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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): July 24, 2020

 

American Finance Trust, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Maryland   001-38597   90-0929989

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

 

650 Fifth Avenue, 30th Floor
New York, New York 10019

(Address, including zip code, of Principal Executive Offices)

 

Registrant’s telephone number, including area code: (212) 415-6500

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to section 12(b) of the Act:

 

Title of each class:   Trading Symbol(s)   Name of each exchange on which registered:
Class A Common Stock, $0.01 par value   AFIN   The Nasdaq Global Select Market
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value   AFINP   The Nasdaq Global Select Market
Preferred Stock Purchase Rights   true   The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 1.01Entry into a Material Definitive Agreement.

 

Loan Agreement with Column Financial

 

On July 24, 2020, American Finance Trust, Inc. (the “Company”), through wholly owned borrower subsidiaries of its operating partnership, American Finance Operating Partnership, L.P. (the “OP”), entered into a loan agreement with Column Financial, Inc. for a $715.0 million loan. The loan is secured by, among other things, a first mortgage on 368 single-tenant properties located in 41 states and the District of Columbia and totaling approximately 7.1 million square feet. The loan agreement permits the lender to either securitize the loan or any portion thereof or bifurcate the loan into a senior mortgage loan and a subordinate mezzanine loan.

 

The loan bears interest at a fixed rate of 3.743% and matures on August 6, 2025. The loan requires payments of interest only, with the principal balance due on the maturity date. The loan may be prepaid at any time, in whole or in part, subject to payment of a yield maintenance premium for any prepayments made prior to April 6, 2025. The loan agreement also contains provisions pursuant to which, subject to certain conditions and limitations, mortgaged properties may be released or replaced and provisions related to circumstances under which all rent and other revenue received from the mortgaged properties will be directly deposited into a bank account controlled by the lender and used to pay obligations under the loan.

 

At closing, of the approximately $697.1 million of net proceeds from the loan after fees and expenses, $696.2 million was used to repay $499.0 million for a mortgage loan originally due September 2020 bearing an interest rate of 4.36% per annum, and the remainder was used to repay outstanding amounts under the Company’s corporate credit facility.

 

Of the 368 single tenant properties secured under the new loan, 223 were previously held as collateral under the mortgage loan originally due September 2020, and all but one of the remaining properties were part of the borrowing base under the corporate credit facility.

 

The loan is nonrecourse to the borrowers, except for certain enumerated recourse liabilities of the borrowers under the loan agreement, which the OP has guaranteed pursuant to a limited recourse guaranty in favor of the lender. The guaranty also requires the OP to maintain a minimum net worth of $1.0 billion. In addition, the OP and the borrowers have indemnified the lender, pursuant to an environmental indemnity agreement, against certain environmental liabilities.

 

Column Financial, Inc. or one of its affiliates is a lender under one of the Company’s other mortgage loans.

 

The foregoing description does not purport to be a complete description and is qualified in its entirety by reference to the loan agreement, the guaranty and the environmental indemnity, copies of which are filed herewith as Exhibits 10.1-10.3 and incorporated herein by reference.

 

2

 

 

New Property Management and Leasing Agreement

 

On July 24, 2020, in connection with the loan agreement, all but one of the borrowers entered into a new property management and leasing agreement with American Finance Properties, LLC (the “Property Manager”) with respect to all but one of mortgaged properties, all of which are double- and triple-net leased single-tenant properties. The Company’s other double- and triple-net leased single-tenant properties are managed by the Property Manager pursuant to an existing property management and leasing agreement, which provides that the Company is responsible for all costs and expenses of managing the properties, except for general overhead and administrative expenses of the Property Manager, and also provides for automatic renewals for successive one-year terms unless terminated 60 days prior to the end of a term or terminated for cause. The new property management and leasing agreement is identical to this existing property management and leasing agreement, except that the new property management and leasing agreement does not permit the Property Manager to subcontract its duties to third parties.

 

The relationships between the Company, on the one hand, and the Property Manager and its affiliates (including without limitation the Company’s external advisor, American Finance Advisors, LLC), and related transactions are described in the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2020 and other filings with the SEC made by the Company.

 

The foregoing description does not purport to be a complete description and is qualified in its entirety by reference to the new property management and leasing agreement, a copy of which is filed herewith as Exhibit 10.4 and incorporated herein by reference.

 

Credit Facility Amendment

 

On July 24, 2020, the Company, through the OP as the borrower thereunder, entered into an amendment to the Company's corporate credit facility with BMO Harris Bank, N.A. as administrative agent, and the other lenders party thereto. The amendment is effective as of April 1, 2020 and is designed to provide the Company with additional flexibility during the period from April 1, 2020 through March 31, 2021 (the “Adjustment Period”) to continue addressing the adverse impacts of the COVID-19 pandemic. The amendment revises specific provisions in the credit facility governing: (i) the payment of dividends; (ii) leverage coverage; (iii) borrowing availability; (iv) fixed charge coverage; (v) the interest rate; and (vi) acquisitions. These revisions are generally only effective during the Adjustment Period, after which the previously effective terms of the credit facility will be reinstated. Please see the Company’s most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 7, 2020 and other filings by the Company with the SEC for more details on these previously effective terms.

 

·Payment of Dividends. During the Adjustment Period, (i) the Company is permitted to continue to pay dividends on its 7.50% Series A cumulative redeemable perpetual preferred stock and its Class A common stock at the current annualized per-share rates without satisfying any further tests for the fiscal quarter ended June 30, 2020 and the fiscal quarter ending September 30, 2020, and (ii) the Company will generally be permitted to pay dividends on its 7.50% Series A cumulative redeemable perpetual preferred stock and its Class A common stock and other distributions in an aggregate amount of up to 105% of annualized MFFO (as defined in the credit facility) for a look-back period of two consecutive fiscal quarters for the fiscal quarter ending December 31, 2020 and a look-back period of three consecutive fiscal quarters for the fiscal quarter ending March 31, 2021 if, as of the last day of the period, after giving effect to the payment of those dividends and distributions, the Company has a combination of cash, cash equivalents and amounts available for future borrowings under the credit facility of not less than $125.0 million. If this level of liquidity is not maintained, the applicable threshold percentage of MFFO will be 95% instead of 105%. If applicable, during the continuance of an event of default under the credit facility, the Company may not pay dividends or other distributions in excess of the amount necessary for the Company to maintain its status as a REIT.

 

3

 

 

During the Adjustment Period, the Company may not repurchase shares by tender offer or otherwise.

 

·Leverage. During the Adjustment Period, the calculation of Total Asset Value (as defined in the credit facility) — which serves as the basis for the denominator used to calculate the maximum consolidated leverage, maximum consolidated secured leverage and maximum other recourse debt to total asset value financial maintenance covenants in the credit facility — will be adjusted such that the value ascribed to the Company’s multi-tenant properties purchased through June 30, 2020 will generally be decreased by 10% for the duration of the Adjustment Period.

 

During the Adjustment Period, the OP must maintain, as of the end of each month starting with June 2020, a combination of cash, cash equivalents and amounts available for future borrowings under the credit facility of not less than $100.0 million.

 

·Borrowing Availability. The amount available for future borrowings under the credit facility is based on the lesser of (i) 60% of the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (ii) a maximum amount of total unsecured indebtedness that could be incurred while maintaining a minimum unsecured interest coverage ratio with respect to the borrowing base, in each case, as of the determination date. During the Adjustment Period, (a) the value of all eligible unencumbered real estate assets comprising the borrowing base purchased through June 30, 2020 will generally be decreased by 10%, and (b) the minimum unsecured interest coverage ratio required to be maintained by the eligible unencumbered real estate assets comprising the borrowing base will be decreased during the fiscal quarter ended June 30, 2020 and increased during the other fiscal quarters of the Adjustment Period.

 

Pursuant to the amendment, the amount available for borrowings as of June 30, 2020 will be calculated giving effect to the closing of the loan described above under “Loan Agreement with Column Financial” when (i) $197.3 million outstanding under the credit facility was repaid, (ii) 144 properties securing the loan and one multi-tenant property that had served as part of the pool of eligible unencumbered real estate assets comprising the borrowing base under the credit facility were removed from the borrowing base, and (iii) 30 of the Company’s unencumbered single-tenant net leased properties were added to the borrowing base. Calculated on this basis, the Company had a total borrowing capacity under the credit facility of $328.1 million as of the closing of the amendment to the credit facility on a pro forma basis as of April 1, 2020 with $305.9 million of this amount outstanding, inclusive of two letters of credit totaling $1.7 million, and $22.2 million remaining available for future borrowings.

 

4

 

 

·Fixed Charges Coverage. During the Adjustment Period, the minimum fixed charge coverage ratio financial maintenance covenant in the credit facility will be decreased.

 

·Interest Rate. Borrowings under the credit facility bear interest at either (i) the Base Rate (as defined in the credit facility) plus an applicable margin ranging from 0.60% to 1.20%, depending on the Company’s consolidated leverage ratio, or (ii) LIBOR plus an applicable margin ranging from 1.60% to 2.20%, depending on the Company’s consolidated leverage ratio. From July 24, 2020 until delivery of the compliance certificate for the fiscal quarter ending June 30, 2021, the margin will be 1.50% with respect to the Base Rate and 2.50% with respect to LIBOR regardless of the Company’s consolidated leverage ratio. Pursuant to the amendment, the “floor” on LIBOR was increased from 0.00% to 0.25%.

 

The Company anticipates that LIBOR will only be available in substantially its current form until the end of 2021. The amendment includes provisions related to the anticipated transition from LIBOR to an alternative benchmark rate under the credit facility.

 

·Acquisitions. During the Adjustment Period, (i) all properties acquired with proceeds from the borrowings under the credit facility must be added to the borrowing base, and (ii) the Company is prohibited from acquiring any multi-tenant properties and from making certain other investments. Following the amendment, the Company is also restricted from using proceeds from borrowings under the credit facility to accumulate or maintain cash or cash equivalents in excess of amounts necessary to meet current working capital requirements, as determined in good faith by the OP.

 

An affiliate of BMO Harris Bank N.A. and certain of the other lenders under the credit facility or their affiliates are also agents under either or both of the Company’s “at the market” equity offering programs.

 

The foregoing description does not purport to be a complete description and is qualified in its entirety by reference to the amendment, a copy of which is filed herewith as Exhibit 10.5 and incorporated herein by reference.

 

Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information contained under the subheading Loan Agreement with Column Financial in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

5

 

 

Item 7.01.Regulation FD Disclosure.

 

On July 27, 2020, the Company issued a press release, a copy of which is attached hereto as Exhibit 99.1. The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.

 

Item 9.01.Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit No   Description
10.1     Loan Agreement, dated as of July 24, 2020, by and among the entities listed on Schedule I thereto, as borrowers, and Column Financial, Inc., as lender
10.2     Limited Recourse Guaranty, dated as of July 24, 2020, by American Finance Operating Partnership, L.P. in favor of Column Financial, Inc.
10.3     Environmental Indemnity Agreement, dated as of July 24, 2020, by and among the entities listed on Schedule I thereto, American Finance Operating Partnership, L.P. and Column Financial, Inc.
10.4     Property Management and Leasing Agreement, dated as of July 24, 2020, by and among the parties identified on Exhibit A thereto and American Finance Properties, LLC
10.5     Third Amendment to Credit Agreement and Consent, entered into as of July 24, 2020 and effective as of April 1, 2020, among American Finance Operating Partnership, L.P., a Delaware limited partnership, Genie Acquisition, LLC, American Finance Trust, Inc., the other guarantors party thereto, the lenders party hereto, and BMO Harris Bank N.A., as administrative agent
99.1     Press Release dated July 27, 2020
104     Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

 

6

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  AMERICAN FINANCE TRUST, INC.
     
  By: /s/ Edward M. Weil, Jr.
    Edward M. Weil, Jr.
   

Chief Executive Officer and President

(Principal Executive Officer)

 

Dated: July 28, 2020

 

7

 

 

Exhibit 10.1

 

________________________________________________________

 

LOAN AGREEMENT

________________________________________________________

 

Dated as of July 24, 2020

 

Among

 

EACH OF THE ENTITIES LISTED ON SCHEDULE I ATTACHED HERETO,
individually and/or collectively, as the context may require, as Borrower

 

and

 

COLUMN FINANCIAL, INC.,
as Lender

 

 

 

Table of Contents

 

ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION  
     
Section 1.1. Definitions  
     
Section 1.2. Principles of Construction  
     
ARTICLE 2 GENERAL TERMS  
     
Section 2.1. Loan Commitment; Disbursement to Borrower  
     
Section 2.2. The Loan  
     
Section 2.3. Disbursement to Borrower  
     
Section 2.4. The Note and the other Loan Documents  
     
Section 2.5. Interest Rate  
     
Section 2.6. Loan Payments  
     
Section 2.7. Prepayments  
     
Section 2.8. Intentionally Omitted  
     
Section 2.9. Release of Individual Property  
     
Section 2.10. Withholding and Indemnified Taxes  
     
ARTICLE 3 REPRESENTATIONS AND WARRANTIES  
     
Section 3.1. Legal Status and Authority  
     
Section 3.2. Validity of Documents  
     
Section 3.3. Litigation  
     
Section 3.4. Agreements  
     
Section 3.5. Financial Condition  
     
Section 3.6. Disclosure  
     
Section 3.7. No Plan Assets  
     
Section 3.8. Not a Foreign Person  
     
Section 3.9. Intentionally Omitted  
     
Section 3.10. Business Purposes  
     
Section 3.11. Borrower’s Principal Place of Business  
     
Section 3.12. Status of Property  
     
Section 3.13. Financial Information  
     
Section 3.14. Condemnation  
     
Section 3.15. Separate Lots  

 

-i-

 

 

Section 3.16. Insurance  
     
Section 3.17. Use of Property  
     
Section 3.18. Leases and Rent Roll  
     
Section 3.19. Filing and Recording Taxes  
     
Section 3.20. Management Agreement  
     
Section 3.21. Illegal Activity/Forfeiture  
     
Section 3.22. Taxes  
     
Section 3.23. Permitted Encumbrances  
     
Section 3.24. Third Party Representations  
     
Section 3.25. Non-Consolidation Opinion Assumptions  
     
Section 3.26. Federal Reserve Regulations  
     
Section 3.27. Investment Company Act  
     
Section 3.28. Fraudulent Conveyance  
     
Section 3.29. Embargoed Person  
     
Section 3.30. Anti-Money Laundering and Economic Sanctions  
     
Section 3.31. Organizational Chart  
     
Section 3.32. Bank Holding Company  
     
Section 3.33. Ground Lease Representations  
     
Section 3.34. Property Document Representations  
     
Section 3.35. No Change in Facts or Circumstances; Disclosure  
     
ARTICLE 4 BORROWER COVENANTS  
     
Section 4.1. Existence  
     
Section 4.2. Legal Requirements  
     
Section 4.3. Maintenance and Use of Property  
     
Section 4.4. Waste  
     
Section 4.5. Taxes and Other Charges  
     
Section 4.6. Litigation  
     
Section 4.7. Access to Property  
     
Section 4.8. Notice of Default  
     
Section 4.9. Cooperate in Legal Proceedings  
     
Section 4.10. Performance by Borrower  
     
Section 4.11. Intentionally Omitted  

 

-ii-

 

 

Section 4.12. Books and Records  
     
Section 4.13. Estoppel Certificates  
     
Section 4.14. Leases and Rents  
     
Section 4.15. Management Agreement  
     
Section 4.16. Payment for Labor and Materials  
     
Section 4.17. Performance of Other Agreements  
     
Section 4.18. Debt Cancellation  
     
Section 4.19. ERISA  
     
Section 4.20. No Joint Assessment  
     
Section 4.21. Alterations  
     
Section 4.22. Property Document Covenants  
     
Section 4.23. Ground Lease Covenants  
     
ARTICLE 5 ENTITY COVENANTS  
     
Section 5.1. Single Purpose Entity/Separateness  
     
Section 5.2. Independent Director  
     
Section 5.3. Change of Name, Identity or Structure  
     
Section 5.4. Business and Operations  
     
ARTICLE 6 NO SALE OR ENCUMBRANCE  
     
Section 6.1. Transfer Definitions  
     
Section 6.2. No Sale/Encumbrance  
     
Section 6.3. Permitted Equity Transfers  
     
Section 6.4. Lender’s Rights  
     
Section 6.5. Economic Sanctions, Anti-Money Laundering and Transfers  
     
ARTICLE 7 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION  
     
Section 7.1. Insurance  
     
Section 7.2. Casualty  
     
Section 7.3. Condemnation  
     
Section 7.4. Restoration  
     
ARTICLE 8 RESERVE FUNDS  
     
Section 8.1. Immediate Repair Funds  

 

-iii-

 

 

Section 8.2. Replacement Reserve Funds  
     
Section 8.3. Leasing Reserve Funds  
     
Section 8.4. Ground Rent Funds  
     
Section 8.5. Excess Cash Flow Funds  
     
Section 8.6. Tax and Insurance Funds  
     
Section 8.7. Environmental Remediation Funds  
     
Section 8.8. Unfunded Obligations Funds  
     
Section 8.9. Special Reserve Funds  
     
Section 8.10. The Accounts Generally  
     
Section 8.11. Letters of Credit  
     
ARTICLE 9 CASH MANAGEMENT  
     
Section 9.1. Establishment of Certain Accounts  
     
Section 9.2. Deposits into the Restricted Account  
     
Section 9.3. Disbursements from the Cash Management Account  
     
Section 9.4. Withdrawals from the Debt Service Account  
     
Section 9.5. Payments Received Under this Agreement  
     
ARTICLE 10 EVENTS OF DEFAULT; REMEDIES  
     
Section 10.1. Event of Default  
     
Section 10.2. Remedies  
     
ARTICLE 11 SECONDARY MARKET  
     
Section 11.1. Securitization  
     
Section 11.2. Disclosure  
     
Section 11.3. Reserves/Escrows  
     
Section 11.4. Servicer  
     
Section 11.5. Rating Agency Costs  
     
Section 11.6. Mezzanine Option  
     
Section 11.7. Conversion to Registered Form  
     
Section 11.8. Uncross of Properties  
     
Section 11.9. Syndication  

 

