section 2.6 of the Mortgage Loan Agreement have been satisfied, including, without limitation, all documents and information required to be delivered to Mortgage Lender by Mortgage Borrower, in form and substance acceptable to Lender in its reasonable discretion and if any such documents and information is certified to Mortgage Lender, then such documents and information shall also be certified to Lender.
(d) Mortgage Borrower shall own the Substitute Property.
(e) Lender shall have received a certificate of Borrower certifying, together with other evidence satisfactory to Lender that, the Debt Service Coverage Ratio for the twelve (12) months immediately preceding the substitution with respect to the Substitute Property is at least equal to the Debt Service Coverage Ratio for the twelve (12) full calendar months immediately preceding the date of the proposed substitution with respect to the Release Property, which Debt Service Coverage Ratio shall be based upon the Allocated Loan Amounts of the Substitute Property and the Release Property.
(f) Unless such event or condition relates solely to the Release Property and will be fully cured by the release and substitution, no Default or Event of Default has shall have occurred and be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and warranties contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the release and substitution with respect to Borrower, the Properties and the Substitute Property and containing any other representations and warranties with respect to Borrower, the Properties, the Substitute Property or the Loan as Lender, such certificate to be in form and substance satisfactory to Lender.
(g) Borrower shall (A) have executed, acknowledged and delivered to an Environmental Indemnity with respect to the Substitute Property from Indemnitor and (B) have caused Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Environmental Indemnity shall be the same in form and substance as the Environmental Indemnity executed and delivered with respect to the related Release Property subject to modifications reflecting only the Substitute Property as the Individual Property and such modifications reflecting the laws of the State in which the Substitute Property is continuing hereunderlocated. The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the "Substitute Allocated Loan Amount") shall equal the Allocated Loan Amount of the related Release Property.
(h) Mortgage Borrower shall have received and delivered to Lender an Owner's Title Policy (or a marked, signed and redated commitment to issue such Owner's Title Policy) insuring the Substitute Property, issued by the title company that issued the Owner's Title Policy insuring the existing Individual Properties and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Owner's Title Policy insuring the Release Property. The Owner's Title Policy issued with respect to the Substitute Property shall (1) provide coverage in the event amount of the fair market value of the Substitute Property, (2) insure the title on the Substitute Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), and (3) contain such endorsements and affirmative coverages as are then available and are contained in the Owner's Policies insuring the existing Individual Properties, and such other endorsements or affirmative coverage that a prudent institutional property owner would require. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(i) Lessee Borrower shall deliver or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold delivered to a Person that is not an Affiliate Lender (A) updates certified by Mortgage Borrower of any party all organizational documentation related to any Operative DocumentMortgage Borrower and/or the formation, Lessee may give Lessor and structure, existence, good standing and/or qualification to do business delivered to Lender on the Indenture Trustee an irrevocable written notice Closing Date; (the Substitution NoticeB) good standing certificates, certificates of Lessee's intention qualification to ------------------- substitute a new property located do business in the United States jurisdiction in which the Substitute Property is located (if required in such jurisdiction); and (C) resolutions of Mortgage Borrower authorizing the substitution and any actions taken in connection with such substitution.
(j) Lender shall have received the following opinions of Borrower's counsel: (A) an Exchange Property) ----------------- for such Leased opinion of counsel acceptable to stating that the Environmental Indemnity delivered with respect to the Substitute Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction ofSection, among other things, is valid and enforceable in accordance with the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trusteeterms, subject to the approval of Lessor laws applicable to creditors rights and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal equitable principles and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by LesseeBorrower and that the execution and delivery of such Environmental Indemnity and the performance by Borrower of its obligations thereunder will not cause a breach of, as lesseeor a default under, adding any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason (C) an update of the transactions contemplated by this Article 38Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein.
(iiik) Lessee Borrower shall have caused Mortgage Borrower to be executed pay or reimburse Lender for all reasonable costs and delivered expenses incurred by Lender (including, without limitation, reasonable attorneys' fees and disbursements) in connection with the release and substitution and Borrower shall have caused Mortgage Borrower to Lessorpay all recording charges, Indenture Trustee filing fees, taxes or other expenses (including, without limitation, mortgage and LC Issuer intangibles taxes and documentary stamp taxes) payable in connection with the substitution.
(wl) Lender shall have received a special warranty deedcurrent Appraisal of (i) the Substitute Property and (ii) the Release Property, sufficient to convey to Lessor good and marketable title each prepared within sixty (60) days prior to the Exchange release and substitution, showing an appraised value of the Substitute Property subject only equal to or greater than one hundred percent (100%) of (A) the Permitted Encumbrances described in clauses (a), (b), (c)appraised value of the Release Property as of the Closing Date, and (hB) the appraised value of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Release Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days immediately prior to the date of the proposed substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(ivm) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and Lender shall have received evidence satisfactory to each such Person that an estoppel and recognition letter from the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to franchisor under the transactions contemplated by this Article 38 shall have been obtained and all taxes (whichFranchise Agreement, if permitted by lawany, may be paid in installments)for the Substitute Property, fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer Lender
(n) Lender shall have received a Replacement Management Agreement for the Substitute Property and Indenture Trustee the Manager thereunder shall have executed and delivered to Lender a conditional assignment of management agreement with respect to such new Management Agreement on substantially the same terms as used in connection with the transactions contemplated by Release Property or such other terms as are acceptable Lender; and
(o) Borrower shall deliver an Officers Certificate certifying that the requirements set forth in this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall Section 2.6 have been duly recorded by Lesseesatisfied. Lessee shall pay all fees and expenses incurred All due diligence required to be delivered to Lender in connection with this Section 2.6 shall be in form, scope and substance satisfactory to Lender. Upon the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trusteesatisfaction of the foregoing conditions precedent, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided Substitute Property shall be deemed to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) be an Individual Property for purposes of this Article 38 shall show that Agreement and the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated Substitute Allocated Loan Amount with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease Substitute Property shall be modified as set forth in Article 16(c).
(d) If all of deemed to be the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance Allocated Loan Amount with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as respect to such affected Leased Substitute Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default for all purposes hereunder.
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Felcor Lodging Trust Inc)
Substitution of Properties. Subject to the terms and conditions set forth in this Section 2.8, Borrower may cause Mortgage Borrower to obtain a release of the Lien of a Mortgage (and the related Mortgage Loan Documents) encumbering an Individual Property (a “Substituted Individual Property”) by substituting therefore another full service hotel or resort property of like kind and quality acquired by Mortgage Borrower or an Affiliate of Mortgage Borrower (provided, however, if the Substitute Property shall be owned by an Affiliate of Mortgage Borrower such Affiliate (i) shall become a party to the Mortgage Loan Documents and shall be bound by the terms and provisions thereof as if it had executed the Mortgage Loan Documents and shall have the rights and obligations of Mortgage Borrower thereunder) (a “Substitute Individual Property”), provided that the following conditions precedent are satisfied.
(a) So long as no Default or Event The Maturity Date shall have not occurred. During the term of Default has occurred and is continuing hereunderthe Loan, in Borrower shall have the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires right to cause a Leased Property Mortgage Borrower to be sold to a Person substitute Properties, provided that is not an Affiliate the sum of any party to any Operative Document, Lessee may give Lessor the original Release Amount for all Substituted Individual Properties and the Indenture Trustee an irrevocable written notice all Properties released under Section 2.5.1 in no event exceeds thirty percent (the Substitution Notice30%) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section original principal balance of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).Loan;
(b) Each proposed Exchange Lender shall have received at least thirty (30) days’ prior written notice requesting the substitution and identifying the Substitute Individual Property and Substituted Individual Property. If a Substitute Individual Property shall consist, in whole or in part, of a leasehold estate created pursuant to a ground lease such ground lease shall be approved by reasonably acceptable to Lender;
(c) If the Indenture Trustee (acting on instructions from applicable Mortgage Borrower or Baltimore Owner continues to own an Individual Property not released, Lender shall have received a copy of a deed conveying all of the Registered Owners)applicable Mortgage Borrower’s or Baltimore Owner’s right, which approval shall not be unreasonably withheld, conditioned title and interest in and to the Substituted Individual Property to an entity other than such Mortgage Borrower or delayed. The following additional conditions shall be satisfied prior to any substitution of properties Baltimore Owner pursuant to this Article 38:an arms length transaction and a letter from the applicable Mortgage Borrower or Baltimore Owner countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county or other appropriate land registry in which the Substituted Individual Property is located;
(id) Lessor, Indenture Trustee and LC Issuer Lender shall have received an Appraisal and a "Phase I" Environmental Report appraisal of each of the Exchange Substitute Individual Property made by an Appraiser and environmental engineerSubstituted Individual Property, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 dated no more than ninety (90) days prior to the date substitution date, by an appraiser reasonably acceptable to Lender;
(e) The fair market value of such proposed substitution and shall indicate the Substitute Individual Property is not less than one hundred percent (100%) of the fair market value and useful life of the Exchange Substituted Individual Property at the time as of the proposed substitution and prospectively date immediately preceding the substitution, which determination shall be made by Lender based on the appraisals delivered pursuant to subsection (d) above;
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the end of each remaining year Mortgage Loan for all of the Maximum Lease Term Properties (assuming in each case that excluding the affected Leased Substituted Individual Property had been maintained and operated in accordance with including the terms Substitute Individual Property) is not less than the Debt Service Coverage Ratio for the Mortgage Loan for all of this Lease)the Properties as of the date immediately preceding the substitution;
(g) No Event of Default shall have occurred and be continuing. Fair market value Lender shall be determined by have received an Officer’s Certificate certifying that, to such officer’s knowledge, the same methodology as was employed by the appraiser representations and warranties of Mortgage Borrower and Baltimore Owner contained in the original appraisal Mortgage Loan Agreement and the other Mortgage Loan Documents are true and correct in all material respects on and as of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Substitute Individual Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's containing any other reasonable representations and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) warranties with respect to the Exchange Substitute Individual Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exceptionas Lender may reasonably require, insuring Lessorunless such certificate would be inaccurate, Indenture Trustee and LC Issuer, respectively, against loss with respect such certificate to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇Lender;
(h) Lender shall have received to the extent available a Mezzanine Loan or similar endorsement to each Owner’s Title Insurance Policy insuring such Substitute Individual Property as of the date of the substitution. The Title Insurance Policy issued with respect to the Substitute Individual Property shall contain such endorsements and affirmative coverages as are then available and are contained in the Owner’s Title Insurance Policies of Mortgage Borrower and Baltimore Owner insuring the Properties. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid;
(i) Lender shall have received a current survey for each Substitute Individual Property, ▇▇ Issuer certified to the title insurance company and Indenture Trustee Lender and their successors and assigns, in substantially the same form and content as the certification of the survey of the Substituted Individual Property prepared by a professional land surveyor licensed in the State in which the Substitute Individual Property is located and acceptable to the Rating Agencies, in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy delivered to Mortgage Lender under the Mortgage Loan in connection with such Substitution relating to such Substitute Individual Property and shall include, among other things, a metes and bounds description of the transactions contemplated real property comprising part of such Substitute Individual Property (unless such real property has been satisfactorily designated by this Article 38 as ▇▇▇▇▇▇lot number on a recorded plat). The surveyor’s seal shall be affixed to such survey and, ▇▇ Issuer or Indenture Trustee may reasonably request. Where requiredif customary, such instruments survey shall certify whether any portion of the surveyed property or the improvements thereon is located in a “one-hundred-year flood hazard area”;
(j) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been duly recorded satisfied with respect to the Substitute Individual Property and evidence of the payment of all premiums payable for the existing policy period;
(k) Lender shall have received a Phase I environmental report dated not more than 90 days prior to the substitution and otherwise reasonably acceptable to a prudent lender and, if recommended under the Phase I environmental report, a Phase II environmental report acceptable to a prudent lender, which conclude that the Substitute Individual Property does not contain any unacceptable levels of hazardous materials and is not subject to any significant risk of contamination from any off-site hazardous materials. If any such report discloses the presence of any such hazardous materials or the risk of such contamination from any off-site hazardous materials, such report shall include an estimate of the cost of any related remediation and Borrower shall deposit with Lender (which deposit may be made in the form of a Letter of Credit) an amount equal to one hundred twenty-five percent (125%) of such estimated cost, which deposit shall constitute additional security for the Loan and shall be disbursed to pay for the costs of remediation in the manner provided herein for the disbursement of the Required Repair Fund; provided, however, such deposit shall be waived to the extent that Mortgage Borrower is required to make such deposit with Mortgage Lender under the Mortgage Loan. Any remaining balance of such deposit (or Letter of Credit) shall be released to Borrower upon the delivery to Lender of (i) an update to such report indicating that there is no longer any such hazardous materials on the Substitute Individual Property or any significant risk of contamination from any such off-site hazardous materials that has not been acceptably remediated and (ii) paid receipts or other reasonable evidence indicating that the costs of all such remediation work have been paid;
(l) Borrower shall deliver, or cause to be delivered, to Lender (i) updates certified by Lessee. Lessee Borrower of all organizational documentation related to Mortgage Borrower and Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (ii) good standing certificates and/or certificates of qualification to do business in the jurisdiction in which the Substitute Individual Property is located (if required in such jurisdiction); and (iii) resolutions of Mortgage Borrower and Borrower authorizing the substitution and any actions taken in connection with such substitution; provided that such organizational documents, structure and other documents delivered in accordance with the foregoing shall pay be reasonably acceptable to an ordinary prudent lender;
(m) Lender shall have received copies of the opinions of Mortgage Borrower’s counsel delivered to Mortgage Lender under Section 2.8(o) of the Mortgage Loan Agreement together with an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein acceptable to REMIC Trust;
(n) Borrower shall have caused Mortgage Borrower to have paid, unless Mortgage Borrower contesting in accordance with terms of the Mortgage Loan Documents or escrowed with Mortgage Lender, all fees Basic Carrying Costs relating to the Substitute Individual Property, including without limitation, (i) accrued and currently due and payable but unpaid insurance premiums relating to the Substitute Individual Property, and (ii) currently due and payable Taxes (including any in arrears) relating to the Substitute Individual Property and (iii) currently due and payable maintenance charges and other impositions relating to the Substitute Individual Property;
(o) Borrower shall have paid or reimbursed Lender for all reasonable costs and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person Lender (including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' attorneys fees and disbursements of such Persons.
disbursements) in connection with the substitution and Borrower shall have caused Mortgage Borrower to have paid all recording charges, filing fees, taxes or other expenses (cincluding, without limitation, mortgage and intangibles taxes and documentary stamp taxes) If payable in connection with the Appraisal provided to Lessorsubstitution, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 however, Borrower shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall not be required to pay any fee to LessorLender or Servicer in connection with a substitution;
(p) Lender shall have received annual operating statements and occupancy statements for the Substitute Individual Property for the most current completed fiscal year and a current operating statement for the Substituted Individual Property, each certified to Lender as being true and correct in all material respects a certificate from Borrower certifying that there has been no material adverse change in the financial condition of the Substitute Individual Property since the date of such operating statements;
(q) Borrower shall have delivered or caused Mortgage Borrower to have delivered to Lender estoppel certificates from any existing tenants under Material Leases at the Substitute Individual Property. All such estoppel certificates shall be in form used in connection with the original closing of the Loan or otherwise in form and substance reasonably acceptable to an adjustment ordinary prudent lender and shall indicate that (i) the subject lease is a valid and binding obligation of the tenant thereunder, (ii) to Basic Rent hereundertenant’s knowledge, there are no defaults under such lease on the part of the landlord or tenant thereunder, (iii) to tenant’s knowledge, the amount of such difference, plus an amount equal tenant thereunder has no defense or offset to the Reinvestment Premium calculated with respect payment of rent under such leases, (iv) no rent under such lease has been paid more than one (1) month in advance, (v) the tenant thereunder has no option under such lease to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If purchase all or any portion of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Substitute Individual Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.and
Appears in 1 contract
Sources: Mezzanine Loan Agreement (Wyndham International Inc)
Substitution of Properties. Subject to the terms and conditions set forth in this Section 2.8, Borrower or IDOT Guarantor, as applicable, may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering one (1) Individual Property (a “Substituted Property”) by substituting therefor another hotel property of like kind and quality acquired by Borrower (individually, a “Substitute Property” and collectively, the “Substitute Properties”), provided that the following conditions precedent are satisfied:
(a) So long as no Default or Event of Default has occurred and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is Maturity Date shall have not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice)occurred.