-iv-

 

 

ARTICLE 12 INDEMNIFICATIONS  
     
Section 12.1. General Indemnification  
     
Section 12.2. Mortgage and Intangible Tax Indemnification  
     
Section 12.3. ERISA Indemnification  
     
Section 12.4. Duty to Defend, Legal Fees and Other Fees and Expenses  
     
Section 12.5. Survival  
     
Section 12.6. Environmental Indemnity  
     
ARTICLE 13 EXCULPATION  
     
Section 13.1. Exculpation  
     
ARTICLE 14 NOTICES  
     
Section 14.1. Notices  
     
ARTICLE 15 FURTHER ASSURANCES  
     
Section 15.1. Replacement Documents  
     
Section 15.2. Recording of Security Instrument  
     
Section 15.3. Further Acts  
     
Section 15.4. Changes in Tax, Debt, Credit and Documentary Stamp Laws  
     
ARTICLE 16 WAIVERS  
     
Section 16.1. Remedies Cumulative; Waivers  
     
Section 16.2. Modification, Waiver in Writing  
     
Section 16.3. Delay Not a Waiver  
     
Section 16.4. Waiver of Trial by Jury  
     
Section 16.5. Waiver of Notice  
     
Section 16.6. Remedies of Borrower  
     
Section 16.7. Marshalling and Other Matters  
     
Section 16.8. Intentionally Omitted  
     
Section 16.9. Waiver of Counterclaim  
     
Section 16.10. Sole Discretion of Lender  
     
ARTICLE 17 MISCELLANEOUS  
     
Section 17.1. Survival  
     
Section 17.2. Governing Law  

 

-v-

 

 

Section 17.3. Headings  
     
Section 17.4. Severability  
     
Section 17.5. Preferences  
     
Section 17.6. Expenses  
     
Section 17.7. Cost of Enforcement  
     
Section 17.8. Schedules Incorporated  
     
Section 17.9. Offsets, Counterclaims and Defenses  
     
Section 17.10. No Joint Venture or Partnership; No Third Party Beneficiaries  
     
Section 17.11. Publicity  
     
Section 17.12. Limitation of Liability  
     
Section 17.13. Conflict; Construction of Documents; Reliance  
     
Section 17.14. Entire Agreement  
     
Section 17.15. Liability  
     
Section 17.16. Duplicate Originals; Counterparts  
     
Section 17.17. Brokers  
     
Section 17.18. Set-Off  
     
Section 17.19. Contributions and Waivers  
     
Section 17.20. Cross Default; Cross-Collateralization  

 

-vi-

 

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of July 24, 2020 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), among COLUMN FINANCIAL, INC., having an address at 11 Madison Avenue, New York, New York 10010 (“CF”; and together with any other Co-Lender under the Loan and each of their respective successors and/or assigns, “Lender”), and EACH OF THE ENTITIES LISTED ON SCHEDULE I ATTACHED HERETO, each having its principal place of business at 38 Washington Square, Newport, Rhode Island 02840 (individually and/or collectively, as the context may require, together with their respective successors and/or assigns, “Borrower”).

 

RECITALS:

 

Borrower desires to obtain the Loan (defined below) from Lender.

 

Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (defined below).

 

In consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:

 

ARTICLE 1.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1.         Definitions.

 

For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:

 

Acceptable LLC” shall mean a limited liability company formed under Delaware law which has at least one springing member, which, upon the dissolution of all of the members or the withdrawal or the disassociation of all of the members from such limited liability company, shall immediately become the sole member of such limited liability company.

 

Account Collateral” shall mean (i) the Accounts, and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in the Accounts from time to time; (ii) any and all amounts in the Accounts invested in Permitted Investments; (iii) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing; and (iv) to the extent not covered by clauses (i) through (iii) above, all “proceeds” (as defined under the UCC as in effect in the State in which the Accounts are located) of any or all of the foregoing.

 

Accounts” shall mean the Cash Management Account, the Debt Service Account, the Restricted Account, the Tax Account, the Insurance Account, the Replacement Reserve Account, the Immediate Repair Account, the Leasing Reserve Account, the Environmental Remediation Account, the Unfunded Obligations Account, the Excess Cash Flow Account, the Ground Rent Account and any other account established by this Agreement or the other Loan Documents.

 

 

 

 

Act” is defined in Section 5.1 hereof.

 

Affected Property” shall have the meaning set forth in Section 11.8 hereof.

 

Affiliate” shall mean, as to any Person, any other Person that (a) directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person and/or (b) is a director or officer of such Person or of an Affiliate of such Person.

 

Affiliated Manager” shall mean any managing agent of any Individual Property in which Borrower, Guarantor, any SPE Component Entity (if any) or any Affiliate of such entities has, directly or indirectly, five percent (5%) or more of the aggregate legal, beneficial or economic interest or which is Controlled by Borrower, Guarantor, any SPE Component Entity (if any) or any Affiliate of such entities.

 

AFT” shall mean American Finance Trust, Inc., a Maryland corporation.

 

AFT Shareholder” means a Person whose indirect interest in Borrower and/or any SPE Component Entity and/or direct or indirect interest in Guarantor and/or any Affiliated Manager is derived solely from its ownership of shares of stock in AFT that are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange.

 

Agent” shall have the meaning set forth in Section 11.9 hereof.

 

Aggregate Square Footage” shall mean the aggregate rentable square footage of the Properties (but excluding the rentable square footage of each Released Property that shall have been released from the lien of the related Security Instrument pursuant to Section 2.9 hereof prior to the date of determination).

 

Allocable Principal Balance” shall have the meaning set forth in Section 17.19 hereof.

 

Allocated Loan Amount” shall mean the portion of the principal amount of the Loan allocated to any applicable Individual Property as set forth on Schedule V hereof.

 

ALTA” shall mean American Land Title Association or any successor thereto.

 

Alteration Threshold” shall mean, with respect to each Individual Property, an amount equal to 5% of the outstanding principal amount of the Allocated Loan Amount attributable to such Individual Property.

 

Anti-Corruption Laws” shall mean any laws, rules and regulations of any Governmental Authority applicable to Borrower, Guarantor or any of their direct or indirect members, partners or owners concerning bribery or corruption, including the United Stated Foreign Corrupt Properties Act of 1997 (15 U.S.C.§8 78d Jan/et seq.).

 

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Anti-Money Laundering Laws” shall mean any laws, rules and regulations of any Governmental Authority applicable from time to time to Borrower, Guarantor or any of their direct or indirect partners, members or owners related to money laundering or terrorist financing.

 

Appraisal” shall mean an appraisal prepared in accordance with the requirements of FIRREA and USPAP, prepared by an independent third party appraiser holding an MAI designation, who is State licensed or State certified if required under the laws of the State where the applicable Individual Property is located, who meets the requirements of FIRREA and USPAP and who is otherwise reasonably satisfactory to Lender.

 

Approved Accounting Method” shall mean (i) GAAP, (ii) federal tax basis accounting (consistently applied) or (iii) such other method of accounting, consistently applied, as may be reasonably acceptable to Lender.

 

Approved Annual Budget” shall have the meaning set forth in Section 4.12 hereof.

 

Approved Bank” means (a) a bank or other financial institution which has the Required Rating, (b) if a Securitization has not occurred, a bank or other financial institution acceptable to Lender, or (c) if a Securitization has occurred, a bank or other financial institution with respect to which Lender shall have received a Rating Agency Confirmation. Each of BMO Harris and KeyBank National Association, a national banking association shall be deemed to be an Approved Bank for so long as such institution (x) has ratings from each Rating Agency equal to or greater than the ratings each such institution has as of the Closing Date or (y) is otherwise approved by each Rating Agency.

 

Approved Extraordinary Expense” shall mean an operating or capital expense of the applicable Individual Property not set forth on the Approved Annual Budget but approved by Lender in writing (which such approval shall not be unreasonably withheld, conditioned or delayed).

 

Approved ID Provider” shall mean each of CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company and Lord Securities Corporation; provided, that, (A) the foregoing shall be deemed Approved ID Providers unless and until disapproved by any Rating Agency and (B) additional national providers of Independent Directors may be deemed added to the foregoing hereunder to the extent reasonably approved in writing by Lender and approved in writing by the Rating Agencies.

 

Approved Operating Expense” shall mean an Operating Expense or capital expense of the applicable Individual Property set forth on the Approved Annual Budget, provided, however, that the amount of any management fees to be included as an Approved Operating Expense shall not exceed an amount equal to (x) in the case of any Affiliated Manager, two percent (2%) of Gross Rents or (y) in the case of any other Manager, three percent (3%) of Gross Rents regardless of the amount set forth for management fees on the Approved Annual Budget.

 

Assignment and Assumption” shall have the meaning set forth in Section 11.9 hereof.

 

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Assignment of Management Agreement” shall mean, individually and/or collectively, those certain Conditional Assignments of Management Agreement each dated as of the date hereof among Lender, Borrower and the applicable Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time.

 

Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of any Individual Property.

 

Bank” shall be deemed to refer to the bank or other institution maintaining the Restricted Account pursuant to the Restricted Account Agreement.

 

Bankruptcy Action” shall mean with respect to any Person (a) such Person filing a voluntary petition under the Bankruptcy Code and/or any Creditors Rights Laws; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code and/or any Creditors Rights Laws, or such Person soliciting or causing to be solicited petitioning creditors for any involuntary petition against such Person; (c) such Person filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code and/or any Creditors Rights Laws, or soliciting or causing to be solicited petitioning creditors for any involuntary petition from any Person; (d) such Person consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, assignee, sequestrator (or similar official), liquidator, or examiner for such Person or any portion of any Individual Property; (e) the filing of a petition against a Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code, any Creditors Rights Laws and/or any other applicable law, (f) under the provisions of any other law for the relief or aid of debtors, an action taken by any court of competent jurisdiction that allows such court to assume custody or Control of a Person or of the whole or any substantial part of its property or assets, (g) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due or (h) such Person takes any action in furtherance of any of the foregoing.

 

Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights.

 

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Bankruptcy Event” shall mean the occurrence of any one or more the of the following: (i) Borrower or any SPE Component Entity shall commence any case, proceeding or other action (A) under the Bankruptcy Code and/or any Creditors Rights Laws seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, liquidation or dissolution or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or substantially all of its assets; (ii) Borrower or any SPE Component Entity shall make a general assignment for the benefit of its creditors; (iii) Borrower, any SPE Component Entity, Guarantor or Affiliated Manager (and/or Person owning an interest (directly or indirectly) in Borrower, any SPE Component Entity, Guarantor or Affiliated Manager, but excluding any AFT Shareholder (other than an Excluded AFT Shareholder)) files, or joins or colludes in the filing of, (A) an involuntary petition against Borrower or any SPE Component Entity under the Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be solicited or colludes with petitioning creditors for any involuntary petition under the Bankruptcy Code or any other Creditors Rights Laws against Borrower or any SPE Component Entity or (B) any case, proceeding or other action under the Bankruptcy Code or any other Creditors Rights Laws seeking issuance of a warrant of attachment, execution, distraint or similar process against all or substantially all of Borrower’s or any SPE Component Entity’s assets; (iv) Borrower or any SPE Component Entity files an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be solicited or colludes with petitioning creditors for any involuntary petition from any Person against Borrower or any SPE Component Entity; (v) Borrower, any SPE Component Entity, Guarantor or Affiliated Manager (and/or Person owning an interest (directly or indirectly) in Borrower, any SPE Component Entity, Guarantor or Affiliated Manager, but excluding any AFT Shareholder (other than an Excluded AFT Shareholder)) consents to or acquiesces in or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower, any SPE Component Entity or any portion of the Property; and (vi) Borrower or any SPE Component Entity admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.

 

Benefitted Borrower” shall have the meaning set forth in Section 17.19 hereof.

 

Blackout Window” shall mean the period commencing on the Closing Date and ending on the earlier of (a) the 30th day following the final settlement of the Securitization of 100% of the Loan (less any amount retained by Lender to comply with risk retention requirements applicable to Lender, to the extent Lender does not satisfy such requirements through the retention of securities issued in connection with a Securitization), and (b) the 180th day following the Closing Date.

 

Borrower Party” and “Borrower Parties” shall mean each of Borrower, any SPE Component Entity and Guarantor.

 

Borrower Tax Period” shall mean, with respect to any Waived Tax Deposit Property, a period commencing, with respect to each Waived Tax Deposit Property, on the earlier to occur of: (i) the date the applicable Lease with respect to such Waived Tax Deposit Property as of the Closing Date is no longer in effect (unless Borrower shall enter into a replacement Lease with respect to such Waived Tax Deposit Property in accordance with the terms and conditions hereof and such replacement Lease provides that the Tenant thereunder is obligated to pay all Taxes and Other Charges), or (ii) if the Lease with respect to such Waived Tax Deposit Property as of the Closing Date (or a replacement Lease entered into pursuant to the parenthetical clause of clause (i) of this definition) is in effect, the date on which the Tenant under such Lease shall have failed to pay all Taxes and Other Charges under such Lease prior to delinquency and ending on the date a new Lease meeting the requirements set forth in the parenthetical clause of clause (i) above is entered into or the applicable Tenant pays all delinquent Taxes and Other Charges (including any penalties and/or fees associated therewith).

 

Business Day” shall mean a day on which commercial banks are not authorized or required by applicable law to close in New York, New York.

 

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Cash Flow Adjustments” shall mean adjustments made by Lender in its calculation of Underwritable Cash Flow and the components thereof, in each case, based upon Lender underwriting criteria, which shall be customary and consistent with loans similar to the Loan and which such adjustments shall include, without limitation, adjustments (A) for (i) items of a non-recurring nature, (ii) a credit loss/vacancy allowance equal to actual vacancy and (iii) imminent liabilities and/or other expense increases (including, without limitation, imminent increases to Taxes and Insurance Premiums), provided that to the extent any such imminent liabilities and/or other expense increases are reimbursable by a Tenant pursuant to the terms of its Lease, Operating Income shall be increased to account for any such amounts; (B) to exclude rental income attributable to any Tenant (1) in bankruptcy that has not affirmed its Lease in the applicable bankruptcy proceeding pursuant to a final, non-appealable order of a court of competent jurisdiction (unless such Tenant is an Investment Grade Tenant and is paying full, unabated rent to Borrower during such bankruptcy), (2) which is in monetary default beyond notice and cure periods under its Lease, (3) that has stated in writing that it is not renewing or is terminating, canceling and/or rejecting its applicable Lease (provided, that, with respect to any Lease pursuant to which Tenant is paying to Borrower full and unabated rent after it has delivered such notification to Borrower, Lender shall continue to include such rental income in its calculation of Underwritable Cash Flow until the first to occur of (I) with respect to a non-renewal, the date required under such Lease for Tenant to exercise its notice of renewal and (II) with respect to a termination, cancellation or rejection, three (3) months prior to the termination date, cancellation date and/or rejection date of the Lease) and/or (4) whose tenancy at the Property is month-to-month and (C) to reflect only those Properties that have not been released from the liens of the Security Instruments at the time of such calculation of Underwritable Cash Flow.

 

Cash Management Account” shall have the meaning set forth in Section 9.1 hereof.

 

Cash Management Agreement” shall have the meaning set forth in Section 9.1 hereof.

 

Cash Management Bank” shall have the meaning set forth in Section 9.1 hereof.

 

Casualty” shall have the meaning set forth in Section 7.2.

 

Casualty Consultant” shall have the meaning set forth in Section 7.4 hereof.

 

Casualty/Condemnation Prepayment” shall have the meaning set forth in Section 7.4 hereof.

 

Cause” shall mean, with respect to an Independent Director, (i) any acts or omissions by such Independent Director that constitute systematic, persistent or willful disregard of, or bad faith or gross negligence with respect to, such Independent Director's duties, (ii) such Independent Director has been indicted or convicted for any crime or crimes of moral turpitude or dishonesty or for any violation of any Legal Requirements, (iii) such Independent Director is unable to perform his or her duties as Independent Director due to death, disability or incapacity, or (iv) such Independent Director no longer satisfies the requirements set forth in the definition thereof.

 

CF” shall have the meaning set forth in the preamble hereof.

 

Closing Date” shall mean the date of the funding of the Loan.

 

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Closing Date Debt Yield” shall mean a Debt Yield of 11.6%.

 

Co-Lender” shall have the meaning set forth in Section 11.9 hereof.

 

Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result, in lieu or in anticipation, of the exercise of the right of condemnation or eminent domain, of all or any part of any Individual Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting any Individual Property or any part thereof.

 

Condemnation Proceeds” shall have the meaning set forth in Section 7.3(b) hereof.

 

Condominium” shall mean each condominium regime created pursuant to the Condominium Documents.

 

Condominium Act” shall mean (i) with respect to the DaVita Baltimore Property, the Maryland Condominium Act, Title 11 of the Real Property Article of the Maryland Code, as amended and as it may be further amended from time to time, and (ii) with respect to the Conway NH Property, the New Hampshire Condominium Act, New Hampshire Revised Statutes, Chapter 356-B, as amended and as it may be further amended from time to time.

 

Condominium Common Charges” shall mean all common charges, maintenance fees and other assessments imposed pursuant to the Condominium Documents, including, without limitation, water rates and sewer rates.

 

Condominium Documents” shall mean (i) with respect to the DaVita Baltimore Property, the declaration, articles of incorporation and by-laws and rules and regulations of a condominium association and any and all other documentation related to the proper formation and operation of the condominium regime established at the DaVita Baltimore Property under the laws of the State of Maryland as more specifically described on Schedule XIII-A hereto, and (ii) with respect to the Conway NH Property, the declaration, articles of incorporation and by-laws and rules and regulations of a condominium association and any and all other documentation related to the proper formation and operation of the condominium regime established at the Conway NH Property under the laws of the State of New Hampshire as more specifically described on Schedule XIII-B hereto.

 

Contribution” shall have the meaning set forth in Section 17.19 hereof.

 

Contribution Payment” shall have the meaning set forth in Section 17.19 hereof.