(b) Each proposed Exchange Lender shall have received at least thirty (30) days’ prior written notice requesting the substitution and identifying the Substitute Property and Substituted Property.
(c) Lender shall be approved by the Indenture Trustee (acting on instructions from have received a copy of a deed conveying all of the Registered Owners)applicable Borrower’s or IDOT Guarantor’s right, which approval shall not be unreasonably withheldtitle and interest in and to the Substituted Property to an entity other than any Borrower, conditioned IDOT Guarantor or delayed. The following additional conditions shall be satisfied prior to any substitution of properties Guarantor, pursuant to this Article 38:an arm’s length transaction and a letter from the applicable Borrower or IDOT Guarantor, countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county in which the Substituted Property is located.
(id) Lessor, Indenture Trustee and LC Issuer Lender shall have received an Appraisal and a "Phase I" Environmental Report fee in the amount of one percent (1.0%) of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to Pro Rata Release Amount for the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report Substitute Property.
(e) Lender shall have been made at received a reasonably acceptable appraisal of the expense of Lessee. Such Appraisal shall be delivered at least 30 Substitute Property and Substituted Property, as determined by Lender dated no more than sixty (60) days prior to the date substitution date, by an appraiser selected by Lender.
(f) The fair market value of such proposed substitution and shall indicate the Substitute Property is not less than one hundred five percent (105%) of the greater of: (1) the fair market value and useful life of the Exchange Substituted Property at the time as of the proposed substitution Closing Date and prospectively for (2) the end of each remaining year fair market value of the Maximum Lease Term Substituted Property as of the date immediately preceding the substitution, which determination shall be made by Lender based on the appraisals delivered pursuant to clause (assuming in each case that e) above if the affected Leased Property had been maintained Loan is part of a Securitization.
(g) The Net Operating Income (as adjusted and operated determined in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered Lender’s standard underwriting practice and procedures used in connection with the commencement underwriting of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to Loan) for the date of such proposed substitution, shall speak as of Substitute Property does not show a date not more than six months prior to downward trend over the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
three (ii3) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days years immediately prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(ivh) LessorThe Net Operating Income (as adjusted and determined in accordance with Lender’s standard underwriting practice and procedures used in connection with the underwriting of the Loan) for the Substitute Property is greater than one hundred five percent (105%) of the Net Operating Income (as adjusted and determined in accordance with Lender’s standard underwriting practice and procedures used in connection with the underwriting of the Loan) for the Substituted Property.
(i) If the Loan is part of a Securitization, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and Lender shall have received evidence satisfactory confirmation in writing from the Rating Agencies to each the effect that such Person substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that are then outstanding. If the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses Loan is not part of a Securitization, but has been identified as an asset for a Securitization scheduled to close within ninety (90) days, Lender shall have been issued with respect theretoconsented in writing to such substitution, which consent shall be given in Lender’s reasonable discretion.
(vj) All necessary approvalsNo Event of Default shall have occurred and be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each Loan Document on Borrower’s or IDOT Guarantor’s part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, authorizations stating that the representations and consents warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all governmental bodies (including courts) having jurisdiction material respects on and as of the date of the substitution with respect to each Borrower, IDOT Guarantor each Operating Tenant, the Properties and the Substitute Property and containing any other reasonable representations and warranties with respect to the transactions contemplated by this Article 38 shall have been obtained Substitute Property (covering only new or different conditions which did not exist with respect to the Property being substituted) as the Rating Agencies (and all taxes (whichLender if the Loan is not part of a Securitization) may require, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each be in form and substance reasonably satisfactory to ▇▇▇▇▇▇the Rating Agencies.
(k) Borrower or IDOT Guarantor, ▇▇ Issuer as applicable, shall (1) have executed, acknowledged and Indenture Trustee delivered to Lender (A) a Mortgage, an Assignment of Leases and Rents and two UCC-1 Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and Rents and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statements in the office of the Delaware Secretary of State, so as to effectively create upon such recording and filing, valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (B) an Environmental Indemnity with respect to the Substitute Property and (2) have caused the Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Mortgage, Assignment of Leases and Rents, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting only the Substitute Property as the Individual Property that is the subject of such documents and such modifications reflecting the laws of the state in which the Substitute Property is located as shall be recommended for similar transactions by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (q) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such Mortgage shall be equal to one hundred twenty-five percent (125%) of the Substitute Release Amount (defined below) of the Substitute Property. The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the “Substitute Release Amount”) shall equal the Release Amount of the related Substituted Property.
(l) Lender shall have received (1) to the extent available any “tie-in” or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property and (2) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the Lien of the Mortgage encumbering the Substitute Property, issued by the title company or its successor that issued the Title Insurance Policies insuring the Lien of the existing Mortgages and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with Title Insurance Policy insuring the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value Lien of the Exchange Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to the Substitute Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, (1) provide coverage in the amount of the Substitute Release Amount if the “tie-in” or similar endorsement described above is available or, if such differenceendorsement is not available, plus in an amount equal to one hundred twenty five percent (125%) of the Reinvestment Premium calculated Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are then available and are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages to the extent applicable, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(m) Lender shall have received an approved current survey for each Substitute Property, prepared pursuant to the requirements contained in Section 4.1.27 hereof.
(n) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to such difference (the Substitution Adjustment) Substitute Property and evidence of the ----------------------- Lease shall be modified as set forth in Article 16(c)payment of all premiums payable for the existing policy period.
(do) If all of the conditions set forth Lender shall have received a Phase I environmental report acceptable in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustmentform and substance and from a provider acceptable to Lender and, if applicablerecommended under the Phase I environmental report, a Phase II environmental report reasonably acceptable to Lender, which conclude that the Substitute Property does not contain any hazardous materials in violation of law and the conveyance is not subject to any risk of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.contamination from any off-site hazardous
Appears in 1 contract
Substitution of Properties. (a) So long as no Default or Event of Default has occurred Subject to the terms and is continuing hereunderconditions set forth in this Section 2.10, in the event Borrowers may obtain, on any Business Day, (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased the release of a Property or (the “Released Property”) from the Lien of the Security Instrument thereon (and related Loan Documents) and (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate the release of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur Borrowers’ obligations under the circumstances described under clause Loan Documents with respect to such Released Property (a)(iother than those obligations expressly stated to survive), by simultaneously substituting another property (a “Substitute Property”) hereof, for the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for Released Property. Any such substitution (which a “Substitution”) shall be subject, in each case, to the Installment Payment Date no less than 14 nor more than 45 days after satisfaction of the date of such Substitution Notice).following conditions precedent:
(b) Each Borrowers shall request such Substitution by written notice to Lender given at least 30 days (or 45 days if more than three Properties are sought to be released prior to the date on which the Substitution is to occur (the “Substitution Date”);
(c) Borrowers shall have provided to Lender all industry standard property due diligence material similar to the due diligence material provided to Lender in connection with the origination of the Loan (e.g., title, survey, leases, engineering report, environmental report) with respect to each Substitute Property at least 20 days (or 30 days if more than three Properties are sought to be released) before the Substitution Date, which due diligence materials would be reasonably satisfactory to a prudent lender for loans with similar financing arrangements as contained herein;
(d) if the Loan has been the subject of a Securitization, Borrower shall deliver to Lender a Rating Agency Confirmation as to the Substitution if required pursuant to any pooling and servicing agreement entered into in connection with such Securitization;
(e) Borrowers shall have delivered to Lender an Acceptable Appraisal of each proposed Exchange Substitute Property shall be approved by indicating an Appraised Value of the Indenture Trustee Substitute Property (acting on instructions from as reflected in such Acceptable Appraisal) that is equal to or greater than the greater of the Appraised Value of the Released Property;