 

Control” shall mean the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise. The terms “Controlled” and “Controlling” shall have correlative meanings.

 

Conway NH Borrower” shall mean ARG DI51PCK001, LLC, a Delaware limited liability company.

 

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Conway NH Property” shall mean the Individual Property located at 21B Poloquin Drive, Conway, New Hampshire.

 

Covered Disclosure Information” shall have the meaning set forth in Section 11.2 hereof.

 

Covered Rating Agency Information” shall mean any Provided Information furnished to the Rating Agencies in connection with issuing, monitoring and/or maintaining the Securities.

 

Creditors Rights Laws” shall mean any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts or debtors.

 

DaVita Baltimore Borrower” shall mean ARG DI51PCK001, LLC, a Delaware limited liability company.

 

DaVita Baltimore Property” shall mean the Individual Property located at 6609 Reisterstown Road, Suite 100, Baltimore, Maryland.

 

Debt” shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement or the other Loan Documents (including, without limitation, the Yield Maintenance Premium and all costs and expenses payable to Lender thereunder).

 

Debt Service” shall mean, with respect to any particular period of time, scheduled interest payments hereunder.

 

Debt Service Account” shall have the meaning set forth in Section 9.1 hereof.

 

Debt Yield” shall mean the ratio of (i) the Underwritable Cash Flow as of the date of calculation to (ii) the outstanding principal balance of the Loan as of the date of calculation.

 

Deemed Approval Requirements” shall mean, with respect to any matter, that (i) no Event of Default shall have occurred and be continuing (either at the date of any notices specified below or as of the effective date of any deemed approval), (ii) Borrower shall have sent Lender a written request for approval with respect to such matter in accordance with the applicable terms and conditions hereof (the “Initial Notice”), which such Initial Notice shall have been (A) accompanied by any and all information and documentation required to be delivered pursuant to this Agreement (or, if no specific deliverables are required pursuant to this Agreement, such information and documentation as is reasonably necessary) in order to approve or disapprove such matter (the “Approval Information”) and (B) marked in bold lettering with the following (or substantially similar) language: “LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the Initial Notice shall have been marked “PRIORITY-DEEMED APPROVAL MAY APPLY”; (iii) Lender shall have failed to approve or disapprove the matter identified in the Initial Notice within the aforesaid time-frame; (iv) Borrower shall have submitted a second request for approval with respect to such matter in accordance with the applicable terms and conditions hereof (the “Second Notice”), which such Second Notice shall have been (A) accompanied by the Approval Information and (B) marked in bold lettering with the following (or substantially similar) language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the Second Notice shall have been marked “PRIORITY-DEEMED APPROVAL MAY APPLY”; and (v) Lender shall have failed to approve or disapprove the matter identified in the Second Notice within the aforesaid time-frame. For purposes of clarification, Lender may request in writing additional and/or clarified information provided such request for information is delivered within five (5) Business Days of Lender’s receipt of the Initial Notice, provided, however, notwithstanding the foregoing, Lender shall still be required to approve or disapprove any request within the timeframes set forth above in this paragraph. From and after the date on which the Loan shall have been securitized, any and all notices and other correspondence described in this definition shall be sent to the Person last identified to Borrower in writing as the Servicer.

 

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Default” shall mean the occurrence of any event hereunder or under the Note or the other Loan Documents which, but for the giving of notice or passage of time, or both, would be an Event of Default.

 

Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate, or (ii) four percent (4%) above the Interest Rate.

 

Default Release” shall have the meaning set forth in Section 2.9 hereof.

 

Defaulting Borrower” shall have the meaning set forth in Section 17.19 hereof.

 

Deferred Rental Agreements” shall mean, collectively, (i) each agreement set forth on Schedule XVII attached hereto (each of which has been approved by Lender as of the Closing Date), and (ii) any other written agreement which (a) provides the Tenant under a Lease with a deferral of its rental obligations, (b) does not result in an overall decrease in the amount of rent payable by such Tenant over the entire term of the applicable Lease, and (c) is otherwise entered into in accordance with the provisions of Section 4.14 hereof.

 

Disclosure Documentsshall mean, collectively and as applicable, any offering circular, free writing prospectus, prospectus, prospectus supplement, private placement memorandum, term sheet or other offering document, in each case, provided to prospective investors and the Rating Agencies in connection with a Securitization.

 

Division” shall mean, as to any Person, such Person dividing and/or otherwise engaging in and/or becoming subject to, in each case, any division (whether pursuant to a plan of division or otherwise), including, without limitation and to the extent applicable, pursuant to §18-217 of the Delaware Limited Liability Company Act.

 

Eligibility Requirements” means, with respect to any Person, that such Person (i) has total assets (in name or under management or advisement) in excess of $1,000,000,000 and (except with respect to a pension advisory firm, asset manager or similar fiduciary) capital/statutory surplus or shareholder’s equity of at least $400,000,000 and (ii) is regularly engaged in the business of making or owning (or, in the case of a pension advisory firm or similar fiduciary, regularly engaged in managing investments in) commercial real estate loans (including mezzanine loans to direct or indirect owners of commercial properties, which loans are secured by pledges of direct or indirect ownership interests in the owners of such commercial properties) or corporate credit loans, or operating commercial properties.

 

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Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is an account or accounts maintained with a federal or state-chartered depository institution or trust company which (a) complies with the definition of Eligible Institution, (b) has a combined capital and surplus of at least $50,000,000 and (c) has corporate trust powers and is acting in its fiduciary capacity. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

 

Eligible Institution” shall mean (a) a depository institution or trust company insured by the Federal Deposit Insurance Corporation (i) the short term unsecured debt obligations or commercial paper of which are rated at least “A-1+” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for thirty (30) days or less) and (ii) the long term unsecured debt obligations of which are rated at least “A+” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for more than thirty (30) days), (b) such other depository institution otherwise approved by the Rating Agencies from time-to-time or (c) KeyBank National Association in its capacity as Restricted Account Bank and as Cash Management Bank; provided that, with respect to this clause (c), KeyBank National Association (x) has ratings from each Rating Agency equal to or greater than the ratings such institution has as of the Closing Date or (y) is otherwise approved by each of the Rating Agencies.

 

Embargoed Person” shall have the meaning set forth in Section 3.29 hereof.

 

Emergency Alterations” shall have the meaning set forth in Section 4.21 hereof.

 

Emergency Expenditures” shall mean any payments required to be made to (i) avoid or minimize the imminent threat of either (a) loss or impairment of life or (b) damage to any Property, or (ii) without limiting the generality of the preceding clause (i), make any repairs or capital improvements or take other action required in order to avoid a penalty by reason of failure of compliance with any laws, orders, rules regulations and other requirements enacted, imposed or enforced by any Governmental Authority.

 

Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement, dated as of the date hereof, executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

Environmental Laws” shall have the meaning set forth in the Environmental Indemnity.

 

Environmental Remediation” shall have the meaning set forth in Section 4.11 hereof.

 

Environmental Remediation Account” shall have the meaning set forth in Section 8.7 hereof.

 

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Environmental Remediation Funds” shall have the meaning set forth in Section 8.7 hereof.

 

Environmental Reports” shall mean those certain Phase I environmental site assessments with respect to Properties delivered to Lender in connection with the closing of the Loan.

 

Equity Collateral” shall have the meaning set forth in Section 11.6 hereof.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may heretofore have been or shall be amended, restated, replaced or otherwise modified.

 

Event of Default” shall have the meaning set forth in Section 10.1 hereof.

 

Excess Cash Flow” shall have the meaning set forth in Section 9.3 hereof.

 

Excess Cash Flow Account” shall have the meaning set forth in Section 8.5 hereof.

 

Excess Cash Flow Funds” shall have the meaning set forth in Section 8.5 hereof.

 

Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 

Exchange Act Filing” shall have the meaning set forth in Section 11.1 hereof.

 

Excluded AFT Shareholder” means an AFT Shareholder who or which (a) is an officer, director, member and/or employee of Borrower, any SPE Component Entity, Guarantor, any Affiliated Manager and/or their respective Affiliates, (b) owns a five percent (5%) or greater interest in AFT through its ownership of shares of stock in AFT that are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange and/or (c) Controls Borrower, any SPE Component Entity, Guarantor, any Affiliated Manager and/or their respective Affiliates.

 

Excluded Taxes” shall mean any of the following Section 2.10 Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Section 2.10 Taxes imposed on or measured by net income (however denominated), franchise Section 2.10 Taxes, and branch profits Section 2.10 Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Section 2.10 Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, withholding taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan pursuant to a law in effect on the date on which (i) such Lender originates or acquires such interest in the Loan or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.10, amounts with respect to such Section 2.10 Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Section 2.10 Taxes attributable to such Recipient’s failure to comply with Section 2.10(f), and (d) any U.S. federal withholding taxes imposed under FATCA.

 

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Exculpated Parties” shall have the meaning set forth in Section 13.1 hereof.

 

FATCA” shall mean Sections 1471 through 1474 of the IRS Code, as of the date of this Agreement (or any amended or successor version), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the IRS Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the IRS Code.

 

Fee Estate” shall mean the fee interest of the lessor under a Ground Lease in the Land and the Improvements demised under such Ground Lease.

 

Fee Owner” shall mean the owner of the lessor’s interest in a Ground Lease and the related Fee Estate.

 

First Monthly Payment Date” shall mean September 6, 2020.

 

Fitch” shall mean Fitch, Inc.

 

Flood Insurance Acts” shall have the meaning set forth in Section 7.1 hereof.

 

Foreign Lender” shall mean a Lender that is not a U.S. Person.

 

Full Recourse Lien” shall have the meaning set forth in Section 13.1 hereof.

 

Full Recourse Transfer” shall have the meaning set forth in Section 13.1 hereof.

 

GAAP” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.

 

Government Lists” shall mean (i) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control (“OFAC”), (ii) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrowers in writing is now included in “Government Lists”, (iii) any similar lists maintained by the United States Department of State, the United States Department of Commerce, the United Nations, the European Union, any European Union member state, the United Kingdom or any other Governmental Authority or (iv) any similar lists maintained pursuant to any Executive Order of the President of the United States of America that Lender notified Borrowers in writing is now included in “Government Lists”.

 

Governmental Authority” shall mean any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

 

Gross Rents” shall mean an amount equal to annual rental income reflected in a current rent roll for (i) all Tenants paying rent (other than Tenants which are not Investment Grade Tenants who are paying rent but who have ceased operations (i.e., “gone dark”) in the space demised under their Leases unless such Tenants have ceased operations in order to comply with applicable Legal Requirements) and (ii) all Tenants who are open for business and in actual physical occupancy of their respective space demised under their Leases but who are benefitting from a free rent period (provided that rental income will only be included in Gross Rents for any Tenant benefitting from (I) with respect to a Lease with a term of five (5) years or less, an amount not to exceed six (6) months of free rent and (II) with respect to a Lease with a term greater than five (5) years, an amount not to exceed twelve (12) months of free rent), in each instance pursuant to Leases which are in full force and effect.

 

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Ground Lease” shall mean, collectively, (i) the “Ground Lease” as defined in each applicable Security Instrument and (ii) the Ground Lease Estoppels.

 

Ground Lease Estoppel” shall mean, collectively, each ground lease estoppel as set forth on Schedule XI attached hereto.

 

Ground Rent” shall mean the ground rent, and other sums and amounts payable to Fee Owner, by Borrower under each Ground Lease.

 

Ground Rent Account” shall have the meaning set forth in Section 8.4 hereof.

 

Ground Rent Funds” shall have the meaning set forth in Section 8.4 hereof.

 

Guarantor” shall mean American Finance Operating Partnership, L.P., a Delaware limited partnership, and any successor to and/or replacement of any of the foregoing Person, in each case, pursuant to and in accordance with the applicable terms and conditions of the Loan Documents.

 

Guarantor Control Condition” shall mean a condition which shall be deemed satisfied to the extent that Borrower and, if applicable, each SPE Component Entity is, in each case, Controlled directly or indirectly by a current Guarantor (as distinguished from any prior Guarantor that has been replaced in accordance with the applicable terms and conditions of the Loan Documents).

 

Guaranty” shall mean that certain Limited Recourse Guaranty executed by Guarantor and dated as of the date hereof, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

Immediate Repair Account” shall have the meaning set forth in Section 8.1 hereof.

 

Immediate Repair Funds” shall have the meaning set forth in Section 8.1 hereof.

 

Immediate Repairs” shall mean the repairs at the Property as set forth on Schedule II-A hereto.

 

Immediate Tenant Repairs” shall mean the repairs at the Property as set forth on Schedule II-B, which repairs are the sole responsibility of the applicable Tenant at an Individual Property pursuant to the terms of the related Lease.

 

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Improvements” shall mean, individually and/or collectively (as the context requires), the “Improvements” as defined in each applicable Security Instrument.

 

Indebtedness” shall mean, for any Person, any indebtedness or other similar obligation for which such Person is obligated (directly or indirectly, by contract, operation of law or otherwise), including, without limitation, (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person pursuant to a guaranty, (iv) all indebtedness incurred and/or guaranteed by such Person, directly or indirectly, (v) all obligations under leases that constitute capital leases for which such Person is liable, (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case whether such Person is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss and (vii) any property-assessed clean energy loans or similar indebtedness, including, without limitation, if such loans or indebtedness are made or otherwise provided by any Governmental Authority and/or secured or repaid (directly or indirectly) by any taxes or similar assessments.

 

Indemnified Person” shall mean Lender, any Affiliate of Lender that has filed any registration statement relating to the Securitization or has acted as the sponsor or depositor in connection with the Securitization, any Affiliate of Lender that acts as an underwriter, placement agent or initial purchaser of Securities issued in the Securitization, any other co-underwriters, co-placement agents or co-initial purchasers of Securities issued in the Securitization, and each of their respective officers, directors, partners, employees, representatives, agents and Affiliates and each Person or entity who Controls any such Person within the meaning of Section 15 of the Securities Act of 1933 as amended or Section 20 of the Security Exchange Act of 1934 as amended, any Person who is or will have been involved in the origination of the Loan on behalf of Lender, any Person who is or will have been involved in the servicing of the Loan secured hereby, any Person in whose name the encumbrance created by the Security Instruments is or will have been recorded, any Person who may hold or acquire or will have held a full or partial direct interest in the Loan secured hereby as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan secured hereby for the benefit of third parties as well as the respective directors, officers, shareholders, partners, employees, agents, representatives of any and all of the foregoing (including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business) and any receiver or other fiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding.

 

Indemnified Taxes” shall mean (a) Section 2.10 Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

Indemnifying Person” shall mean Borrower and/or Guarantor, as applicable.

 

Independent Director” shall have the meaning set forth in Section 5.2 hereof.

 

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Individual Property” shall mean each parcel of real property, the Improvements thereon and all personal property owned by Borrower and encumbered by the applicable Security Instrument, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clauses of the applicable Security Instrument and referred to therein as the “Property.”

 

Information” shall have the meaning set forth in Section 11.9 hereof.

 

Insurance Account” shall have the meaning set forth in Section 8.6 hereof.

 

Insurance Payment Date” shall mean, with respect to any applicable Policies, the date occurring 30 days prior to the date the applicable Insurance Premiums associated therewith are due and payable.

 

Insurance Premiums” shall have the meaning set forth in Section 7.1 hereof.

 

Interest Accrual Period” shall mean the period beginning on (and including) the sixth (6th) day of each calendar month during the term of the Loan and ending on (and including) the fifth (5th) day of the next succeeding calendar month.

 

Interest Bearing Accounts” shall mean the following Reserve Accounts: the Replacement Reserve Account, the Immediate Repair Account, the Excess Cash Flow Account, the Leasing Reserve Account, the Environmental Remediation Account and the Unfunded Obligations Account.

 

Interest Rate” shall mean a rate per annum equal to 3.743%.

 

Interest Shortfall” shall have the meaning set forth in Section 2.7 hereof.

 

Investment Grade Ratings” shall mean, as applicable, a long-term unsecured debt rating of “BBB-” or higher by S&P or Fitch or “Baa3” or higher by Moody’s.

 

Investment Grade Tenant” shall mean either (i) a Tenant that, as of the date of determination, has an Investment Grade Rating, (ii) a Tenant whose Lease is guaranteed by a lease guarantor that, as of the date of determination, has an Investment Grade Rating, or (iii) a Tenant which is a subsidiary of FedEx Corporation provided that, as of the date of determination, FedEx Corporation has an Investment Grade Rating.

 

Investor” shall mean any investor in the Loan (or any portion thereof or interest therein) in connection with any Secondary Market Transaction.

 

IRS Code” shall mean the Internal Revenue Code of 1986, as amended from time to time or any successor statute.

 

Land” shall mean, individually and/or collectively (as the context requires), the “Land” as defined in each applicable Security Instrument.

 

Landlord Alterations” shall have the meaning set forth in Section 4.21.

 

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Lease” shall have the meaning set forth in the Security Instrument.

 

Leasing Reserve Account” shall have the meaning set forth in Section 8.3 hereof.

 

Leasing Reserve Cap” shall mean, for each date of determination, an amount equal to the Aggregate Square Footage multiplied by two dollars and twenty-five cents ($2.25).

 

Leasing Reserve Funds” shall have the meaning set forth in Section 8.3 hereof.

 

Leasing Reserve Monthly Deposit” shall mean, for each date of determination, one-twelfth (1/12th) of the amount equal to the Aggregate Square Footage multiplied by seventy-five cents ($0.75).

 

Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower or any Individual Property or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act of 1990, and all Permits, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower or any Individual Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to any Individual Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.

 

Lender Affiliate” shall have the meaning set forth in Section 11.2 hereof.

 

Lender Group” shall have the meaning set forth in Section 11.2 hereof.