(f) after giving effect to the Substitution, the Actual Debt Service Coverage Ratio for all of the Registered Owners)Properties (including the Substitute Properties, which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions but excluding the Released Properties) shall be satisfied prior to any substitution no less than the greater of properties pursuant to this Article 38:(A) the Actual Debt Service Coverage Ratio for all of the Properties (including the Released Properties, but excluding the Substitute Properties ) immediately preceding such Substitution and (B) 2.00:1;
(g) Intentionally Omitted;
(h) no Substitution shall occur during the twelve (12) month period preceding the Maturity Date;
(i) LessorLender shall have received (x) tenant estoppel letters in substantially the same form as those delivered from existing tenants in connection with the closing of the Loan, Indenture Trustee and LC Issuer showing no landlord or tenant defaults, for leases comprising not less than 85% of the gross rentable area of each Substitute Property, and (y), if requested by Lender, subordination, non-disturbance and attornment agreements, substantially in Lender’s standard form (or such other form required by any applicable lease provided the same would be satisfactory to a prudent lender for loans with similar financing arrangements as those contained herein);
(j) Lender shall have received an Appraisal and opinion of counsel for Borrower stating that any securitization vehicle formed in connection with a "Phase I" Environmental Report securitization which includes the Loan which has elected to be treated as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Exchange Property made Internal Revenue Code, as amended, will not fail to maintain such status as a result of such Substitution and that the Substitution does not constitute a “significant modification” of the Loan under Section 1001 of the Internal Revenue Code, as amended, or otherwise cause a tax to be imposed on a “prohibited transaction” by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject any securitization vehicle electing to the approval be treated as a REMIC Trust;
(k) no Event of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report Default shall have been made at the expense of Lessee. Such Appraisal shall occurred and be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property continuing at the time that the Substitution request is made or on the Substitution Date, other than an Event of Default which would be cured by the release of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall or Properties sought to be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.released;
(iil) Lessor, Indenture Trustee Borrowers and LC Issuer Guarantor shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed execute and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing deliver such other terms consents, certificates, documents, agreements or instruments as Lessor, Indenture Trustee or LC Issuer or their respective counsel Lender may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
request (iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇a mortgage, ▇▇ Issuerdeed of trust or deed to secure debt granted by Borrower to Lender with respect to the Substitute Property and any modifications to this Agreement or the other Loan Documents necessitated by the substitution), Indenture Trusteeand Borrower shall deliver opinions of counsel relating to such documents, which be substantially similar to the Registered Ownersopinions of counsel delivered on the Closing Date;
(m) Borrower shall deliver an Officer’s Certificate (i) certifying that all information delivered to Lender by or on behalf of Borrower in connection with the Substitution is true, Beneficiaryaccurate and complete in all material respects and (ii) making all the representations and warranties set forth herein with respect to the Properties as to the Substitute Property as of the Substitution Date; and
(n) Borrowers shall have paid all reasonable, actual out-of-pocket fees charged by the Servicer, a reasonable processing fee charged by Servicer and all reasonable costs and expenses incurred by Lender in connection with such Substitution, including reasonable attorneys' ’ fees and disbursements of such Personsexpenses.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Substitution of Properties. Subject to the terms of this Section, Borrower may obtain a release of the lien of the Property-related Loan Documents from up to three (3) parcels constituting the Property (the "RELEASE PROPERTY"), which constitute in the aggregate, not more than thirty percent (30%) of the total cash flow of the Property, by substituting therefor an office and/or industrial property of like quality to be owned by a subsidiary of the Guarantor (a "SUBSTITUTE PROPERTY"), provided that the following conditions precedent are satisfied.
(a) So long as no Default or Event of Default has occurred and is continuing hereunder, in the event Lender shall have received at least sixty (i60) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable days prior written notice (requesting the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in substitution and identifying the United States (an Exchange Substitute Property and Release Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property Lender shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
have received (i) Lessora copy of a deed conveying all of Borrower's right, Indenture Trustee title and LC Issuer interest in and to the Release Property to a Person other than Borrower or any principal or affiliate of Borrower pursuant to an arms length transaction, and (ii) a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county or town (as applicable) in which the Release Property is located simultaneously with the substitution.
(c) Lender shall have received an Appraisal and a "Phase I" Environmental Report current M.A.I. appraisal of the Exchange Release Property, the Substitute Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject the Remaining Property (hereinafter defined) in form and substance meeting the standards of prudent institutional lenders prepared within six (6) months prior to the approval release and substitution (i) showing as to the Substitute Property an appraised value equal to or greater than the appraised value of Lessor the Release Property as of the original closing date of the Loan, and LC Issuer(ii) which supports a post-substitution, which approval shall aggregate loan-to-value ratio, for all properties that will secure the Loan after the substitution, that does not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at exceed the expense lesser of Lessee. Such Appraisal shall be delivered at least 30 days (A) the aggregate loan-to-value ratio for the properties securing the Loan as of the original closing date of the Loan or (B) the aggregate loan-to-value ratio of such properties immediately prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease)substitution. Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(c).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.Ply Gem Industries -74-
Appears in 1 contract
Sources: Loan Agreement (Corporate Property Associates 16 Global Inc)
Substitution of Properties. Borrower may cause Mortgage Borrower and Maryland Owner to obtain the release of one or more Individual Properties from the Lien of the Mortgage thereon and the release of Mortgage Borrower’s and/or Maryland Owner’s obligations under the Mortgage Loan Documents with respect to such Individual Property (other than those expressly stated to survive) (each such Individual Property, a “Substituted Property”), by substituting therefor one or more properties (such properties, individually and collectively as the context requires, “Substitute Property”), upon the satisfaction of each of the following conditions:
(a) So long as After giving effect to the proposed substitution, no Default or Event of Default has occurred shall be continuing;
(b) Lender shall have received at least thirty (30) days’ prior notice requesting the substitution and is continuing hereunder, identifying the Substitute Property and the Substituted Property;
(c) All conditions to the substitution set forth in Section 2.5 of the event Mortgage Loan Agreement and each Senior Mezzanine Loan Agreement shall have been satisfied and Lender shall have received evidence that all such conditions shall have been satisfied; provided that such evidence shall in all cases consist of the identical evidence or documentation provided to Mortgage Lender and each Senior Mezzanine Lender in satisfaction of such conditions;
(d) Lender shall have received an Officer’s Certificate stating that (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or no Event of Default shall have occurred and be continuing, (ii) Lessee desires each of the representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects with respect to the Substitute Property Borrower and the Substitute Property as of the applicable Substitution Effective Date (on a pro forma basis giving effect to the proposed substitution) and (iii) that all of the conditions of this Section 2.5 shall have been satisfied or waived;
(e) Lender shall have received such certified organizational documents, good standing certificates, qualifications to do business, resolutions and consents for the Substitute Property Borrower and the Substitute Property Operator in connection with the substitution as are requested by Mortgage Lender pursuant to Section 2.5(o) of the Mortgage Loan Agreement;
(f) Lender shall have received such lien, credit, bankruptcy, litigation and judgment searches with respect to the Substitute Property, the Substitute Property Borrower, the Substitute Property Operator, any former owner and/or operator of the Substitute Property and any direct or indirect owner thereof as are provided to Mortgage Lender pursuant to Section 2.5(w) of the Mortgage Loan Agreement;
(g) Lender shall have received a mezzanine loan or similar endorsement (to the extent available, and if not available, a form of “comfort letter” in substantially the form delivered at closing, if available) to each owner’s Title Insurance Policy insuring such Substitute Property as of the Substitution Effective Date. Lender also shall have received copies of paid receipts or a closing statement showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid or will be paid at closing of the purchase of the Substitute Property;
(h) Lender shall have received from Borrower a copy of each document, agreement, financial statement, amendment, instrument, report, appraisal, opinion, survey, study or other communication delivered by Mortgage Borrower to Mortgage Lender in connection with such Substitution pursuant to Section 2.5 of the Mortgage Loan Agreement;
(i) Intentionally omitted;