 

Letter of Credit” shall mean an irrevocable, auto-renewing, unconditional, transferable, clean sight draft standby letter of credit having an initial term of not less than one (1) year and with automatic renewals for one (1) year periods (unless the obligation being secured by, or otherwise requiring the delivery of, such letter of credit is required to be performed at least thirty (30) days prior to the initial expiry date of such letter of credit), for which Borrower shall have no reimbursement obligation and which reimbursement obligation is not secured by the Property or any other property pledged to secure the Note, in favor of Lender and entitling Lender to draw thereon in New York, New York, based solely on a statement that Lender has the right to draw thereon executed by an officer or authorized signatory of Lender. A Letter of Credit must be issued by an Approved Bank. Borrower’s delivery of any Letter of Credit hereunder shall, at Lender’s option, be conditioned upon Lender’s receipt of either an update to the Non-Consolidation Opinion reasonably acceptable to Lender and acceptable to the Rating Agencies or a New Non-Consolidation Opinion relating to such Letter of Credit.

 

Liabilities” shall have the meaning set forth in Section 11.2 hereof.

 

Lien” shall mean, with respect to each Individual Property, any mortgage, deed of trust, deed to secure debt, indemnity deed of trust, lien, pledge, hypothecation, assignment, security interest, PACE Loan or any other encumbrance, charge or transfer of, on or affecting any Individual Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances on such Individual Property.

 

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Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement.

 

Loan Bifurcation” shall have the meaning set forth in Section 11.1 hereof.

 

Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Environmental Indemnity, the Assignment of Management Agreement, the Guaranty, the Post-Closing Agreement and all other documents executed and delivered in connection with the Loan, as each of the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time.

 

Loan-to-Value Ratio” shall mean, as of the date of its calculation, the ratio of (a) the outstanding principal amount of the Loan as of the date of such calculation to (b) the fair market value of the Properties (for purposes of the REMIC provisions, counting only real property and excluding any personal property or going concern value), as determined, in Lender’s reasonable discretion, by any commercially reasonable method permitted to a REMIC Trust.

 

Losses” shall mean any and all losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including but not limited to strict liabilities), obligations, fines, penalties, charges, amounts paid in settlement, litigation costs and attorneys’ fees, in the case of each of the foregoing, of whatever kind or nature and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards (but excluding consequential, special, indirect and/or punitive damages or lost profits except to the extent Lender or its Affiliates are responsible therefor to third parties).

 

Major Lease” shall mean (i) any Lease with Versacold USA, Inc., a Minnesota corporation (f/k/a Atlas Cold Storage US Inc. and successor by merger to Atlas Cold Storage America LLC) and/or its affiliates, (ii) any Lease which accounts for more than 3% of the Gross Rent at all Properties, (iii) any Lease which contains any option, offer, right of first refusal or other similar entitlement to acquire all or any portion of any Individual Property, (iv) any instrument guaranteeing or providing credit support for any Lease meeting the requirements of clause (i), (ii) and/or (iii) above, (v) any Lease which is entered into during the continuance of an Event of Default. In connection with the requirement to obtain Lender’s consent or approval pursuant to Section 4.14 hereof with respect to any matters pertaining to a Major Lease, if at the time of such request, Borrower is seeking similar consents and/or approvals with respect to multiple Leases which do not individually constitute Major Leases, but which, when aggregated with all other Leases with the same Tenant or an Affiliate thereof for which such similar consents and/or approvals are pending, accounts for more than 4.8% the Gross Rent at all Properties, each such Lease shall be deemed to be a Major Lease notwithstanding that it does not independently constitute a Major Lease hereunder.

 

Management Agreement” shall mean individually and/or collectively (as the context may require), (i) Property Management Agreement, dated as of October 23, 2013, by and between ARC AMWNRKY001, LLC, as owner, and CBRE, Inc., as manager, (ii) that certain Property Management and Leasing Agreement, dated as of the date hereof, by and among each Borrower other than ARC AMWNRKY001, LLC, collectively as owner, and American Finance Properties, LLC as manager, and (iii) each Qualified Management Agreement entered into by and between Borrower and Manager, pursuant to which Manager is to provide management and other services with respect to the Properties or any portion thereof, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time in accordance with this Agreement.

 

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Manager” shall mean (i) with respect to that certain Individual Property located at 1919 Rolling Hills Lane, Winchester, Kentucky, CBRE, Inc., a Delaware corporation, (ii) with respect to each other Individual Property, American Finance Properties, LLC, or (iii) such other Person selected as the manager of any applicable Individual Property in accordance with the terms of this Agreement or the other Loan Documents.

 

Master Lease” shall mean, individually and/or collectively, as the context may require, those certain Leases listed on Schedule X attached hereto together with any replacements, amendments, modifications, renewals or supplements thereto in accordance with the terms and conditions of this Agreement, including, without limitation, any replacement Lease entered into in accordance with the terms and conditions of this Agreement with respect to any space demised under a Master Lease.

 

Material Adverse Effect” shall mean a material adverse effect on (i) any Individual Property, (ii) the business, management, operations or condition (financial or otherwise) of any Borrower, Guarantor, or any Individual Property, (iii) the enforceability, validity, perfection or priority of the lien of any Security Instrument or the enforceability of the other Loan Documents, or (iv) the ability of any Borrower and/or Guarantor to perform its obligations under the related Security Instrument or the other Loan Documents.

 

Maturity Date” shall mean the Stated Maturity Date or such other date on which the final payment of the principal amount of the Loan becomes due and payable as herein provided, whether at the Stated Maturity Date, by declaration of acceleration, or otherwise.

 

Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

 

Member” is defined in Section 5.1 hereof.

 

Mezzanine Borrower” shall have the meaning set forth in Section 11.6 hereof.

 

Mezzanine Option” shall have the meaning set forth in Section 11.6 hereof.

 

Minimum Debt Yield (Full Trigger)” shall mean a Debt Yield equal to 8.2%.

 

Minimum Debt Yield (Partial Trigger)” shall mean a Debt Yield equal to 9.3%.

 

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Minimum Disbursement Amount” shall mean Twenty-Five Thousand and No/100 Dollars ($25,000).

 

Minor Repairs” shall mean, for any Individual Property, routine repairs and/or maintenance performed in the ordinary course of business and in compliance with this Agreement in an aggregate amount not to exceed $10,000.00 and which would not be reasonably anticipated to result in a Material Adverse Effect.

 

Monthly Debt Service Payment Amount” shall mean for each Monthly Payment Date, a payment equal to the amount of interest which has accrued during the preceding Interest Accrual Period computed at the Interest Rate.

 

Monthly Ground Rent Deposit” shall have the meaning set forth in Section 8.4 hereof.

 

Monthly Insurance Deposit” shall have the meaning set forth in Section 8.6 hereof.

 

Monthly Payment Date” shall mean the First Monthly Payment Date and the sixth (6th) day of every calendar month occurring thereafter during the term of the Loan.

 

Monthly Tax Deposit” shall have the meaning set forth in Section 8.6 hereof.

 

Moody’s” shall mean Moody’s Investor Service, Inc.

 

Net Proceeds” shall mean: (i) the net amount of all insurance proceeds payable as a result of a Casualty to any Individual Property, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys’ fees), if any, in collecting such insurance proceeds, or (ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys’ fees), if any, in collecting such Award.

 

Net Proceeds Deficiency” shall have the meaning set forth in Section 7.4 hereof.

 

Net Sales Proceeds” shall mean, in connection with any Sales Contract Release, the total value of all cash consideration received by or on behalf of Borrower in connection with the applicable sale of the related Individual Property less all reasonable, out-of-pocket costs and expenses actually incurred by Borrower in favor of third parties in connection with the negotiation and consummation of the applicable sale of the Individual Property, which costs shall be substantiated to Lender’s reasonable satisfaction.

 

New Manager” shall mean any Person replacing or becoming the assignee of the then current Manager, in each case, in accordance with the applicable terms and conditions hereof.

 

New Non-Consolidation Opinion” shall mean a substantive non-consolidation opinion provided by outside counsel reasonably acceptable to Lender and acceptable to the Rating Agencies or a bring down of or an update to the Non-Consolidation Opinion and, in either case, otherwise in form and substance reasonably acceptable to Lender and acceptable to the Rating Agencies.

 

Non-Conforming Policy” shall have the meaning set forth in Section 7.1 hereof.

 

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Non-Consolidation Opinion” shall mean that certain substantive non-consolidation opinion delivered to Lender by Greenberg Traurig, LLP in connection with the closing of the Loan.

 

Non-Discretionary Expenses” shall mean (i) all payments required to be made under this Agreement or any other Loan Document, including, without limitation, in respect of interest, principal, servicing fees, and required escrows, (ii) Emergency Expenditures, (iii) expenditures required pursuant to any Legal Requirement, and (iv) expenditures required to pay real estate taxes and other governmental impositions, utilities, insurance premiums or other similar non-discretionary expenses.

 

Non-discretionary Substitution Property” shall mean the Individual Properties identified on Schedule XVIII attached hereto.

 

Note” shall mean, individually and/or collectively, as the context may require, Note A-1 and Note A-2.

 

Note A-1” shall mean that certain Replacement Consolidated Amended and Restated Promissory Note A-1, dated the date hereof, in the principal amount of $464,750,000.00 made by Borrower in favor of CF.

 

Note A-2” shall mean that certain Replacement Consolidated Amended and Restated Promissory Note A-2, dated the date hereof, in the principal amount of $250,250,000.00 made by Borrower in favor of CF.

 

OFAC” shall have the meaning set forth in Section 3.30 hereof.

 

Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by Responsible Officer of Borrower.

 

Op Ex Monthly Amount” shall mean an amount equal to the sum of (i) Approved Operating Expenses and Approved Extraordinary Expenses to be incurred by Borrower for the then current Interest Accrual Period, and (ii) without duplication of any amounts previously remitted to Borrower, any Non-Discretionary Expenses which do not constitute Approved Operating Expenses or Approved Extraordinary Expenses actually incurred by Borrower for the immediately preceding Interest Accrual Period (as identified to Lender in a written request therefor).

 

Open Prepayment Period” shall have the meaning set forth in Section 2.7(a) hereof.

 

Operating Expenses” shall mean for any period the total of all expenditures, computed in accordance with the Approved Accounting Method, of whatever kind relating to the ownership, operation, maintenance and management of the Properties, including without limitation, (and without duplication) utilities, ordinary repairs and maintenance, insurance, license fees, ground rent, property taxes and assessments, advertising expenses, payroll and related taxes, computer processing charges, assumed management fees (equal to the greater of (x) two percent (2.0%) of Gross Rents or (y) actual management fees payable under the Management Agreement), operational equipment or other lease payments as approved by Lender, but specifically excluding (i) depreciation, (ii) Debt Service, (iii) non-recurring or extraordinary expenses, and (iv) deposits into the Reserve Funds.

 

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Operating Income” shall mean all income, computed in accordance with the Approved Accounting Method, derived from the ownership and operation of the Properties from whatever source, including, but not limited to common area maintenance, real estate tax recoveries, utility recoveries, other miscellaneous expense recoveries and other miscellaneous income, but excluding rental income taxes, sales, use and occupancy taxes or other taxes on receipts required to be accounted for by Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of furniture, fixtures and equipment, interest income, insurance proceeds (other than business interruption or other loss of income insurance), Awards, unforfeited security deposits, utility and other similar deposits, non-recurring or extraordinary income, including, without limitation lease termination payments, and any disbursements to Borrower from the Reserve Funds. Operating Income shall not be diminished as a result of the Security Instruments or the creation of any intervening estate or interest in the Properties or any part thereof. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Loan Document, “Gross Rents” and “Operating Income” shall be calculated hereunder without duplication of one another or of any individual item contained within the definitions thereof.

 

Other Charges” shall mean all maintenance charges, impositions other than Taxes, and any other charges, vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Individual Property, now or hereafter levied or assessed or imposed against any Individual Property or any part thereof.

 

Other Connection Taxes” shall mean, with respect to any Recipient, Section 2.10 Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Section 2.10 Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Section 2.10 Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Section 2.10 Taxes that are Other Connection Taxes imposed with respect to an assignment or Section 2.10 Taxes that are the result of Barclays being a foreign lender with a loan made in the United States.

 

Overpaying Borrower” shall have the meaning set forth in Section 17.19 hereof.

 

Overpayment Amount” shall have the meaning set forth in Section 17.19 hereof.

 

Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended from time to time, and corresponding provisions of future laws with respect to the same subject matter.

 

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Patriot Act Offense” shall mean any violation of the criminal laws of any Governmental Authority, or that would be a criminal violation if committed within the jurisdiction of the United States of America, any of the several states or any Governmental Authority, relating to terrorism or the laundering of monetary instruments, including any offense under (a) the criminal laws against terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, or the (e) Patriot Act. “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense.

 

Permits” shall mean all necessary certificates, licenses, permits, franchises, trade names, certificates of occupancy, consents, and other approvals (governmental and otherwise) required under applicable Legal Requirements for the operation of each Individual Property and the conduct of Borrower’s business (including, without limitation, all required zoning, building code, land use, environmental, public assembly and other similar permits or approvals).

 

Permitted Encumbrances” shall mean, with respect to each Individual Property, collectively, (a) the lien and security interests created by this Agreement and the other Loan Documents, (b) all liens, encumbrances and other matters disclosed in the applicable Title Insurance Policy, (c) liens, if any, for Taxes imposed by any Governmental Authority not yet due or delinquent, (d) such other title and survey matters as Lender has approved or may approve in writing in Lender’s sole discretion and (e) easements entered into in the ordinary course of owning real property for use, access, water and sewer lines, telephone lines, electrical service lines, other utility lines or for other similar purposes provided that such easements (individually and in the aggregate) do not result in a Material Adverse Effect.

 

Permitted Fund Manager” means any Person that on the date of determination is not subject to a case under the Bankruptcy Code and/or any Creditors Rights Laws and is an entity that is a Qualified Lender pursuant to clauses (v)(A), (B), (C) or (D) of the definition thereof.

 

Permitted Investments” shall mean any one or more of the following obligations or securities acquired at a purchase price of not greater than par, including those issued by Servicer, or any trustee under any Securitization or any of their respective Affiliates, payable on demand or having a maturity date not later than the Business Day immediately prior to the first Monthly Payment Date following the date of acquiring such investment and meeting one of the appropriate standards set forth below:

 

(a)               obligations of, or obligations directly and unconditionally guaranteed as to principal and interest by, the U.S. government or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America and have maturities not in excess of one year, provided that with respect to any such obligation guaranteed by any agency or instrumentality of the U.S. government, such agency or instrumentality must be either (i) rated by S&P and have a rating equal to at least the minimum eligible rating by S&P or (ii) are specifically approved by S&P as having the creditworthiness of the senior obligations equal to that of the U.S. government;

 

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(b)               federal funds, unsecured certificates of deposit, time deposits, banker’s acceptances, and repurchase agreements having maturities of not more than 90 days of any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia, the short-term debt obligations of which are rated (a) “A-1+” (or the equivalent) by S&P and, if it has a term in excess of three months, the long-term debt obligations of which are rated “AAA” (or the equivalent) by S&P, and that (1) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (2) has Tier 1 capital (as defined in such regulations) of not less than $1,000,000,000, (b) in one of the following Moody’s rating categories: (1) for maturities less than one month, a long-term rating of “A2” or a short-term rating of “P-1”, (2) for maturities between one and three months, a long-term rating of “A1” and a short-term rating of “P-1”, (3) for maturities between three months to six months, a long-term rating of “Aa3” and a short-term rating of “P-1” and (4) for maturities over six months, a long-term rating of “Aaa” and a short-term rating of “P-1”, or such other ratings as confirmed in a Rating Agency Confirmation and (c) in one of the following Fitch rating categories: (1) for maturities less than three months, a long term rating of “A” and a short term rating of “F-1” and (2) for maturities greater than three months, a long-term rating of “AA-” and a short term rating of “F-1+”;

 

(c)               deposits that are fully insured by the Federal Deposit Insurance Corp.;

 

(d)               commercial paper rated (a) “A–1+” (or the equivalent) by S&P and having a maturity of not more than 90 days, (b) in one of the following Moody’s rating categories: (i) for maturities less than one month, a long-term rating of “A2” or a short-term rating of “P-1”, (ii) for maturities between one and three months, a long-term rating of “A1” and a short-term rating of “P-1”, (iii) for maturities between three months to six months, a long-term rating of “Aa3” and a short-term rating of “P-1” and (iv) for maturities over six months, a long-term rating of “Aaa” and a short-term rating of “P-1” and (c) in one of the following Fitch rating categories: (1) for maturities less than three months, a long term rating of “A” and a short term rating of “F-1” and (2) for maturities greater than three months, a long-term rating of “AA-” and a short term rating of “F-1+”;

 

(e)               any money market funds that (a) has substantially all of its assets invested continuously in the types of investments referred to in clause (a) above, (b) has net assets of not less than $5,000,000,000, and (c) has an S&P rating of “AAAm” or better and the highest rating obtainable from Moody’s and Fitch; and

 

(f)                such other investments as to which each Rating Agency shall have delivered a Rating Agency Confirmation.

 

Notwithstanding the foregoing, “Permitted Investments” (i) shall exclude any security with a qualified rating symbol (or any other Rating Agency’s corresponding symbol) attached to the rating, as well as any mortgage-backed securities and any security of the type commonly known as “strips”; (ii) shall be limited to those instruments that have a predetermined fixed dollar of principal due at maturity that cannot vary or change; (iii) shall only include instruments that qualify as “cash flow investments” (within the meaning of Section 860G(a)(6) of the IRS Code); and (iv) shall exclude any investment where the right to receive principal and interest derived from the underlying investment provides a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment. Interest may either be fixed or variable, and any variable interest must be tied to a single interest rate index plus a single fixed spread (if any), and move proportionately with that index. No investment shall be made which requires a payment above par for an obligation if the obligation may be prepaid at the option of the issuer thereof prior to its maturity. All investments shall mature or be redeemable upon the option of the holder thereof on or prior to the earlier of (x) three months from the date of their purchase and (y) the Business Day preceding the day before the date such amounts are required to be applied hereunder.

 

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Permitted Pledge” shall mean a pledge of the direct and/or indirect interests in AFT or Guarantor provided that (i) such pledge is made to a Qualified Lender, (ii) such pledge is made to secure a parent-level (i.e., a direct or indirect owner of Borrower which has substantial assets other than its interest in the Property) corporate credit facility issued by such Qualified Lender, (iii) the collateral for such pledge consists primarily of collateral other than indirect interests in the Property, and (iv) the repayment of such corporate credit facility is not tied specifically to the cash flow of the Property.

 

Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any other entity and, in each case, any fiduciary acting in such capacity on behalf of any of the foregoing.

 

Personal Property” shall mean, individually and/or collectively (as the context requires), the “Personal Property” as defined in each applicable Security Instrument.

 

Physical Conditions Report” shall mean those certain reports delivered to Lender in connection with the closing of the Loan regarding the physical condition of the Properties.

 

PLL Policy” shall have the meaning set forth in Section 7.1 hereof.

 

Policies” shall have the meaning specified in Section 7.1 hereof.

 

Post-Closing Agreement” shall mean that certain Post-Closing Obligations Agreement by and between Borrower and Lender and dated as of the date hereof, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time

 

Prohibited Transfer” shall have the meaning set forth in Section 6.2 hereof.

 

Projections” shall have the meaning set forth in Section 11.9 hereof.

 

Property” and “Properties” shall mean, individually and/or collectively (as the context requires), each Individual Property which is subject to the terms hereof and of the other Loan Documents.

 

Property Document” shall mean, individually or collectively (as the context may require), each document comprising the REA.

 

Property Document Event” shall mean any event with respect to a violation of a Property Document which would, directly or indirectly, cause a termination right, right of first refusal, first offer or any other similar right, cause any termination fees to be due or would cause a Material Adverse Effect to occur with respect to a particular Individual Property under any Property Document (in each case, beyond any applicable notice and cure periods under the applicable Property Document); provided, however, any of the foregoing shall not be deemed a Property Document Event to the extent Lender’s prior written consent is obtained with respect to the same.

 

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Provided Information” shall mean any information provided by or on behalf of any Borrower Party to Lender in writing (including by e-mail or electronic means) in connection with the Loan, the Properties (or any portion thereof) and/or such Borrower Party.

 

Prudent Lender Standard” shall, with respect to any matter, be deemed to have been met if the matter in question (i) prior to a Securitization, is reasonably acceptable to Lender and (ii) after a Securitization, (A) if permitted by legal requirements relating to any REMIC Trust formed pursuant to a Securitization maintaining its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code applicable to such matter, would be reasonably acceptable to Lender or (B) if the Lender discretion in the foregoing subsection (A) is not permitted under such applicable legal requirements relating to any REMIC Trust formed pursuant to a Securitization maintaining its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code applicable to such matter, would be acceptable to a prudent lender of securitized commercial mortgage loans similar to the Loan.

 

Qualified Equityholder” shall mean (i) AFT, (ii) a bank, savings and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, real estate company, investment fund or an institution substantially similar to any of the foregoing, provided in each case under this clause (ii) that such Person (x) has total assets (in name or under management) in excess of $1,000,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $400,000,000 (in both cases, exclusive of the Properties), and (y) is regularly engaged in the business of owning and operating comparable properties, or (iii) any other Person reasonably approved by Lender.

 

Qualified Insurer” shall have the meaning set forth in Section 7.1 hereof.

 

Qualified Lender” shall mean (i) CF, (ii) any Affiliate of CF, or (iii) one or more of the following (in each of clauses (A) through (F), either acting (1) for itself or (2) as agent for itself and other lenders, provided that at least fifty percent (50%) of such lenders pursuant to this clause (2) are Qualified Lenders):

 

(A)              a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (A) satisfies the Eligibility Requirements;

 

(B)              an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act, provided that any such Person referred to in this clause (B) satisfies the Eligibility Requirements;

 

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(C)               an institution substantially similar to any of the foregoing entities described in clause (iii)(A), (iii)(B) or (iii)(E), or any other Person which is subject to supervision and regulation by the insurance or banking department of any state or of the United States, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or by any successor hereafter exercising similar functions, in each case, that satisfies the Eligibility Requirements;

 

(D)              any entity Controlled by, Controlling or under common Control with any of the entities described in clause (iii)(A), (iii)(B) or (iii)(C) above or clause (iii)(E) below;

 

(E)              an investment fund, limited liability company, limited partnership or general partnership where a Permitted Fund Manager or Qualified Lender (other than pursuant to this clause (iii)(E)) acts as general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more of the following: a Qualified Lender under paragraph (A), (B), (C) or (D) above or (F) below, an institutional “accredited investor”, within the meaning of Regulation D promulgated under the Securities Act, and/or a “qualified institutional buyer” or both within the meaning of Rule 144A promulgated under the Exchange Act, provided such institutional “accredited investors” or “qualified institutional buyers” that are used to satisfy the fifty percent (50%) test set forth above in this clause (E) satisfy the financial tests in clause (i) of the definition of Eligibility Requirements; or

 

(F)               following a Securitization, any Person for which the Rating Agencies have issued a Rating Agency Confirmation.

 

Qualified Management Agreement” shall mean a management agreement with a Qualified Manager with respect to the applicable Individual Property providing for a management fee not in excess of (x) in the case of any Affiliated Manager, two percent (2%) of Gross Rents or (y) in the case of any other Manager, three percent (3%) of Gross Rents attributable to the applicable Individual Property and which is otherwise approved by Lender in writing (which such approval is not to be unreasonably withheld, conditioned or delayed except that it may be conditioned upon Lender’s receipt of a Rating Agency Confirmation with respect to such management agreement) and for which Lender shall have received an assignment and subordination of management agreement in substantially the form of the Assignment of Management Agreement or otherwise reasonably acceptable to Lender and executed by Borrower and the Qualified Manager thereunder.

 

Qualified Manager” shall mean a Person approved by Lender in writing (which such approval is not to be unreasonably withheld, conditioned or delayed except that may be conditioned upon Lender’s receipt of a Rating Agency Confirmation with respect to such Person).

 

Qualified Replacement Guarantor” shall mean a Person who (a) (i) is a United States citizen and lives year round in the United States or (ii) is (to the extent such Person is a corporation) incorporated or is (to the extent such Person is a limited partnership or limited liability company) formed in the United States and, in each instance, domiciled with its principal place of business in the United States, (b)(i) has net worth of not less than $655,000,000.00 (exclusive of the Properties) and (ii) liquidity of $30,000,000.00, each as reasonably determined by Lender, (c) is one hundred percent (100%) owned and Controlled by, or is, a Qualified Equityholder, and (d) (A) such Person has not been the subject of a voluntary or involuntary bankruptcy proceeding in the previous seven (7) years, (B) such Person has not been, and is not controlled by any party which has ever been, convicted of a capital offense or fraud, embezzlement or other financial crime felony, and (C) such Person has never been, and is not affiliated with any person which has been, indicted or convicted for a Patriot Act offense, is not on any anti-terrorism list and for which Lender has otherwise received Satisfactory Search Results.

 

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Rating Agency” shall mean S&P, Moody’s, Fitch, Kroll Bond Rating Agency, Inc., Morningstar Credit Ratings, LLC, DBRS, Inc. or any other nationally-recognized statistical rating agency which has assigned a rating to the Securities (and any successor to any of the foregoing), but only to the extent any of the foregoing have been engaged by one or more Lenders or their Affiliates in connection with and/or in anticipation of any Securitization.

 

Rating Agency Condition” shall be deemed to exist if (i) any Rating Agency fails to respond to any request for a Rating Agency Confirmation with respect to any applicable matter or otherwise elects (orally or in writing) not to consider any applicable matter or (ii) Lender (or its Servicer) is not required to and/or elects not to obtain (or cause to be obtained) a Rating Agency Confirmation with respect to any applicable matter, in each case, pursuant to and in compliance with any pooling and servicing agreement(s) or similar agreement(s), in each case, relating to the servicing and/or administration of the Loan.

 

Rating Agency Confirmation” shall mean (i) prior to a Securitization or if the Rating Agency Condition exists, that Lender has (in consultation with the Rating Agencies (if reasonably required by Lender)) approved the matter in question in writing based upon Lender’s good faith determination of applicable Rating Agency standards and criteria and (ii) from and after a Securitization (to the extent the Rating Agency Condition does not exist), a written affirmation from each of the Rating Agencies (obtained at Borrower’s sole cost and expense) that the credit rating of the Securities by such Rating Agency immediately prior to the occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency’s sole and absolute discretion.

 

REA” shall mean, individually or collectively (as the context requires), each reciprocal easement or similar agreement affecting the Properties (or any portion thereof) as more particularly described on Schedule IV hereto (if any), any amendment, restatement, replacement or other modification thereof, any future reciprocal easement or similar agreement affecting the Properties (or any portion thereof) entered into in accordance with the applicable terms and conditions hereof and any amendment, restatement, replacement or other modification thereof.

 

Recipient” shall mean any Lender and Agent, as applicable.

 

Register” shall have the meaning set forth in Section 11.9 hereof.

 

Registrar” shall have the meaning set forth in Section 11.7 hereof.

 

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Registration Statement” shall have the meaning set forth in Section 11.2 hereof.

 

Regulation AB” shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.

 

Rejected Substitution” shall mean, with respect to any Non-discretionary Substitution Property, that (i) Lender shall have rejected or otherwise failed to approve a proposed Substitute Property in connection with a proposed Property Substitution pursuant to Section 2.8 hereof, and (ii) the tenant under the related Master Lease shall have exercised its rights to terminate the related Master Lease as a result of such rejection or failure by Lender.

 

Related Loan” shall mean a loan to an Affiliate of Borrower or secured by a Related Property, that is included in a Securitization with the Loan (or any portion thereof or interest therein).

 

Related Property” shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is “related” within the meaning of the definition of Significant Obligor, to the Properties (or any portion thereof).

 

Release” shall have the meaning set forth in Section 2.9 hereof.

 

Release Amount” shall have the meaning set forth in Section 2.9 hereof.

 

Release Approval Item” shall have the meaning set forth in Section 2.9 hereof.

 

Release Notice Date” shall have the meaning set forth in Section 2.9 hereof.

 

Release Price” shall mean (I) in connection with the Release pursuant to Section 2.9 of this Agreement of any Individual Property which is not a Vacated Individual Property, (A) with respect to any such Release to a Person that is not an Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor (i) an amount equal to 110% of the Allocated Loan Amount with respect to such Individual Property until the then outstanding principal balance of the Loan is equal to $643,500,000, and (ii) following such time as the then outstanding principal balance of the Loan is equal to $643,500,000, an amount equal to 115% of the Allocated Loan Amount with respect to such Individual Property, and (B) with respect to any such Release to a Person that is an Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor, (i) an amount equal to 120% of the Allocated Loan Amount with respect to such Individual Property until the then outstanding principal balance of the Loan is equal to $643,500,000, and (ii) following such time as the then outstanding principal balance of the Loan is equal to $643,500,000, an amount equal to 125% of the Allocated Loan Amount with respect to such Individual Property, (II) in connection with the Release pursuant to Section 2.9 of this Agreement of any Vacated Individual Property, an amount equal to 100% of the Allocated Loan Amount with respect to such Vacated Individual Property, (III) solely in connection with a Release of an Individual Property for which a Rejected Substitution has occurred, 100% of the Allocated Loan Amount of such Individual Property, or (IV) in connection with a Sales Contract Release, an amount equal to 100% of the Net Sales Proceeds. With respect to the foregoing clause (I), as an example for illustration purposes only, to the extent that a prepayment of the Loan in connection with a Release pursuant to Section 2.9 of this Agreement to a Person that is not an Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor would result in the then outstanding principal balance of the Loan (after taking into account such prepayment of the Loan) to be both below and above $643,500,000, the Release Price of 110% of the Allocated Loan Amount shall apply to such portion of the Allocated Loan Amount which results in the then outstanding principal balance of the Loan being equal to $643,500,000 and the Release Price of 115% of the Allocated Loan Amount shall apply to such portion of the Allocated Loan Amount which results in the then outstanding principal balance of the Loan being less than $643,500,000.

 

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Released Property” shall have the meaning set forth in Section 2.9 hereof.

 

Remaining Loan” shall have the meaning set forth in Section 11.8 hereof.

 

Remaining Loan Documents” shall have the meaning set forth in Section 11.8 hereof.

 

REMIC Trust” shall mean any “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code that holds any interest in all or any portion of the Loan.

 

Rent Loss Proceeds” shall have the meaning set forth in Section 7.1 hereof.

 

Rent Roll” shall have the meaning set forth in Section 3.18 hereof.

 

Rents” shall have the meaning set forth in the Security Instrument.

 

Replacement Reserve Account” shall have the meaning set forth in Section 8.2 hereof.

 

Replacement Reserve Cap” shall mean, for each date of determination, an amount equal to the Aggregate Square Footage multiplied by sixty cents ($0.60).

 

Replacement Reserve Funds” shall have the meaning set forth in Section 8.2 hereof.

 

Replacement Reserve Monthly Deposit” shall mean, for each date of determination, one-twelfth (1/12th) of the amount equal to the Aggregate Square Footage multiplied by twenty cents ($0.20).

 

Replacements” for any period shall mean replacements and/or alterations to any Individual Property; provided, that, the same are (i) required to be capitalized according to the Approved Accounting Method and (ii) if a Trigger Period is then continuing and such Replacements are not contained in an Approved Annual Budget, reasonably approved by Lender.

 

Reporting Failure” shall have the meaning set forth in Section 4.12 hereof.

 

Required Financial Item” shall have the meaning set forth in Section 4.12 hereof.

 

Required Rating” means (i) a rating of not less than “A-1” (or its equivalent) from each of the Rating Agencies if the term of such Letter of Credit is no longer than three (3) months or if the term of such Letter of Credit is in excess of three (3) months, a rating of not less than “A+” (or its equivalent) from each of the Rating Agencies, which rating in each instance shall exclude a qualified rating symbol (or any other Rating Agency’s corresponding symbol) attached to the rating or (ii) such other rating with respect to which Lender shall have received a Rating Agency Confirmation.

 

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Reserve Accounts” shall mean the Tax Account, the Insurance Account, the Replacement Reserve Account, the Immediate Repair Account, the Leasing Reserve Account, the Excess Cash Flow Account, the Environmental Remediation Account, the Unfunded Obligations Account, the Ground Rent Account, and any other escrow account established by this Agreement or the other Loan Documents (but specifically excluding the Cash Management Account, the Restricted Account and the Debt Service Account).

 

Reserve Funds” shall mean the Tax and Insurance Funds, the Replacement Reserve Funds, the Immediate Repair Funds, the Leasing Reserve Funds, the Excess Cash Flow Funds, the Environmental Remediation Funds, the Unfunded Obligations Funds, the Ground Rent Funds and any other escrow funds established by this Agreement or the other Loan Documents.

 

Responsible Officer” means with respect to a Person, the chairman of the board, president, chief operating officer, chief financial officer, treasurer or vice president of such Person or such other similar officer of such Person reasonably acceptable to Lender.

 

Restoration” shall mean, following the occurrence of a Casualty or a Condemnation which is of a type necessitating the repair of any Individual Property (or any portion thereof), the completion of the repair and restoration of any Individual Property (or applicable portion thereof) as nearly as possible to the condition such Individual Property (or applicable portion thereof) was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender.

 

Restoration Retainage” shall have the meaning set forth in Section 7.4 hereof.

 

Restoration Threshold” shall mean, with respect to each Individual Property, an amount equal to 5% of the outstanding principal amount of the Allocated Loan Amount attributable to such Individual Property.

 

Restricted Account” shall have the meaning set forth in Section 9.1 hereof.

 

Restricted Account Agreement” shall mean that certain Restricted Account Agreement by and among Borrower, Lender and KeyBank National Association dated as of the date hereof, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

Restricted Party” shall have the meaning set forth in Section 6.1 hereof.

 

S&P” shall mean Standard & Poor’s Ratings Services.

 

Sale or Pledge” shall have the meaning set forth in Section 6.1 hereof.

 

Sales Contract Release” shall mean a Release occurring during the continuance of an Event of Default, provided that the related Individual Property is being transferred to a non- Affiliated third-party pursuant to a written contract of sale that was entered into in accordance with this Agreement prior to the occurrence of an Event of Default.

 

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Sanctioned Person” shall mean any Person that is a designated target of any Sanctions or otherwise a subject of any Sanctions, including as a result of being (a) owned or controlled directly or indirectly by any Persons (or Person) that are designated targets of any Sanctions, or (b) organized or operating under the laws of, or a citizen or resident of, any country that is subject to any Sanctions.

 

Sanctions” shall mean any economic or financial sanctions or trade embargoes (or similar measures) imposed, administered or enforced from time to time by (a) the United States of America (including the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State), (b) the United Nations Security Council, (c) the European Union or any member state thereof, or (d) Her Majesty’s Treasury of the United Kingdom.

 

Satisfactory Search Results” shall mean the results of Lender’s customary “know your customer”, credit history check, litigation, lien, OFAC, Patriot Act, anti-money laundering and other similar searches, bankruptcy and judgment searches with respect to the applicable transferee and its applicable affiliates that control the applicable transferee and/or have a twenty percent (20%) or greater (or, with respect to any Person not domiciled in the United States, ten percent (10%)) direct or indirect interest in such transferee, in each case, (i) revealing no matters which would have a Material Adverse Effect and (ii) yielding results which are otherwise acceptable to Lender in its reasonable discretion. Borrower shall pay all of Lender’s reasonable out of pocket costs, fees and expenses in connection with the foregoing.

 

Secondary Market Transaction” shall have the meaning set forth in Section 11.1 hereof.

 

Section 2.10 Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Securities” shall have the meaning set forth in Section 11.1 hereof.

 

Securities Act” shall mean the Securities Act of 1933, as amended.

 

Securitization” shall have the meaning set forth in Section 11.1 hereof.

 

Security Instrument” and “Security Instruments” shall mean individually and/or collectively (as the context requires), each first priority Mortgage / Deed of Trust/Deed to Secure Debt, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof, executed and delivered by each Borrower as security for the Loan and encumbering each Individual Property, as each of the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

Security Instrument Taxes” shall have the meaning set forth in Section 15.2 hereof.

 

Servicer” shall have the meaning set forth in Section 11.4 hereof.