(j) Lender shall have received the following opinions of Borrower’s counsel: (i) copies of First Mezzanine Borrower’s counsel’s opinion as to the perfection and enforceability of the pledge of the ownership interests in the Substitute Property Borrower, (ii) copies of an opinion or opinions of counsel admitted in New York and Delaware opining as to such matters with respect to the Substitute Property Borrower and the documents and instruments delivered with respect to the substitution and with such qualifications and assumptions as the opinions with respect to the Property delivered at the closing of the Mortgage Loan, which opinions and the counsel issuing the same would be acceptable to a prudent lender originating commercial mortgage loans for securitization similar to the Mortgage Loan, (iii) copies of so-called “Special Delaware” opinions with respect to the Substitute Property Borrower and the Substitute Property Operator issued by counsel admitted to practice in Delaware and with such qualifications and assumptions as the “Special Delaware” opinions with respect to Mortgage Borrower, Maryland Owner and Operator delivered at the closing of the Mortgage Loan, which opinions and counsel issuing the same shall otherwise be acceptable to the Rating Agencies, (iv) copies of an opinion of counsel with respect to such health care regulatory matters as are required by the Rating Agencies with respect to the Mortgage Loan, (v) copies of an opinion of counsel which would be acceptable to a prudent lender originating commercial mortgage loans for securitizations similar to the Mortgage Loan, and if after a Securitization of the Mortgage Loan, acceptable to the Rating Agencies, opining that subjecting the Substitute Property to the Lien of the related Substitute Property Lien Documents and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Mortgage Lender to enforce its remedies under all of the Mortgage Loan Documents or to realize the benefits of the cross-collateralization provided for thereunder, (vi) if required by the Rating Agencies under the Mortgage Loan, an Additional True-Lease Opinion of counsel acceptable to the Rating Agencies under the Mortgage Loan, (vii) copies of an opinion of counsel acceptable to the Rating Agencies under the Mortgage Loan that the substitution does not constitute a “significant modification” of the Mortgage Loan under Section 1001 of the Code or otherwise cause a Leased Property tax to be sold imposed on a “prohibited transaction” by any REMIC Trust and (viii) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein (it being agreed that any opinions contemplated by this paragraph which cover the same matters as opinions delivered on the Closing Date shall be of similar form and substance as those delivered on the Closing Date);
(k) Lender shall have received with respect to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor the Substitute Property Borrower and the Indenture Trustee an irrevocable written notice Substitute Property, as applicable, (i) annual operating statements for the three (3) years immediately prior to the Substitution NoticeEffective Date, (ii) financial statements for the most current completed Fiscal Year in accordance with the requirements of Lessee's intention to ------------------- substitute Section 5.1.11 hereof, (iii) a new property located current operating statement and (iv) an Officer’s Certificate certifying that each of the foregoing presents fairly the financial condition and the results of operations of the Substitute Property Borrower and the Substitute Property and that there has been no material adverse change in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section financial condition of the Indenture, Substitute Property;
(Bl) state that Lessee proposes to substitute such Leased Following the substitution of a Substituted Property in exchange for a Substitute Property in accordance with this Section 2.5, Lender shall adjust (if applicable) the provisions of this Article 38amounts thereafter required to be deposited by Borrower into the Reserve Funds to reflect amounts required solely for the remaining Individual Properties and the Substitute Property after giving effect to such substitution, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or unless such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report of the Exchange Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall deposits have been made at by Mortgage Borrower and Maryland Owner or any Senior Mezzanine Borrower pursuant to the expense Mortgage Loan Documents or the applicable Senior Mezzanine Loan Documents, in which case the making of Lessee. Such Appraisal such deposits shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.waived hereunder;
(iim) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee Borrower shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to paid or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient reimbursed Lender for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees costs and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person Lender (including, without limitation, ▇▇▇▇▇▇reasonable attorneys fees and disbursements) in connection with the release and substitution and Borrower shall have caused to be paid all recording charges, ▇▇ Issuerfiling fees, Indenture Trusteetaxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have caused to be paid all costs and expenses and fees of the Rating Agencies incurred by Mortgage Borrower and Maryland Owner in connection with the substitution; and
(n) such substitution shall not result in any breach of or noncompliance with any applicable REIT Representations and Covenants. Upon satisfaction or waiver of the foregoing conditions precedent, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value Allocated Loan Amount of the Exchange Substitute Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference Allocated Loan Amount of the Substituted Property (and, if there is more than one Substitute Property, the Substitution Adjustment) and Allocated Loan Amount of the ----------------------- Lease Substituted Property shall be modified as set forth in Article 16(callocable to each such Substitute Property on a pro rata basis according to the Appraised Value thereof) (such date, the “Substitution Effective Date”).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.
Appears in 1 contract
Sources: Loan Agreement (Hcp, Inc.)
Substitution of Properties. (a) So long as no Default or Event of Default has occurred Subject to the terms and is continuing hereunder, in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(a) and the corresponding section of the Indenture, (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth hereinin this Section 2.6, on and after the Release Date, Borrower may obtain a release of the Lien of the Mortgage (Eand the Loan Documents) specify encumbering the Individual Property (the “Substituted Property”), by substituting therefor one or more properties of like kind and quality acquired by Borrower (individually, a “Substitute Property” and collectively, the “Substitute Properties”), provided that no such substitution may occur after the date for such substitution that is eight (which shall be the Installment Payment Date no less than 14 nor more than 45 days 8) years after the date of this Agreement. In addition, any such Substitution Notice).substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and the Substituted Property;
(b) Each proposed Exchange The Substitute Property must be a property as to which Borrower will hold indefeasible fee or ground leasehold title free and clear of any lien or other encumbrance except for Permitted Encumbrances, Leases and easements, restrictive covenants and other title exceptions which do not have a material adverse effect on the utility or value of such property for its current use.
(c) Lender and the Rating Agencies shall be approved by the Indenture Trustee (acting on instructions from have received a copy of a deed conveying all of Borrower’s right, title and interest in and to the Registered Owners)Substituted Property to an entity other than Borrower or an Affiliate of Borrower (such transferee, the “Buyer”) in an arms’ length transaction together with a copy of a fully executed contract of sale between the Buyer and the Borrower which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution contract of properties pursuant to this Article 38:
sale (i) Lessorat the time of substitution, Indenture Trustee is not subject to any unsatisfied contingencies, except for the payment of the purchase price by the purchaser and LC Issuer the delivery of title by Borrower and (ii) evidence that any good-faith deposit required under such contract of sale has been deposited into escrow.
(d) Lender and the applicable Rating Agencies shall have received an Appraisal and a "Phase I" Environmental Report MAI appraisal of the Exchange Substitute Property made by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 dated no more than thirty (30) days prior to the date of substitution by an appraiser acceptable to such proposed substitution and shall indicate the fair market Rating Agencies, indicating an appraised value and useful life of the Exchange Substitute Property that is at least equal to the time greater of the proposed substitution and prospectively for the end of each remaining year appraised value of the Maximum Lease Term (assuming in each case that the affected Leased Substituted Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that Lender as of the substitution date there has been no adverse change in the environmental status hereof or determined by an Independent Appraiser within thirty (30) days of the Exchange encumbrance of the Substitute Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reportsrelated Mortgage.
(e) The Debt Service Coverage Ratio for the Substitute Property shall be equal to the greater of (i) the Threshold DSCR and (ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by LesseeDebt Service Coverage Ratio, as lesseedetermined by Lender in its sole and absolute discretion, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing immediately prior to such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38substitution.
(iiif) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer The Underwritten Cash Flow for the Substitute Property either (wi) does not show a special warranty deed, sufficient to convey to Lessor good and marketable title to successive decrease over the Exchange Property subject only to the Permitted Encumbrances described in clauses three (a), (b), (c), and (h3) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days years immediately prior to the date of substitution, or (ii) if the Substitute Property has been substantially renovated within such three (3) year period, the Underwritten Cash Flow shall not show a successive decrease for such a period of not less than twelve (12) months.
(g) The Underwritten Cash Flow for the twelve (12) month period immediately preceding the substitution for the Substitute Property shall not be less than the Underwritten Cash Flow for the twelve (12) month period immediately preceding the substitution for the Substituted Property.
(h) The Person transferring the Substitute Property is solvent and the Substitute Property was transferred to Borrower in an arm’s length transaction, which may include a transfer by an Affiliate of Borrower to Borrower as long as Borrower is giving a reasonably equivalent value (as determined by the appraisal obtained pursuant to clause (d) above) for the Substitute Property.
(i) If the Loan is part of a Securitization, Lender shall have received a Rating Agency Confirmation with respect to such substitution.
(j) No Event of Default shall have occurred and be continuing and Lender and the Rating Agencies shall have received an Officer’s Certificate certifying as to such absence of an Event of Default.