 

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Severed Loan Documents” shall have the meaning set forth in Section 10.2(d) hereof.

 

Significant Obligor” shall have the meaning set forth in Item 1101(k) of Regulation AB under the Securities Act.

 

Single Purpose Entity” shall mean an entity whose structure and organizational and governing documents are otherwise in form and substance in compliance with Article 5 hereof.

 

SPE Component Entity” shall have the meaning set forth in Section 5.1 hereof.

 

Special Member” is defined in Section 5.1 hereof.

 

State” shall mean the applicable state in which the applicable Individual Property is located.

 

Stated Maturity Date” shall mean the Monthly Payment Date in August 2025.

 

Substitute Property” shall mean each real property added as collateral for the Loan in connection with a Property Substitution pursuant to Section 2.8 hereof.

 

Survey” shall mean, individually or collectively (as the context requires), each survey of each Individual Property certified and delivered to Lender in connection with the closing of the Loan.

 

Syndication” shall have the meaning set forth in Section 11.9 hereof.

 

Tax Account” shall have the meaning set forth in Section 8.6 hereof.

 

Tax and Insurance Funds” shall have the meaning set forth in Section 8.6 hereof.

 

Tax Payment Date” shall mean, with respect to any applicable Taxes, the date occurring 30 days prior to the date the same are due and payable.

 

Taxes” shall mean all taxes, assessments, water rates, sewer rents, and other governmental impositions, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Land, now or hereafter levied or assessed or imposed against the Properties or any part thereof.

 

Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion of any Individual Property under a Lease or other occupancy agreement.

 

Tenant Direction Notice” shall have the meaning set forth in Section 9.2 hereof.

 

Title Insurance Policy” shall mean those certain ALTA mortgagee title insurance policies issued with respect to each Individual Property and insuring the lien of the Security Instruments.

 

Trigger Period” shall mean, as applicable, a Trigger Period (Full) or a Trigger Period (Partial).

 

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Trigger Period (Full)” shall mean a period (A) commencing upon the earliest to occur of:

 

(i) an Event of Default,

 

(ii) the Debt Yield falling below the Minimum Debt Yield (Full Trigger), or

 

(iii) the occurrence of a Bankruptcy Action with respect to Borrower or Manager; and, (A) with respect to any involuntary Bankruptcy Action with respect to Borrower or any Bankruptcy Action with respect to Manager, which Bankruptcy Action shall not have been discharged or dismissed, or (B) with respect to any Bankruptcy Action with respect to Manager, Borrower shall not have entered into a Qualified Management Agreement with a Qualified Manager pursuant to the terms hereof, in each case, within sixty (60) days following the filing thereof; and

 

(B) expiring upon:

 

(x) with regard to any Trigger Period commenced in connection with clause (A)(i) above, the cure (if applicable) of such Event of Default,

 

(y) with regard to any Trigger Period commenced in connection with clause (A)(ii) above, the Debt Yield being equal to or exceeding the Minimum Debt Yield (Full Trigger) for two (2) consecutive calendar quarters; or

 

(z) with regard to any Trigger Period commenced in connection with clause (A)(iii) above, either (x) the discharge or dismissal of the applicable Bankruptcy Action or (y) in the case of a Bankruptcy Action with respect to Manager, Borrower has replaced such Manager with a Qualified Manager in accordance with the provisions of Section 4.15 hereof.

 

Notwithstanding the foregoing, a Trigger Period (Full) shall not be deemed to expire in the event that a Trigger Period (Full) pursuant to any of clauses (A)(i) through (iii) above has occurred and is continuing.

 

Trigger Period (Partial)” shall mean any period (A) commencing upon the Debt Yield falling below the Minimum Debt Yield (Partial Trigger) and (B) expiring upon the Debt Yield being equal to or exceeding the Minimum Debt Yield (Partial Trigger) for two (2) consecutive calendar quarters.

 

Notwithstanding the foregoing, (i) if at any time (including during the continuance of a Trigger Period (Partial)) the Debt Yield falls below the Minimum Debt Yield (Full Trigger), a Trigger Period (Full) shall commence and continue until the expiration of such Trigger Period (Full) in accordance with the definition thereof, and (ii) the cure of any Trigger Period (Full) shall not be deemed constitute a cure of any Trigger Period (Partial) unless such cure shall also constitute a cure of such Trigger Period (Partial) pursuant to the terms of this definition.

 

TRIPRA” shall have the meaning set forth in Section 7.1 hereof.

 

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True Up Payment” shall mean a payment into the applicable Reserve Account of a sum which, together with any applicable monthly deposits into the applicable Reserve Account, will be sufficient to discharge the obligations and liabilities for which such Reserve Account was established as and when reasonably appropriate. The amount of the True Up Payment shall be determined by Lender in its reasonable discretion and shall be final and binding absent manifest error.

 

UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State.

 

Unaffected Property” shall have the meaning set forth in Section 11.8 hereof.

 

Uncrossed Loan” shall have the meaning set forth in Section 11.8 hereof.

 

Uncrossed Loan Documents” shall have the meaning set forth in Section 11.8 hereof.

 

Uncrossing Event” shall have the meaning set forth in Section 11.8 hereof.

 

Underwritable Cash Flow” shall mean an amount calculated by Lender on a monthly basis equal to the sum of Gross Rents plus the trailing twelve (12) months Operating Income, less the trailing twelve (12) months Operating Expenses, each of which shall be subject to Lender’s application of the Cash Flow Adjustments. Lender’s calculation of Underwritable Cash Flow (including determination of items that do not qualify as Operating Income or Operating Expenses) shall be calculated by Lender in good faith based upon Lender’s reasonable determination of Rating Agency criteria and shall be final absent manifest error.

 

Underwriter Group” shall have the meaning set forth in Section 11.2 hereof.

 

Unfunded Obligations” shall have the meaning set forth in Section 8.8 hereof.

 

Unfunded Obligations Account” shall have the meaning set forth in Section 8.8 hereof.

 

Unfunded Obligations Funds” shall have the meaning set forth in Section 8.8 hereof.

 

Updated Information” shall have the meaning set forth in Section 11.1 hereof.

 

U.S. Obligations” shall mean direct full faith and credit obligations of the United States of America that are not subject to prepayment, call or early redemption.

 

U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the IRS Code.

 

U.S. Tax Compliance Certificate” shall have the meaning set forth in Section 2.10 hereof.

 

Vacated Individual Property” shall mean any Individual Property where each applicable Tenant has vacated its premises at such Individual Property.

 

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Waived Tax Deposit Property” shall mean those certain Individual Properties listed on Schedule VIII attached hereto.

 

Withholding Agent” shall mean Borrower and Agent.

 

Work Charge” shall have the meaning set forth in Section 4.16 hereof.

 

Yield Maintenance Premium” shall mean an amount equal to the greater of (a) an amount equal to 1% of the amount prepaid; or (b) an amount equal to the present value as of the date on which the prepayment is made of the Calculated Payments (as defined below) from the date on which the prepayment is made through (and including) the first day of the Open Prepayment Period determined by discounting such payments at the Discount Rate (as defined below). As used in this definition, the term “Calculated Payments” shall mean the monthly payments of interest only which would be due based on the principal amount of the Loan being prepaid on the date on which prepayment is made and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate (as defined below). As used in this definition, the term “Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate (as defined below), when compounded semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading “U.S. Government Securities/Treasury Constant Maturities” for the week ending prior to the date on which prepayment is made, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the first day of the Open Prepayment Period. In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. Lender shall notify Borrower of the amount and the basis of determination of the required prepayment consideration. Lender’s calculation of the Yield Maintenance Premium shall be conclusive absent manifest error.

 

Zoning Reports” shall mean those certain zoning assessment reports provided to Lender in connection with the closing of the Loan.

 

Section 1.2.         Principles of Construction.

 

All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined. References herein to “the Property or any portion thereof” and words of similar import shall be deemed to refer, as applicable, to any portion of the Property taken as a whole (including any Individual Property) and any portion of any Individual Property.

 

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ARTICLE 2.

 

GENERAL TERMS

 

Section 2.1.         Loan Commitment; Disbursement to Borrower. Except as expressly and specifically set forth herein or in the other Loan Documents, Lender has no obligation or other commitment to loan any funds to Borrower or otherwise make disbursements to Borrower. Borrower hereby waives any right Borrower may have to make any claim to the contrary.

 

Section 2.2.         The Loan. Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.

 

Section 2.3.         Disbursement to Borrower. Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.

 

Section 2.4.         The Note and the other Loan Documents. The Loan shall be evidenced by the Note and this Agreement and secured by this Agreement and the other Loan Documents.

 

Section 2.5.         Interest Rate.

 

(a)               Interest on the outstanding principal balance of the Loan shall accrue from the Closing Date at the Interest Rate until repaid in accordance with the applicable terms and conditions hereof.

 

(b)               Intentionally Omitted.

 

(c)               In the event that, and for so long as, any Event of Default shall have occurred and be continuing, (i) the then outstanding principal balance of the Loan and shall accrue interest at the Default Rate, calculated from the date the applicable Event of Default occurred, (ii) without limitation of any rights or remedies contained herein and/or in any other Loan Document, any interest accrued at the Default Rate in excess of the interest component of the Monthly Debt Service Payment Amount shall, to the extent not already paid and/or due and payable hereunder, be due and payable on each Monthly Payment Date and (iii) all references herein and/or in any other Loan Document to the “Interest Rate” shall be deemed to refer to the Default Rate (except with respect to interest paid at the Interest Rate pursuant to clause (a) immediately above prior to the occurrence and continuance of an Event of Default (and, as applicable, after the cure of any Event of Default in accordance with the terms and conditions hereof)).

 

(d)               Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year (that is, the Interest Rate or the Default Rate, as then applicable, expressed as an annual rate divided by 360) by (c) the outstanding principal balance. The accrual period for calculating interest due on each Monthly Payment Date shall be the Interest Accrual Period immediately prior to such Monthly Payment Date. Borrower understands and acknowledges that such interest accrual requirement results in more interest accruing on the Loan than if either a thirty (30) day month and a three hundred sixty (360) day year or the actual number of days and a three hundred sixty-five (365) day year were used to compute the accrual of interest on the Loan.

 

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(e)               This Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

 

Section 2.6.         Loan Payments.

 

(a)               Borrower shall make a payment to Lender of interest only on the Closing Date for the period from (and including) the Closing Date through (but excluding) the sixth (6th) day of either (i) the month in which the Closing Date occurs (if such Closing Date is after the first day of such month, but prior to the sixth (6th) day of such month) or (ii) if the Closing Date is after the sixth (6th) day of the then current calendar month, the month following the month in which the Closing Date occurs; provided, however, if the Closing Date is the sixth (6th) day of a calendar month, no such separate payment of interest shall be due. Borrower shall make a payment to Lender of interest in the amount of the Monthly Debt Service Payment Amount on the First Monthly Payment Date and on each Monthly Payment Date occurring thereafter to and including the Maturity Date. Provided no Event of Default is continuing, each payment shall be applied first to accrued and unpaid interest and the balance to principal and each payment shall be applied to each Note on a pro rata basis. During the continuance of an Event of Default, each payment may be applied by Lender to the Debt and/or the Notes in such order and priority as Lender may determine in its sole discretion.

 

(b)               Intentionally Omitted.

 

(c)               Borrower shall pay to Lender on the Maturity Date the outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Security Instrument and the other Loan Documents.

 

(d)               If any principal, interest or any other sum due under the Loan Documents, other than the payment of principal due on the Maturity Date, is not paid by Borrower on the date on which it is due (after giving effect to all applicable notice and cure periods), Borrower shall pay to Lender upon demand an amount equal to the lesser of four percent (4%) of such unpaid sum or the maximum amount permitted by applicable law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Any such amount shall be secured by the Security Instruments and the other Loan Documents.

 

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(e)                

 

(i)                 Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 3:00 p.m. New York City time (or, with respect to any payment or prepayment made in connection with a release of an Individual Property pursuant to this Agreement, 5:00 p.m. New York City time) on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

 

(ii)              Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be deemed to be the immediately preceding Business Day.

 

(iii)            All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto.

 

Section 2.7.         Prepayments.

 

(a)               Except as otherwise provided in this Agreement (including, without limitation, Section 2.9 and Section 7.4 hereof), Borrower shall not have the right to prepay the Loan in whole or in part. Prior to the Monthly Payment Date occurring in April 2025 (such period from and after the Monthly Payment Date occurring in April 2025, the “Open Prepayment Period”), Borrower may, at its option and upon thirty (30) days prior notice to Lender (or such shorter period of time as may be permitted by Lender in its reasonable discretion), prepay the Debt in whole or in part on any Business Day together with payment to Lender of the Yield Maintenance Premium. On and after the first Business Day of the Open Prepayment Period, Borrower may, at its option and upon ten (10) days prior notice to Lender (or such shorter period of time as may be permitted by Lender in its reasonable discretion or as otherwise may be provided herein), prepay the Debt in whole or in part on any Business Day without payment of any prepayment premium or penalty (including, without limitation, any Yield Maintenance Premium) except as required pursuant to Section 2.7(c) hereof during the continuance of an Event of Default. In addition, Borrower on any Business Day may, at its option and upon thirty (30) days prior notice to Lender (or such shorter period of time as may be permitted by Lender in its sole discretion or as may otherwise be provided herein), prepay the Debt in part in accordance with the express terms and conditions of this Section 2.7 and Section 2.9 hereof in connection with a Release of an Individual Property. Borrower shall have the right to make a prepayment in accordance with the terms and conditions of this Section 2.7(a) in order to cure a Trigger Period pursuant to clause (A)(ii) in the definition of Trigger Period (Full) or to cure a Trigger Period (Partial), but subject to the terms and conditions of the definition of Trigger Period (Full) and Trigger Period (Partial), as applicable, and other provisions of this Agreement. Any prepayment received by Lender on a date other than a Monthly Payment Date shall include interest which would have accrued thereon to the end of the Interest Accrual Period during which such payment is made (such amounts, the “Interest Shortfall”) and such amounts (i.e., principal and interest prepaid by Borrower) shall be held by Lender as collateral security for the Loan in an interest bearing Eligible Account at an Eligible Institution, with interest accruing on such amounts to the benefit of Borrower; such amounts prepaid shall be applied to the Loan on the next Monthly Payment Date, with any interest on such funds paid to Borrower on such date provided no Event of Default then exists.

 

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(b)               On each date on which Lender actually receives a distribution of Net Proceeds, and if Lender is not obligated to make such Net Proceeds available to Borrower for Restoration or otherwise remit such Net Proceeds to Borrower pursuant to Section 7.4 hereof, then either (I) Lender shall remit such Net Proceeds to Borrower and Borrower shall prepay the Debt or (II) Lender shall apply such Net Proceeds as a prepayment of the Debt, in each instance in an amount up to the Release Price associated with the Individual Property to which such Net Proceeds relate together with any applicable Interest Shortfall, if any. In the event that Net Proceeds are sufficient to pay the Release Price associated with the Individual Property to which such Net Proceeds relate together with any applicable Interest Shortfall, if any, Lender shall release such Individual Property upon delivery by Borrower to Lender of a release or assignment of lien for execution and delivery by Lender in form and substance consistent with that set forth in Section 2.9(b) hereof. All Net Proceeds in excess of such Release Price and the applicable Interest Shortfall, if any, shall (i) if an Event of Default has occurred and is continuing, be held and applied by Lender in accordance with the terms of this Agreement and the other Loan Documents and (ii) if no Event of Default has occurred and is continuing, any remaining Net Proceeds shall be deposited into the Cash Management Account and applied in accordance with Section 9.3 of this Agreement. Borrower shall make the payment pursuant to Section 7.3(b) hereof as and to the extent required therein. No prepayment premium or penalty (including, without limitation, any Yield Maintenance Premium) shall be due in connection with any prepayment made pursuant to this Section 2.7(b) (including, without limitation, in connection with any payment pursuant to Section 7.3(b) hereof). Any prepayment received by Lender pursuant to this Section 2.7(b) on a date other than a Monthly Payment Date shall be held by Lender as collateral security for the Loan in an interest bearing, Eligible Account at an Eligible Institution, with such interest accruing to the benefit of Borrower, and shall be applied by Lender on the next Monthly Payment Date, with any interest on such funds paid to Borrower on such date provided no Event of Default then exists.

 

(c)               After the occurrence and during the continuance of an Event of Default and notwithstanding any acceleration of the Debt in accordance with the applicable terms and conditions hereof, the Yield Maintenance Premium shall, in all cases, be deemed a portion of the Debt due and owing hereunder and under the other Loan Documents. Without limitation of the foregoing, if, after the occurrence and during the continuance of an Event of Default, (i) payment of all or any part of the Debt is tendered by Borrower (voluntarily or involuntarily), a purchaser at foreclosure or any other Person, (ii) Lender obtains a recovery of all or a portion of the Debt (through an exercise of remedies hereunder or under the other Loan Documents or otherwise) or (iii) the Debt is deemed satisfied (in whole or in part) through an exercise of remedies hereunder or under the other Loan Documents or at law, the Yield Maintenance Premium, in addition to the outstanding principal balance, all accrued and unpaid interest and other amounts payable under the Loan Documents, shall be deemed due and payable hereunder. Notwithstanding anything to the contrary contained herein or in any other Loan Document, any prepayment of the Debt after an Event of Default has occurred and is continuing shall be applied to the Debt in such order and priority as may be determined by Lender in its sole discretion.

 

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Section 2.8.         Substitution of Property.