(k) The Borrower shall have executed, acknowledged and delivered to Lender (A) a First Mortgage and a Second Mortgage, a First Assignment of Leases and a Second Assignment of Leases and UCC Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such documents and agreeing to record or file, as applicable, such documents in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statements in the office of the Secretary of State of the state in which Borrower is organized, so as to effectively create upon such recording and filing valid and enforceable liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be required under local law), subject only to the Permitted Encumbrances and such other liens as are permitted pursuant to the Loan Documents, (B) an Environmental Indemnity Agreement with respect to the Substitute Property, and (C) written confirmation and acceptance from each Guarantor and the Other Borrowers of such substitution and a reaffirmation by such Guarantor and Other Borrowers with respect to guarantees executed by such Guarantor and Other Borrowers which relate to the Loan. The Mortgage, UCC-1 Financing Statements and Environmental Indemnity Agreement shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting the Substitute Property as the Individual Property and such modifications reflecting the laws of the state in which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as to the enforceability of such documents required pursuant to clause (p) below. The First Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such First Mortgage shall be equal to one hundred twenty-five percent (125%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to the Substitute Property (such amount being hereinafter referred to as the “Substitute Property Loan Amount”) shall equal the Allocated Loan Amount of the related Substituted Property.
(l) Lender shall have received (i) a “tie-in” or similar endorsement to each Title Insurance Policy insuring the lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the lien of the Mortgage with respect to the Substitute Property and (ii) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the lien of the Mortgage encumbering the Substitute Property, issued by the title company that issued the Title Insurance Policies insuring the lien of the existing Mortgages and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the lien of the Mortgage encumbering the Substituted Property, to the extent such agreements are available in the jurisdiction in which the Substitute Property is located. The Title Insurance Policy issued with respect to the Substitute Property shall (1) provide coverage in the amount of the Allocated Loan Amount if the “tie-in” or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the Allocated Loan Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the liens of the existing Mortgage, to the extent available in the jurisdiction in which the Substitute Property is located and (4) name Lender as the insured. Lender also shall have received copies of paid receipts or a closing statement showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid or will be paid at closing of the purchase of the Substitute Property.
(m) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Exchange Substitute Property is locatedlocated and acceptable to the Rating Agencies in accordance with the 1997 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, including items 1, (if readily available) 2, 3, 4, 6, 7 (a) (b) (c) , 8, 9, 10, 11 and 13 from Table A, or in accordance with similar successor standards typically accepted by prudent lenders in similar transactions. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor’s seal shall be affixed to each survey and each survey shall certify that the Improvements located on the surveyed property is not located in an area identified by the Federal Emergency Management Agency as a “special flood hazard area”.
(ivn) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and Lender shall have received evidence satisfactory to each such Person valid certificates of insurance indicating that the Exchange requirements for the Policies of insurance required for an Individual Property complies with all zoning and other land use requirements and that all necessary permits and licenses hereunder have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction satisfied with respect to the transactions contemplated by this Article 38 shall have been obtained Substitute Property and evidence of the payment of all taxes (which, if permitted by law, may be paid in installments), fees and other charges premiums payable in connection therewith shall have been paidfor the existing policy period.
(vio) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report from a nationally recognized environmental consultant approved by the Rating Agencies (if applicable), not less than thirty (30) days prior to such release and substitution, which conclude that the Substitute Property does not contain any Hazardous Materials (except for cleaning and other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee products used in connection with the transactions contemplated by this Article 38 routine maintenance or repair of the Substitute Property or the operation thereof as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably requestan office building and in full compliance with Hazardous Materials Laws) and is not subject to any risk of contamination from any off-site Hazardous Materials. Where required, If any such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees report discloses the presence of any Hazardous Materials (except for cleaning and expenses incurred other products used in connection with the transaction contemplated routine maintenance or repair of the Substitute Property or the operation thereof as an office building, in full compliance with Hazardous Materials Laws) or the risk of contamination from any off-site Hazardous Materials, such report shall include an estimate of the cost of any related remediation and Borrower shall deposit with Lender an amount equal to one hundred twenty-five percent (125%) of such estimated cost, which deposit shall constitute additional security for the Loan and shall be released to Borrower upon the delivery to Lender of (i) an update to such report indicating that there is no longer any Hazardous Materials (except for cleaning and other products used in connection with the routine maintenance or repair of the Substitute Property or the operation thereof as an office building, in full compliance with Hazardous Materials Laws) on the Substitute Property or any danger of contamination from any off-site Hazardous Materials that has not been fully remediated in accordance with all applicable laws and (ii) paid receipts indicating that the costs of all such remediation work have been paid. Such report shall also state the amount of time that will be necessary to complete such remediation, as may be required by this Article 38applicable law. Borrower covenants to undertake any repairs, cleanup or remediation indicated.
(p) Borrower shall deliver or cause to be delivered to Lender (i) an Officer’s Certificate and updates of all organizational documentation related to the Borrower substituting an Individual Property and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (ii) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (iii) resolutions of the managing member of the Borrower substituting an Individual Property authorizing the substitution and any actions taken in connection with such substitution.
(q) Lender shall have received the following opinions of Borrower’s counsel (which opinions, with respect to the opinions set forth in clauses (i), (ii) and (iii) below, shall be in form similar to the corresponding opinions delivered to Lender on the Closing Date: (i) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors’ rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that the Borrower is not required by applicable law to qualify to do business in such jurisdiction; (ii) an opinion of counsel stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above were duly authorized, executed and delivered by the Borrower and that, to the best of Borrower’s counsel’s knowledge, the execution and delivery of such Loan Documents and the performance by the Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (iii) title endorsements or, if such title endorsements are not available, an opinion of counsel insuring or opining, as applicable, that subjecting the Substitute Property to the lien of the related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or the Guaranty Security Documents or to realize the benefits of the cross-collateralization provided for thereunder; (iv) an update of the Non-Consolidation Opinion indicating that the substitution does not affect the opinions set forth therein; (v) an Officer’s Certificate and other reasonable evidence acceptable to the applicable Rating Agencies confirming that the substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (vi) an opinion of counsel acceptable to the applicable Rating Agencies that the substitution does not constitute a “significant modification” of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any Person REMIC.
(r) Borrower shall have paid or caused to be paid all Basic Carrying Costs relating to the Individual Property and the Substitute Property, including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal accrued but unpaid insurance premiums relating to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) Individual Property and the ----------------------- Lease shall be modified as set forth Substitute Property, (ii) currently due taxes (including any in Article 16(c).
(darrears) If all of relating to the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Individual Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.t
Appears in 1 contract
Sources: Loan Agreement (Wells Real Estate Investment Trust Inc)
Substitution of Properties. From and after the date twelve (a12) So long months after the A Loan Closing Date, Borrower from time to time (not to exceed six (6) occasions) may offer to Lenders as collateral for the Loans (a “Substitution”) one or more substitute properties (each, a “Substitute Property” and, collectively, “Substitute Properties”; each Substitute Property to be considered a Property for all purposes of this Agreement) as replacements for Properties (“Replaced Properties”), subject to there then being no Default or Event of Default has occurred and is continuing hereunder(excepting non-monetary defaults relating solely to the Replaced Property, including, but not limited to, a breach of one or more representations or warranties, but not excepting any default relating to financial statements or their delivery or representations or warranties in the event (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (the Substitution Notice) of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property pursuant to this Article 38(a). Such notice shall (A) refer specifically to this Article 38(arespect thereof) and the corresponding section of the Indenture, (B) state that Lessee proposes subject further to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereof, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, of all the conditions set forth hereinbelow with respect to each Substitution and to Borrower making the representations and warranties in Section 5.1 hereof as to each Substitute Property and to Borrower satisfying the closing conditions of Section 3.1 hereof as to each Substitute Property. Any proposed Substitution shall be submitted by Borrower to Lenders in writing, together with copies of all reports and other due diligence materials necessary to enable Lender to ascertain compliance with the conditions below, at least ninety (90) days prior to the proposed date of Substitution. No Substitute Property may qualify as a Replaced Property and, after giving effect to the Substitution, no Property may share its tax parcel with any property not secured by the applicable Mortgage. No Property may be substituted if it includes property which is needed to comply with a tenant’s expansion right from an adjoining Property onto such Property unless all of the Properties related to the tenant’s expansion right are contemporaneously substituted.
(a) For each Substitution, the Substitute Property or Substitute Properties must have an aggregate NOI of not less than the greater of (i) the aggregate NOI of the Replaced Property or Properties as of the B Loan Closing Date as set forth on Schedule 1 attached hereto, and (Eii) specify the date aggregate NOI of the Replaced Property or Replaced Properties for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).immediately preceding 12 month period;
(b) For each Substitution, the Substitute Property or Substitute Properties must have an aggregate FMV of not less than the greater of (i) the FMV of the Replaced Property or Replaced Properties as of the B Loan Closing Date as set forth on Schedule 1 attached hereto, and (ii) the FMV of the Replaced Property or Replaced Properties immediately prior to the Substitution;
(c) As evidenced by estoppel certificates reasonably acceptable to Lenders and the Rating Agencies, all tenants in each Substitute Property that lease more than 20,000 s.f. (or whose rent constitute greater than thirty percent (30%) of the Gross Income for the Substitute Property) must be occupying their space, open for business and paying rent (after any free rent, credit or rent abatement periods) and not in arrears more than 30 days, and all free rent or rental grace periods shall have expired, and the tenants shall not be in bankruptcy (provided, however, the impact of any tenant not qualifying under this subparagraph (c) would be the disqualification of the income associated with that tenant for purposes of calculating NOI, or establishing FMV for the affected Substitute Property, not the elimination of the property as a potential Substitute Property);
(d) With respect to each Substitute Property, leases affecting at least 90% of the net rentable area must have average remaining terms of five (5) years or more, as of the date of Substitution;
(e) Borrower must hold fee title to the Substitute Properties and the Substitute Properties must be free of all encumbrances, easements and other title exceptions (except those expressly permitted by Lender in its reasonable discretion);
(f) Borrower must continue to be a bankruptcy-remote single purpose entity and, immediately prior to each such Substitution, Borrower shall deliver bankruptcy (including, but not necessarily limited to, non-consolidation) and other legal opinions as reasonably required by Lenders;
(g) Borrower must deliver an environmental report for each Substitute Property in form, findings and substance acceptable to Lenders in their reasonable discretion and the Rating Agencies;
(h) Borrower must (i) deliver to Lenders and the Rating Agencies an engineering report (including, but not limited to, analysis of seismic risk for any Substitute Property situated in a seismic zone, and which analysis must show that the Substitute Property does not have a probable maximum loss percentage that exceeds the probable maximum loss percentage of the Replaced Property and in no event shall such Substitute Property have a probable maximum loss of more than 15%) in form, findings and substance acceptable to Lenders and the Rating Agencies in their reasonable discretion, and (ii) deposit 125% of estimated deferred maintenance cost (if any) into a reserve account with Existing Lender for the benefit of Lenders where the estimated cost of such deferred maintenance exceeds $100,000 per Substitute Property;
(i) Each proposed Exchange Substitute Property shall be approved must comply with all title, land use, legal, environmental and insurance requirements provided in the Loan Documents, and Lender must receive title insurance, surveys, casualty insurance, and other due diligence items, all acceptable to Lender in its reasonable discretion; and with respect to the remaining Properties encumbered by the Indenture Trustee applicable Mortgage, Borrower shall provide Lenders with title insurance endorsements reasonably acceptable to Lenders to the effect that such release will not impair the priority of such Mortgage on the remaining Properties encumbered by the Mortgage;
(acting on instructions from j) After giving effect to the Substitution, not more than sixty (60%) percent of the rentable square footage of the Property Pool would be located in Los Angeles, Riverside, San Bernardino and Orange Counties in California;
(k) The Rating Agencies must have confirmed in writing that such Substitution would not result in a downgrade, qualification, or withdrawal of the ratings of the securities issued pursuant to any Securitization. Except as provided in Subsection 2.12 (m) and Section 2.15 below, however, Rating Agency confirmation shall not be so required if all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38are satisfied:
(i) Lessor, Indenture Trustee and LC Issuer shall have received an Appraisal and a "Phase I" Environmental Report The Replaced Property’s Allocated Loan Amount A is not among that of the Exchange Property made top ten (10) Properties ranked by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject to the approval of Lessor and LC Issuer, which approval shall not be unreasonably withheld, which Appraisal and Environmental Report shall have been made at the expense of Lessee. Such Appraisal shall be delivered at least 30 days prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology Allocated Loan Amount A as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease with respect to such Leased Property. Such Environmental Report shall be delivered at least 30 days prior to the date of such proposed substitution, shall speak as of a date not more than six months prior to the date of such proposed substitution and shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely set forth on such Environmental Reports.Schedule 1 attached hereto;
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason The Allocated Loan Amount A of the transactions contemplated by this Article 38.Replaced Property is less than five percent (5%) of the then-current principal amount of the A Loan immediately preceding the proposed Substitution; and
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title After giving effect to the Exchange Property subject only to proposed Substitution, the Permitted Encumbrances described in clauses (a), (b), (c), and (h) aggregate Allocated Loan Amount A for all Substitute Properties substituted since the A Loan Closing Date is less than 15% of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment original principal amount of the Assignment of Lease, including A Loan. If the legal description of the Exchange Property, (y) a supplement Substitution is to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days occur prior to the date Securitization, the Substitution is subject to Lender’s prior written consent. Borrower acknowledges and agrees that Lenders’ decision to approve or disapprove of substitutionany Substitution shall be in Lenders’ reasonable discretion, by which may include consideration of the impact such Substitution will have on the Rating Agencies review, analysis and concerns in connection with a surveyor licensed in the state in which the Exchange Property is locatedSecuritization.
(ivl) LessorThe Substitute Property must be income producing and developed property and similar in quality, Indenture Trustee nature and LC Issuer shall have had the opportunity to conduct customary due diligence with regard property type to the Exchange Replaced Property and shall have received evidence satisfactory to each such Person that (“Like for Like”) (except for the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇▇ and the Properties known as Home Depot, ▇▇ Issuer or Indenture Trustee may reasonably request. Where requiredPak N’ Save and Kmart, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees located in Emeryville, California (identified as Properties numbered 66, 67, 68 and expenses incurred in connection with the transaction contemplated by this Article 3869, by any Person includingrespectively, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(con Exhibit A attached hereto) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to Substitute Properties may be substitutedeither industrial, then Lessee shall office (except office Properties may not be required to pay to Lessorsubstituted for retail Properties), as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference (the Substitution Adjustment) and the ----------------------- Lease shall be modified as set forth in Article 16(cresearch & development or grocery anchored retail properties).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.;
Appears in 1 contract
Substitution of Properties. Subject to the terms and conditions set forth in this Section, at any time following the commencement of the Defeasance Period, Borrower may obtain a release of the Lien of the Mortgage (and the related Loan Documents) to the extent it encumbers one or more Mortgaged Properties (a "SUBSTITUTED PROPERTY") by substituting therefor one or more office properties acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the "SUBSTITUTE PROPERTIES"), provided that (a) So long as the Substitution Conditions are satisfied with respect to the Substitute Properties, (b) no Default or Event such substitution may occur after the Anticipated Repayment Date, (c) such substitution shall not be allowed more than two (2) times during the term of Default has occurred the Loan and is continuing hereunder, in (d) not more than five (5) Mortgaged Properties may be released from the event Lien of the Mortgage (i) Lessee or Guarantor or any Affiliate thereof is required by applicable bank regulatory requirements to divest its interest in any Leased Property or (ii) Lessee desires to cause a Leased Property to be sold to a Person that is not an Affiliate of any party to any Operative Document, Lessee may give Lessor and the Indenture Trustee an irrevocable written notice (related Loan Documents) during the Substitution Notice) term of Lessee's intention to ------------------- substitute a new property located in the United States (an Exchange Property) ----------------- for such Leased Property Loan pursuant to this Article 38(a)SECTION 11. Such notice Any such substitution shall (A) refer specifically be subject, in each case, to this Article 38(a) and the corresponding section satisfaction of the Indenture, following conditions precedent (B) state that Lessee proposes to substitute such Leased Property in accordance with the provisions of this Article 38, (C) include, if a substitution shall occur under the circumstances described under clause (a)(i) hereofcollectively, the order or regulation applicable to Lessee, Guarantor or such Affiliate, (D) include, if a proposed substitution shall occur under the circumstances described under clause (a)(ii) hereof, an irrevocable commitment to purchase such Leased Property from such Person which purchase shall be conditioned upon the satisfaction of, among other things, the conditions set forth herein, and (E) specify the date for such substitution (which shall be the Installment Payment Date no less than 14 nor more than 45 days after the date of such Substitution Notice).