 

(a)               Subject to the terms of this Section 2.8 and Lender’s consent, provided no Event of Default is then continuing or would result therefrom, Borrower may at any time, other than during a Blackout Window, replace one of more Individual Properties (individually, a “Replaced Property” and collectively, the “Replaced Properties”, provided, however, in no event shall the Replaced Properties include any of the Individual Properties set forth on Schedule XIV, and Borrower shall not be permitted to replace any of the Individual Properties set forth on Schedule XIV) with one or more Substitute Properties (each, a “Property Substitution”), in which case Lender shall release the lien of the applicable Security Instrument (and related Loan Documents) with respect to the Replaced Properties, provided, in the case of each Property Substitution, the following conditions are met:

 

(i)                the aggregate Allocated Loan Amounts of all Replaced Properties during the term of the Loan shall not exceed $107,250,000.00 in the aggregate;

 

(ii)               Borrower shall have delivered all information reasonably required by Lender to underwrite the proposed Substitute Property and Lender shall have approved the Substitute Property in its sole discretion;

 

(iii)              Lender shall have received current Appraisals of the applicable Substitute Property and the applicable Replaced Property, demonstrating that the as-is market value of such Substitute Property is equal to or greater than the greater of (x) the as-is market value of such Replaced Property at the time of substitution and (y) the appraised value of such Replaced Property as of the Closing Date;

 

(iv)              Lender shall be reasonably satisfied that the removal of the Replaced Property and the addition of the Substitute Property do not adversely impact (A) the geographic diversity of the Property as security for the Loan, (B) the diversity of the Tenant mix at the Property, or (C) the diversity of the property-use types of the Property as security for the Loan;

 

(v)               Borrower shall deliver to Lender an Officer’s Certificate certifying that (i) as of the date of such Property Substitution, the representations and warranties contained in this Agreement are true and correct with respect to both the Borrower acquiring the applicable Substitute Property (to the extent such Person was not a “Borrower” as of the Closing Date) and the applicable Substitute Property (and any exceptions to such representations and warranties shall be specified in an exhibit to such Officer’s Certificate and shall be reasonably acceptable to Lender) and (ii) such Property Substitution does not result in a Material Adverse Effect;

 

(vi)              the acquisition of the applicable Substitute Property shall not result in the incurrence of any Indebtedness that is not permitted under the terms of this Agreement, the existence of any liens on any collateral for the Loan that do not constitute not Permitted Encumbrances, or otherwise cause a Default or Event of Default to occur;

 

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(vii)             if the Loan is included in a REMIC Trust, the Loan-to-Value Ratio (as determined by Lender using any commercially reasonable method permitted to a REMIC Trust) shall not exceed 125% immediately after the substitution of the applicable Replaced Property;

 

(viii)            after giving effect to such Property Substitution, the Debt Yield, recalculated to include only income and expense attributable to the remaining Properties (including the applicable Substitute Property, based on operating statements and rent rolls certified as true and correct by an officer of Borrower), shall not be less than the greater of (i) the Closing Date Debt Yield and (ii) the Debt Yield immediately prior to the Property Substitution;

 

(ix)               Lender shall have received reasonably satisfactory environmental reports and engineering reports regarding the applicable Substitute Property showing no structural, environmental or other issues that are not reasonably acceptable to Lender; and, if corrective measures are recommended therein, Borrower shall have deposited into a reserve account with Lender an amount equal to one hundred ten percent (110%) of the amount required to fund such corrective measures;

 

(x)                Lender shall have received an Officer’s Certificate reasonably satisfactory to Lender specifying any and all material unfunded obligations (including, without limitation, unpaid tenant allowances, leasing commissions and free rent) to be paid by Borrower to third parties in connection with the applicable Substitute Property, and, to the extent such amounts exceed the Unfunded Obligations Threshold (defined below), Borrower shall have made a deposit into the Unfunded Obligations Reserve Account in an amount equal to the amount of such obligations in excess of the Unfunded Obligations Threshold, which funds shall be available to Borrower in accordance with the provisions of Section 8.8 hereof to pay for such unfunded obligations at the Substitute Property; for purposes hereof, the “Unfunded Obligations Threshold” shall mean an amount equal to (i) $100,000.00 with respect to an individual Substitute Property and/or (ii) an amount which, when aggregated with all other then outstanding unfunded obligations at all Properties, is equal to $300,000.00;

 

(xi)               Lender shall have received the following, in each case in form and content reasonably satisfactory to Lender: (A) a current rent roll, (B) current results from operations, and (C) such other financial information as Lender shall reasonably request with respect to the applicable Borrower and/or the Property;

 

(xii)              the applicable Individual Borrower shall have executed, acknowledged and delivered to Lender a Security Instrument with respect to each Substitute Property in form and substance of the Security Instruments delivered on the Closing Date with such changes as are required to comply with applicable Legal Requirements and are reasonably acceptable to Lender, and Borrower shall have authorized the filing of (and Lender shall file) applicable Uniform Commercial Code financing statements, in each case with such state-specific modifications as shall be reasonably recommended by counsel admitted to practice in such state and reasonably selected by Lender;

 

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(xiii)             Lender shall have received a Title Insurance Policy in respect of the Substitute Property, listing only Permitted Encumbrances and such other exceptions as are reasonably satisfactory to Lender;

 

(xiv)            A Borrower or a Person that has been added as a “Borrower” in connection with the Property Substitution shall own the fee interest (as opposed to the interest of a ground lessee) of each Substitute Property;

 

(xv)             Lender shall have received a Survey with respect to the Substitute Property showing no encroachments or other issues that are reasonably objectionable to Lender;

 

(xvi)            Lender shall have received evidence reasonably satisfactory to Lender that the Substitute Property is in compliance in all material respects with all applicable zoning requirements which evidence shall be in the form of a reasonably acceptable zoning endorsement to the applicable Title Insurance Policy and a zoning report from a third party consultant acceptable to Lender, and Lender shall have received a copy of all material permits for the use and operation of each Substitute Property and the certificate(s) of occupancy, if required and obtainable, for each Substitute Property;

 

(xvii)           Guarantor shall deliver to Lender a ratification of its obligations under the Guaranty and the Environmental Indemnity, in each case confirming that the Substitute Property will thereafter be a Property for all purposes thereunder and that the Property Substitution does not affect Guarantor’s obligations under the Guaranty and the Environmental Indemnity;

 

(xviii)          Lender shall have received from counsel reasonably satisfactory to Lender legal opinions as to the applicable Borrower, and the Loan Documents delivered in connection with the Property Substitution, that are in form and substance substantially similar to those delivered to Lender on the Closing Date, including a New Non-Consolidation Opinion;

 

(xix)             Lender shall have received from counsel reasonably satisfactory to Lender an opinion that the Property Substitution does not cause a tax to be imposed on the Securitization Vehicle or, if the Securitization Vehicle is a REMIC, an opinion that the Property Substitution does not cause any portion of the Loan to cease to be a “qualified mortgage” within the meaning of section 860G(a)(3) of the Code, and that the Property Substitution does not constitute a “significant modification” of the Loan as such term is defined in the Treasury Regulations Section 1.860G-2(b) if the Loan is included in a REMIC Trust, or if the Loan is included in a grantor trust, as such term is defined in Treasury Regulations Section 1.1001-3;

 

(xx)              Lender shall have received the then-current annual budget with respect to the applicable Substitute Property;

 

(xxi)             Lender shall have received true and complete copies of all Leases in respect of the applicable Substitute Property;

 

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(xxii)            Borrower shall have requested estoppel certificates from each tenant at the Substitute Property on the form heretofore agreed by Lender or on the form set forth in each applicable tenant’s Lease and shall have delivered to Lender true and complete copies of each estoppel certificate received back from any Tenant, which shall at a minimum include estoppel certificates reasonably satisfactory to Lender from tenants comprising at least 70% of gross rental income from such Substitute Property;

 

(xxiii)           Lender shall have received certificates of insurance (on ACORD Form 28, where available) demonstrating insurance coverage in respect of the Substitute Property of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in this Agreement;

 

(xxiv)           if the Property Substitution requires the addition of a Person as a “Borrower” hereunder, such Person shall be a Single Purpose Entity and have executed an assumption agreement in form and substance reasonably satisfactory to Lender assuming all obligations of Borrower under the Loan Documents, and Lender shall have received (A) all documents reasonably requested by Lender relating to the existence of such new Borrower and the due authorization of such new Borrower to assume the obligations of Borrower and to execute and deliver the documents described in this Section 2.8, each in form and substance reasonably satisfactory to Lender, including a certified copy of the applicable resolutions from all appropriate persons, certified copies of the organizational documents of such Person, together with all amendments thereto, and certificates of good standing or existence for such Person issued as of a recent date by its state of organization and each other state where such entity, by the nature of its business, is required to qualify or register, (B) reports of Uniform Commercial Code, credit, tax lien, bankruptcy and judgment searches, in such jurisdictions as Lender shall request, conducted by a nationally recognized search firm with respect to the Substitute Property and such Person and showing no liens, claims or encumbrances against such Person or the Substitute Property that are not reasonably approved by Lender, and (C) all other information reasonably requested by Lender for satisfaction of Lender’s “know-your-customer requirements” with respect to such Person;

 

(xxv)            Borrower shall have obtained a Rating Agency Confirmation from the Rating Agencies with respect the Property Substitution;

 

(xxvi)           Borrower shall have reimbursed Lender for all of its reasonable out of pocket costs and expenses relating to the Property Substitution (including any reasonable and customary fees charged by the Servicer and Rating Agencies in connection with such substitution); and

 

(xxvii)          if such Property Substitution results in the release of the Individual Property owned by ARG 1CBHGNJ001, LLC and/or another Borrower whose tax identification number has been assigned to the Restricted Account and/or the Cash Management Account, Borrower shall have delivered to Lender evidence reasonably acceptable to Lender that each of the Restricted Account and the Cash Management Account have been assigned the tax identification number of a Borrower whose related Individual Property and/or Properties is secured by the Security Instruments after giving effect to such Property Substitution;

 

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(xxviii)         in connection with each Property Substitution, Borrower shall have paid to Lender a fee in an amount equal to $10,000.00 per Individual Property which has been released and replaced with a Substitute Property;

 

(xxix)           Borrower shall have delivered to Lender such other documents, instruments and agreements as Lender may reasonably require relating to such Property Substitution; and

 

(xxx)            Borrower shall give Lender at least forty-five (45) days’ prior written notice of any Property Substitution, identifying the proposed Replaced Property or Replaced Properties, the proposed Substitute Property or Substitute Properties and the proposed date of the Property Substitution (which date may be extended provided that Borrower gives Lender reasonable prior written notice). If such Property Substitution does not occur on such date (as same may have been extended), without duplication of amounts to be paid pursuant to clause (xxvi) above, Borrower shall pay to Lender all reasonable out-of-pocket expenses actually incurred by Lender in connection therewith (including to the extent such Property Substitution does not occur).

 

(b)               Upon the occurrence of any Property Substitution in accordance herewith, Lender shall execute instruments prepared by Borrower and reasonably satisfactory to Lender releasing and discharging each Replaced Property from the liens of, and the applicable Individual Borrower from any obligations under, the Loan Documents subject to obligations stated to survive.

 

Notwithstanding anything to the contrary contained in this Section 2.8, with respect to any Lender approval or similar discretionary rights over any matters contained in this Section 2.8, Lender agrees to use commercially reasonable efforts to promptly respond to requests relating to any such approval or discretionary matters.

 

Section 2.9.         Release of Individual Property. Provided no Event of Default shall have occurred and be continuing (except as expressly permitted otherwise in connection with a Default Release or a Sales Contract Release as set forth below), Borrower shall have the right at any time prior to the Maturity Date to obtain the release (the “Release”) of one or more Individual Properties (each such Individual Property, collectively, the “Released Property”) from the lien of the applicable Security Instrument thereon (and related Loan Documents) and the release of Borrower’s and, to the extent permitted pursuant to the express terms and conditions of the Guaranty, the Environmental Indemnity and this Agreement, Guarantor’s, obligations under the Loan Documents with respect to such Released Property (other than those expressly stated to survive), upon the satisfaction of each of the following conditions precedent:

 

(a)               Borrower shall provide Lender with thirty (30) days (or a shorter period of time if permitted by Lender in its sole discretion) prior written notice of the proposed Release (the date of Lender’s receipt of such notice shall be referred to herein as the “Release Notice Date”);

 

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(b)               Borrower shall submit to Lender, not less than ten (10) days prior to the date of such Release, a release or assignment of lien (and related Loan Documents) and release of obligations under the Loan Documents for the Released Property for execution by Lender. Such release or assignment shall be in a form appropriate in each jurisdiction in which the Released Property is located and shall contain reasonable and customary provisions, if any, protecting the rights of Lender. In addition, Borrower shall provide an Officer’s Certificate certifying that all documentation in connection with such Release (i) is in compliance with all applicable Legal Requirements, (ii) will effect such release in accordance with the terms of this Agreement, and (iii) will not impair or otherwise adversely affect the liens, security interests and other rights of Lender under the Loan Documents not being released (or as to the parties to the Loan Documents and Properties subject to the Loan Documents not being released). Any assignments made by Lender shall be without recourse, representation or warranty by Lender (except Lender shall represent and warrant that (1) it is the holder of the lender’s interest under the Loan Documents, (2) there are no pledges, liens or encumbrances on Lender’s interest being so assigned, (3) the execution and delivery of such assignments has been duly authorized by Lender and (4) the Person signing on behalf of Lender has been duly authorized to execute and delivery such assignments) and comply with all applicable law. Notwithstanding the foregoing, Lender and Borrower will cooperate in implementing different requirements or procedures on such an assignment of the Security Instrument to the extent (but only to the extent) necessary to accommodate any Legal Requirements enacted or interpreted in a new manner subsequent to the date hereof at the time of such release if and to the extent a reasonably prudent Lender would implement such requirements or procedures;

 

(c)               Either (i) the Released Property shall be conveyed to a Person that is not Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor or an Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor or (ii) the Released Property shall be conveyed to a Person that is an Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor provided that in the case of this clause (ii) only Borrower has delivered to Lender (A) a New Non-Consolidation Opinion addressing such conveyance and (B) evidence reasonably satisfactory to Lender that the transfer to such Affiliate of Borrower, any SPE Component Entity, Affiliated Manager and/or Guarantor is on commercially reasonable terms and otherwise complies with Borrower’s obligations pursuant to Article 5 hereof;

 

(d)               As of each of the Release Notice Date and as of the date of consummation of the Release, after giving effect to the release of the lien of the Security Instrument(s) encumbering the Released Property, the Debt Yield with respect to the remaining Individual Properties shall be equal to or greater than the greater of (1) the Debt Yield of all Individual Properties encumbered by the Security Instruments immediately prior to the consummation of the Release and (2) the Closing Date Debt Yield;

 

(e)               Borrower shall (A) partially prepay the Debt in accordance with Section 2.7 hereof in an amount equal to the Release Price for the Released Property (the “Release Amount”), (B) pay any applicable Interest Shortfall due hereunder in connection therewith and (C) pay to Lender the Yield Maintenance Premium to the extent that such prepayment occurs at any time other than during the Open Prepayment Period;

 

(f)                Borrower shall deliver (or cause to be delivered) to Lender an opinion of counsel in form and substance reasonably acceptable to Lender that such Release would not cause a “significant modification” of the Loan, as such term is defined in Treasury Regulations Section 1.860G-2(b);

 

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(g)           If the Released Property is subject to a Master Lease, either (i) Borrower shall modify the applicable Master Lease in a manner reasonably acceptable to Lender to remove the Released Property from the premises demised pursuant to such Master Lease or (ii) cause all other Individual Properties that are subject to the applicable Master Lease to be simultaneously released from the lien of the applicable Security Instrument in accordance with the terms and conditions of this Section 2.9, in each case, in order to prevent a Master Lease which demises any interest in the Property that is collateral for the Loan from demising any property or interests that do not comprise a portion of the Property that is collateral for the Loan;

 

(h)           Notwithstanding anything to the contrary contained herein or in any other Loan Document, if the Loan is included in a REMIC Trust and the Loan-to-Value Ratio (as Borrower shall have established to Lender’s reasonable satisfaction based upon valuations obtained by Borrower at its sole cost and expense using any commercially reasonable valuation method permitted to a REMIC Trust (which may include an existing or updated appraisal or other written determination of value using a commercially reasonable valuation method reasonably satisfactory to Lender)) (expressed as a percentage) exceeds or would exceed 125% immediately after giving effect to the release of the applicable Individual Property, no release under any provision of this Agreement will be permitted unless the principal balance of the Loan is prepaid by an amount not less than the greater of (i) the applicable Release Price for the Released Property or (ii) the least of the following amounts: (A) only if the Released Property is sold to an unrelated Person, the net proceeds of an arm’s length sale of the Released Property to an unrelated Person, (B) the fair market value of the Released Property at the time of the Release and (C) an amount such that the Loan-to-Value Ratio (as so determined by Lender in accordance with the provisions of this clause (h)) after giving effect to the Release of the applicable Released Property is not greater than the Loan-to-Value Ratio immediately prior to such Release, unless Lender receives an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code as a result of the Release (provided, however, that any such prepayment shall be deemed a voluntary prepayment but shall not be subject to the Yield Maintenance Premium or to any other premium or penalty);

 

(i)            If such Release is a Release of the Individual Property owned by ARG 1CBHGNJ001, LLC and/or another Borrower whose tax identification number has been assigned to the Restricted Account and/or the Cash Management Account, Borrower shall have delivered to Lender evidence reasonably acceptable to Lender that each of the Restricted Account and the Cash Management Account have been assigned the tax identification number of a Borrower whose related Individual Property and/or Properties is secured by the Security Instruments after giving effect to such Release; and

 

(j)            Borrower shall pay all reasonable out-of-pocket costs and expenses actually incurred by Lender in connection with the Release, including, without limitation, reasonable legal fees of outside counsel.

 

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In addition, Borrower shall have the right, but not the obligation, to cause the release of any Individual Property (I) in order to cure a Default or an Event of Default related to an Individual Property provided that Lender has delivered a default notice with respect thereto and either (A) such Default or Event of Default was not caused by the intentional acts of Borrower, Guarantor, AFT, or any Affiliate of any of the foregoing, and Borrower has demonstrated in good faith to Lender that it has used commercially reasonable efforts to cure such Default or Event of Default, or (B) such Default or Event of Default relates to an environmental condition existing at an Individual Property (in each case of clause (A) or clause (B), a “Default Release”), or (II) in connection with a Sales Contract Release. In connection with any Default Release or Sales Contract Release, Borrower shall be required to satisfy all conditions set forth in this Section 2.9 (including, without limitation, the payment of the Release Price, any Interest Shortfall and any Yield Maintenance Premium applicable thereto).