(b) Each proposed Exchange Property shall be approved by the Indenture Trustee (acting on instructions from all of the Registered Owners), which approval shall not be unreasonably withheld, conditioned or delayed. The following additional conditions shall be satisfied prior to any substitution of properties pursuant to this Article 38:"SUBSTITUTION CONDITIONS"):
(i) LessorLender shall have received a copy of a deed or an assignment and assumption of lessee's interest in the Ground Lease (together with the ground lessor's consent thereto), Indenture Trustee as applicable, conveying all of Borrower's right, title and LC Issuer interest in and to the Substituted Property or Substituted Properties then being Released to an entity other than Borrower and a letter from Borrower countersigned by the Title Company acknowledging receipt of such deed or assignment and assumption, as applicable, and agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located or in the counties in which the Substituted Properties are located;
(ii) Lender shall have received an Appraisal and a "Phase I" Environmental Report appraisal of the Exchange Substitute Property made or Substitute Properties, as applicable, dated no more than sixty (60) days prior to the substitution by an Appraiser and environmental engineer, respectively, selected by Indenture Trustee, subject appraiser acceptable to the approval Rating Agencies, indicating an appraised value of Lessor and LC Issuerthe Substitute Property or Substitute Properties, which approval shall not be unreasonably withheldas applicable, which Appraisal and Environmental Report shall have been made at that is equal to or greater than the expense Release Price of Lessee. Such Appraisal the Substituted Property or Substituted Properties, then being Released, determined by Lender as of the Closing Date;
(iii) after giving effect to the substitution, the Debt Service Coverage Ratio for the Mortgaged Properties (including the Substitute Properties but excluding the Substituted Properties) shall be delivered at least 30 days equal to the greater of (i) 2.052:1 and (ii) the Debt Service Coverage Ratio for the Loan for all of the Mortgaged Properties immediately preceding the substitution;
(iv) the Net Operating Income for any Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of such proposed substitution and shall indicate the fair market value and useful life of the Exchange Property at the time of the proposed substitution and prospectively for the end of each remaining year of the Maximum Lease Term (assuming in each case that the affected Leased Property had been maintained and operated in accordance with the terms of this Lease). Fair market value shall be determined by the same methodology as was employed by the appraiser in the original appraisal of the replaced Leased Property delivered in connection with the commencement of the Lease or, with respect to a Substitute Property for which information regarding the Net Operating Income of such Leased Property. Such Environmental Report shall be delivered at least 30 days Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such proposed substitution, shall speak as period of a date not more than six months time immediately prior to the date of substitution as may be determined from the information regarding such proposed substitution and Net Operating Income available (which period of time, in any event, shall not disclose any conditions which are not satisfactory to Lessor, Indenture Trustee or LC Issuer. Lessee shall certify to the best of its knowledge that as of the substitution date there has been no adverse change in the environmental status of the Exchange Property from that described in the Environmental Report with regard to environmental matters. If such Environmental Report recommends further review, Lessee, at its own expense, will provide such additional environmental assessments as are required by Lessor, Indenture Trustee or LC Issuer. The results of such Environmental Reports shall be satisfactory to Lessor, Indenture Trustee and LC Issuer. Lessor, Indenture Trustee, LC Issuer and each holder of indebtedness secured by the Indenture shall receive a letter from the environmental engineer submitting such Environmental Report, permitting such addressee to rely on such Environmental Reports.
(ii) Lessor, Indenture Trustee and LC Issuer shall have received a Lease Supplement in the form of Schedule H annexed hereto and, if appropriate, a memorandum or short form of lease with respect thereto, duly authorized, executed and delivered by Lessee, as lessee, adding and subjecting the Exchange Property to, and releasing the affected Leased Property from, the terms of this Lease, and containing such other terms as Lessor, Indenture Trustee or LC Issuer or their respective counsel may reasonably deem necessary or appropriate by reason of the transactions contemplated by this Article 38.
(iii) Lessee shall have caused to be executed and delivered to Lessor, Indenture Trustee and LC Issuer (w) a special warranty deed, sufficient to convey to Lessor good and marketable title to the Exchange Property subject only to the Permitted Encumbrances described in clauses (a), (b), (c), and (h) of the definition thereof (to the extent such Permitted Encumbrances are acceptable to Lessor, Indenture Trustee and LC Issuer), (x) a supplement to or amendment of the Assignment of Lease, including the legal description of the Exchange Property, (y) a supplement to or amendment of the Indenture with respect to such Exchange Property, and (z) a supplement to or amendment of the LC Deed of Trust with respect to such Exchange Property, in each case in form sufficient for recording and enforceability in the applicable jurisdiction, so that upon the proper recordation and effectiveness of the foregoing, such parties shall enjoy the same rights and benefits with respect to the Exchange Property as existed with respect to such substituted Leased Property. Lessor, Indenture Trustee and LC Issuer shall have received (a) an owner's and a mortgagee's policy of title insurance, as applicable, on the standard ALTA form formerly known as 1970 form (or if the 1970 form is not available in a particular jurisdiction, a more recent form which has been endorsed or had exclusions removed to achieve the equivalent) with respect to the Exchange Property (or a commitment therefor) with mechanics' lien coverage and containing no survey exception, insuring Lessor, Indenture Trustee and LC Issuer, respectively, against loss with respect to the Exchange Property and otherwise reasonably satisfactory to Lessor, Indenture Trustee and LC Issuer and (b) a survey of the Exchange Property, satisfactory in form and substance to Lessor, Indenture Trustee and LC Issuer, certified within 90 days prior to the date of substitution, by a surveyor licensed in the state in which the Exchange Property is located.
(iv) Lessor, Indenture Trustee and LC Issuer shall have had the opportunity to conduct customary due diligence with regard to the Exchange Property and shall have received evidence satisfactory to each such Person that the Exchange Property complies with all zoning and other land use requirements and that all necessary permits and licenses have been issued with respect thereto.
(v) All necessary approvals, authorizations and consents of all governmental bodies (including courts) having jurisdiction with respect to the transactions contemplated by this Article 38 shall have been obtained and all taxes (which, if permitted by law, may be paid in installments), fees and other charges payable in connection therewith shall have been paid.
(vi) ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee shall have received such other instruments and such certificates, including without limitation, an estoppel certificate from Lessee, evidence of the insurance required by this Lease, certificates as to representations and warranties, and opinions of counsel, each in form and substance reasonably satisfactory to ▇▇▇▇▇▇, ▇▇ Issuer and Indenture Trustee in connection with the transactions contemplated by this Article 38 as ▇▇▇▇▇▇, ▇▇ Issuer or Indenture Trustee may reasonably request. Where required, such instruments shall have been duly recorded by Lessee. Lessee shall pay all fees and expenses incurred in connection with the transaction contemplated by this Article 38, by any Person including, without limitation, ▇▇▇▇▇▇, ▇▇ Issuer, Indenture Trustee, the Registered Owners, Beneficiary, including reasonable attorneys' fees and disbursements of such Persons.
(c) If the Appraisal provided to Lessor, Indenture Trustee and LC Issuer pursuant to paragraph (b) (i) of this Article 38 shall show that the fair market value of the Exchange Property is less than the fair market value of the Leased Property for which such Exchange Property is to be substituted, then Lessee shall be required to pay to Lessor, as an adjustment to Basic Rent hereunder, the amount of such difference, plus an amount equal to the Reinvestment Premium calculated with respect to such difference one (the Substitution Adjustment1) and the ----------------------- Lease shall be modified as set forth in Article 16(cyear).
(d) If all of the conditions set forth in this Article 38 have been satisfied, then, upon payment of the Substitution Adjustment, if applicable, and the conveyance of the Exchange Property to Lessor in accordance with the terms hereof, Lessor shall convey the affected Leased Property to Lessee in accordance with the provisions of Article 16 and the Lease shall terminate as to such affected Leased Property and shall be effective as to such Exchange Property. If Lessee fails to complete such substitution on or before the date set forth in the Substitution Notice, or such later date as Lessor, Lessee, Indenture Trustee and LC Issuer shall mutually agree, such failure shall immediately constitute an Event of Default hereunder.;
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Sources: Loan Agreement (Arden Realty Inc)