 

Notwithstanding anything to the contrary contained in this Section 2.9, the parties hereto hereby acknowledge and agree that after the Securitization of the Loan (or any portion thereof or interest therein), with respect to any Lender approval or similar discretionary rights over any matters contained in this Section 2.9 (any such matter, an “Release Approval Item”), such rights shall be construed such that Lender shall only be permitted to withhold its consent or approval with respect to any Release Approval Item if the same fails to meet the Prudent Lender Standard.

 

Section 2.10.     Withholding and Indemnified Taxes.

 

(a)           Defined Terms. For purposes of this Section 2.10, the term “applicable law” includes FATCA and references to Agent only apply in the event of Syndication pursuant to Section 11.9.

 

(b)           Payments Free of Taxes. Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Section 2.10 Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Section 2.10 Taxes from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Section 2.10 Taxes is an Indemnified Tax, then the sum payable by Borrower to Lender shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

(c)           Payment of Other Taxes by Borrower. Without duplication, Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

 

(d)           Indemnification by Borrower. Borrower shall indemnify each Recipient, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, provided that if such Indemnified Taxes were not correctly or legally imposed or asserted by the relevant Governmental Authority then Borrower shall have the right to recover such amounts or to sue the Governmental Authority therefore for reimbursement thereof and be subrogated to the rights of Lender. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent, on its own behalf or on behalf of a Co-Lender, shall be conclusive absent manifest error.

 

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(e)           Evidence of Payments. As soon as practicable after any payment of Section 2.10 Taxes by Borrower to a Governmental Authority pursuant to this Section 2.10, Borrower shall deliver to Lenders or, following a Syndication, Agent, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to such recipient.

 

(f)            Status of Agent and Lenders.

 

(i)            Any Lender that is entitled to an exemption from or reduction of any Section 2.10 Taxes imposed through withholding with respect to payments made under any Loan Document shall deliver to Borrower and Agent on the Closing Date and at the time or times reasonably requested by Borrower or Agent, such properly completed and executed documentation reasonably requested by Borrower or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements and to satisfy any such requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.10(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii)           Without limiting the generality of the foregoing,

 

(A)any Lender that is a U.S. Person shall deliver to Borrower and Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), whichever of the following is applicable:

 

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(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(ii) executed originals of IRS Form W-8ECI;

 

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the IRS Code, (x) a certificate substantially in the form of Exhibit B-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the IRS Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the IRS Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the IRS Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or

 

(iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit B-2 or Exhibit B-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit B-4 on behalf of each such direct and indirect partner;

 

(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Agent to determine the withholding or deduction required to be made; and

 

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(D)if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRS Code, as applicable), such Lender shall deliver to Borrower and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRS Code) and such additional documentation reasonably requested by Borrower or Agent as may be necessary for Borrower and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(iii)          Agent shall deliver to Borrower, on or prior to the date on which Agent becomes an Agent under this Agreement (and from time to time thereafter upon the reasonable request of Borrower) such properly completed and executed documentation reasonably requested by Borrower as will permit payments to be made under any Loan Document to Agent without withholding. In addition, Agent, if reasonably requested by Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower as will enable Borrower to determine whether or not Agent is subject to information reporting requirements and to satisfy any such requirements. Without limiting the generality of the foregoing, Agent shall deliver to Borrower (A) executed originals of IRS Form W-9 certifying that Agent is exempt from U.S. federal backup withholding tax or (B) executed originals of IRS Form W-8IMY certifying that Agent is acting as a “qualified intermediary” or a “nonqualified intermediary” and accompanied by any required attachments (including certification documents from each beneficial owner). For purposes of this Section 2.10(f)(iii), “Agent” shall mean Agent in its capacity as such and not in any other capacity (such as a Lender).

 

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Agent and each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Agent in writing of its legal inability to do so.

 

(g)           Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Section 2.10 Taxes as to which it has been indemnified pursuant to this Section 2.10 (including by the payment of additional amounts pursuant to this Section 2.10), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Section 2.10 Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Section 2.10 Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund less any Taxes payable by such party with respect to such interest). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a materially less favorable net after-tax position than the indemnified party would have been in if the Section 2.10 Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Section 2.10 Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its tax returns (or any other information relating to its Section 2.10 Taxes that it reasonably deems confidential) to the indemnifying party or any other Person.

 

(h)           Survival. Each party’s obligations under this Section 2.10 shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

ARTICLE 3.

 

REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants as of the Closing Date that:

 

Section 3.1.      Legal Status and Authority. Each Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of formation; (b) is duly qualified to transact business and is in good standing in the State in which such Borrower’s Individual Property is located; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own, operate and lease the applicable Individual Properties. Each Borrower has full power, authority and legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the related Individual Properties pursuant to the terms hereof and to keep and observe all of the terms of this Agreement, the Note, the Security Instruments and the other Loan Documents on Borrower’s part to be performed.

 

Section 3.2.      Validity of Documents. (a) The execution, delivery and performance of this Agreement, the Note, the Security Instruments and the other Loan Documents by Borrower and Guarantor and the borrowing evidenced by the Note and this Agreement (i) are within the power and authority of such parties; (ii) have been authorized by all requisite organizational action of such parties; (iii) have received all necessary approvals and consents, corporate, governmental or otherwise; (iv) will not violate, conflict with, result in a breach of or constitute (with notice or lapse of time, or both) a material default under any provision of law, any order or judgment of any court or Governmental Authority, any license, certificate or other approval required to operate the Properties or any portion thereof, any applicable organizational documents, or any applicable indenture, agreement or other instrument, including, without limitation, the Management Agreement; (v) will not result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of its assets, except the lien and security interest created hereby and by the other Loan Documents; and (vi) will not require any authorization or license from, or any filing with, any Governmental Authority (except for the recordation of each Security Instrument in appropriate land records in each applicable State and UCC financing statements in Delaware), (b) this Agreement, the Note, the Security Instrument and the other Loan Documents have been duly executed and delivered by Borrower and Guarantor and (c) this Agreement, the Note, the Security Instruments and the other Loan Documents constitute the legal, valid and binding obligations of Borrower and Guarantor. The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower or Guarantor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Creditors Rights Laws, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)). Neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim or defense with respect to the Loan Documents.

 

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Section 3.3.      Litigation. There is no action, suit, proceeding or governmental investigation, in each case, judicial, administrative or otherwise, pending or, to the best of Borrower’s knowledge, threatened or contemplated against Borrower or Guarantor or against or affecting any Individual Property or any portion thereof that could reasonably be expected to have a Material Adverse Effect.

 

Section 3.4.       Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which would have a Material Adverse Effect. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which Borrower or the Properties (or any portion thereof) is bound. Borrower has no material financial obligation under any agreement or instrument to which Borrower is a party or by which Borrower or the Properties (or any portion thereof) is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Properties (including, without limitation, obligations under any Ground Lease), and (b) obligations under this Agreement, the Security Instruments, the Note and the other Loan Documents. There is no agreement or instrument to which Borrower is a party or by which Borrower is bound that would require the subordination in right of payment of any of Borrower’s obligations hereunder or under the Note to an obligation owed to another party.

 

Section 3.5.       Financial Condition.

 

(a)           Each Borrower is solvent and each Borrower has received reasonably equivalent value for the granting of the related Security Instrument. No proceeding under Creditors Rights Laws with respect to any Borrower Party has been initiated.

 

(b)           In the last ten (10) years, no (i) petition in bankruptcy has been filed by or against any Borrower Party and (ii) Borrower Party has ever made any assignment for the benefit of creditors or taken advantage of any Creditors Rights Laws.

 

(c)           No Borrower Party is contemplating either the filing of a petition by it under any Creditors Rights Laws or the liquidation of its assets or property and Borrower has no knowledge of any Person contemplating the filing of any such petition against any Borrower Party.

 

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(d)           With respect to any loan or financing in which any Borrower Party or any Affiliate thereof has been directly or directly obligated for or has, in connection therewith, otherwise provided any guaranty, indemnity or similar surety, none of such loans or financings has ever been (i) more than 30 days in default or (ii) transferred to special servicing.

 

Section 3.6.       Disclosure. Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact, in each case of which Borrower has knowledge, that could cause any representation or warranty made herein to be materially misleading.

 

Section 3.7.       No Plan Assets. As of the date hereof and until the Debt is repaid in accordance with the applicable terms and conditions hereof, (a) neither Borrower nor Guarantor is or will be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a “plan” as defined in and subject to Section 4975 of the IRS Code, (b) neither Borrower nor Guarantor is or will be, or be acting on behalf of or with assets of, a “governmental plan” within the meaning of Section 3(32) of ERISA, and (c) none of the assets of Borrower or Guarantor constitutes or will constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. As of the date hereof, none of Borrower, Guarantor, or any member of a “controlled group of corporations” or trade or business treated as a “single employer” together with the Borrower or Guarantor (each within the meaning of Section 414 of the IRS Code), maintains, sponsors or contributes to, or otherwise any liability in respect of a “defined benefit plan” (within the meaning of Section 3(35) of ERISA) or a “multiemployer plan” (within the meaning of Section 3(37)(A) of ERISA).

 

Section 3.8.       Not a Foreign Person. Borrower is not a “foreign person” within the meaning of § 1445(f)(3) of the IRS Code.

 

Section 3.9.      Master Leases. Each Master Lease is in full force and effect, and neither Borrower nor, to Borrower’s knowledge, any other party to a Master Lease is in default beyond applicable notice and cure periods thereunder. No Master Lease demises premises that does not comprise a portion of the Property that is collateral for the Loan.

 

Section 3.10.    Business Purposes. The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

 

Section 3.11.     Borrower’s Principal Place of Business. Each Borrower’s principal place of business and its chief executive office as of the date hereof is 38 Washington Square, Newport, Rhode Island 02840. Each Borrower’s mailing address, as set forth in the opening paragraph hereof or as changed in accordance with the provisions hereof, is true and correct. Each Borrower’s organizational identification number, if any, assigned by the state of its incorporation or organization is as set forth on Schedule I attached hereto. Each Borrower’s federal tax identification number is as set forth on Schedule I attached hereto. No Borrower is subject to back-up withholding taxes.

 

Section 3.12.    Status of Property.

 

(a)           Borrower has obtained all Permits if any are required for the operation of Borrower’s business, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification.

 

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(b)           Except as set forth in the Zoning Reports and the Environmental Reports, each Individual Property and the present and contemplated use and occupancy thereof are in full compliance with all applicable zoning ordinances, building codes, land use laws, Environmental Laws and other similar Legal Requirements.

 

(c)           Each Individual Property is served by all utilities required for the current or contemplated use thereof. All utility service is provided by public utilities and each Individual Property has accepted or is equipped to accept such utility service.

 

(d)           All public roads and streets necessary for service of and access to each Individual Property for the current or contemplated use thereof have been completed, are serviceable and all-weather and are physically and legally open for use by the public. Each Individual Property has either direct access to such public roads or streets or access to such public roads or streets by virtue of an easement or similar agreement inuring in favor of Borrower and any subsequent owners of the applicable Individual Property.

 

(e)           Each Individual Property is served by public water and sewer systems and/or individual well water and septic systems.

 

(f)            Each Individual Property is free from damage caused by fire or other casualty. Except as disclosed in the applicable Physical Condition Report, each Individual Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects, subject to reasonable wear and tear; there exists no structural or other material defects or damages in any Individual Property, whether latent or otherwise, and Borrower has not received written notice from any insurance company or bonding company of any defects or inadequacies in any Individual Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.

 

(g)           All costs and expenses of any and all labor, materials, supplies and equipment used in the construction of the Improvements have been paid in full. Except as shown on the Title Insurance Policies, there are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under applicable Legal Requirements could give rise to any such liens) affecting any Individual Property which are or may be prior to or equal to the lien of the related Security Instrument.

 

(h)           Borrower has paid in full for, and is the owner of, all furnishings, fixtures and equipment (other than Tenants’ property) used in connection with the operation of the Properties, free and clear of any and all security interests, liens or encumbrances, except the lien and security interest created by this Agreement, the Note, the Security Instruments and the other Loan Documents.

 

(i)            Except as shown in the Physical Condition Reports and/or the Environmental Reports, all liquid and solid waste disposal, septic and sewer systems located on each Individual Property are in a good and safe condition and repair and in compliance with all Legal Requirements.

 

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(j)            Except as shown on the Survey, no portion of the Improvements is located in an area identified by the Federal Emergency Management Agency or any successor thereto as an area having special flood hazards pursuant to the Flood Insurance Acts. Except as shown on the Survey, no part of any Individual Property consists of or is classified as wetlands, tidelands or swamp and overflow lands.

 

(k)           Except as set forth in the Title Insurance Policies or the Survey, all the Improvements lie within the boundaries of the Land and any building restriction lines applicable to the Land.

 

(l)            To Borrower’s knowledge after due inquiry, there are no pending or proposed special or other assessments for public improvements or otherwise affecting any Individual Property, nor are there any contemplated improvements to any Individual Property that could reasonably be expected to result in such special or other assessments.

 

(m)          Except for certain striping of parking spaces as set forth in the Post Closing Agreement, Borrower has not (i) made, ordered or contracted for any construction, repairs (other than Minor Repairs existing as of the Closing Date), alterations or improvements to be made on or to any Individual Property which have not been completed and paid for in full, (ii) ordered materials for any such construction, repairs, alterations or improvements which have not been paid for in full or (iii) attached any fixtures to any Individual Property which have not been paid for in full. Except for certain striping of parking spaces as set forth in the Post Closing Agreement, (x) there is no such construction, repairs, alterations or improvements ongoing at any Individual Property as of the Closing Date (other than Minor Repairs existing as of the Closing Date) and (y) there are no outstanding or disputed claims for any Work Charges and there are no outstanding liens or security interests in connection with any Work Charges.

 

(n)           No Borrower has any direct employees.

 

Section 3.13.    Financial Information. All financial data, including, without limitation, the balance sheets, statements of cash flow, statements of income and operating expense and rent rolls, that have been delivered to Lender in respect of Borrower, Guarantor and/or each Individual Property (a) are true, complete and correct in all material respects as of the date set forth on each item of financial data, (b) accurately represent the financial condition of Borrower, Guarantor or such Individual Property, as applicable, as of the date of such reports, and (c) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with the Approved Accounting Method throughout the periods covered, except as disclosed therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a Material Adverse Effect, except as referred to or reflected in said financial statements. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of Borrower or Guarantor from that set forth in said financial statements.

 

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Section 3.14.    Condemnation. Except as disclosed in writing to Lender with respect to the Individual Property located at 5725 Heisley Road, Mentor, Ohio, the Individual Property located at 2155 Buford Dam Road, Buford, Georgia and the Individual Property located at 6201 Peterson Road, Lake Park, Georgia (which matters will not constitute a Material Adverse Effect), no Condemnation or other proceeding has been commenced or, to Borrower’s knowledge, is threatened or contemplated with respect to all or any portion of any Individual Property or for the relocation of the access to any Individual Property.

 

Section 3.15.    Separate Lots. Each Individual Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is assessed and taxed together with any Individual Property or any portion thereof.

 

Section 3.16.    Insurance. Borrower has obtained and has delivered to Lender certified copies of all Policies (or such other evidence reasonably acceptable to Lender) reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. There are no present claims of any material nature under any of the Policies, and to Borrower’s knowledge, no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.

 

Section 3.17.    Use of Property. Each Individual Property is used exclusively as retail space (including, without limitation, bank branches) and/or commercial office space, industrial space, warehouse space and other appurtenant and related uses.

 

Section 3.18.    Leases and Rent Roll. Except as disclosed in the rent roll for the each Individual Property delivered to, certified to and approved by Lender in connection with the closing of the Loan and attached hereto on Schedule IX hereto (the “Rent Roll”) and except as set forth on Schedule XV attached hereto, (a) each applicable Borrower is the sole owner of the entire lessor’s (or, in the case of the Ground Leases, sub-lessor’s) interest in the Leases; (b) the Leases are valid and enforceable and in full force and effect; (c) all of the Leases are arms-length agreements with bona fide, independent third parties; (d) Borrower has not delivered or received written notice stating, and to Borrower’s knowledge, no party under any Lease is in default under any Lease beyond any applicable notice and cure periods set forth therein; (e) all Rents due have been paid in full (except pursuant to the Deferred Rental Agreements) and no Tenant is in arrears in its payment of Rent (except pursuant to the Deferred Rental Agreements); (f) the terms of all alterations, modifications and amendments to the Leases have been disclosed to Lender in writing; (g) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated except pursuant to the Loan Documents; (h) none of the Rents have been collected for more than one (1) month in advance (except a security deposit shall not be deemed rent collected in advance); (i) the premises demised under the Leases have been completed, all improvements, repairs, alterations or other work required to be furnished on the part of Borrower under the Leases have been completed, the Tenants under the Leases have accepted the premises demised thereunder and have taken possession of the same on a rent-paying basis and any payments, credits or abatements required to be given by Borrower to the Tenants under the Leases as of the date hereof have been made in full; (j) Borrower has not received written notice from Tenant asserting, and to Borrower’s knowledge there exist no, offsets or defenses to the payment of any portion of the Rents, and, other than the Unfunded Obligations, Borrower has no monetary obligation to any Tenant under any Lease; (k) Borrower has not received written notice from any Tenant challenging the validity or enforceability of any Lease; (l) there are no agreements with the Tenants under the Leases other than expressly set forth in each Lease; (m) except as set forth on Schedule VII hereto, no Tenant is entitled to any free rent, rent credits or other monetary credits or other similar monetary obligations of landlord under the applicable Lease to such Tenants; (n) no Lease contains an option to purchase, right of first refusal to purchase, right of first offer to purchase or other similar provision that applies to a foreclosure of any Individual Property, a deed-in-lieu of foreclosure with respect to any Individual Property or any other exercise of Lender’s rights and remedies hereunder and under the other Loan Documents; (o) no Person has any possessory interest in, or right to occupy, any Individual Property except under and pursuant to a Lease; (p) all security deposits relating to the Leases are reflected on the Rent Roll and have been collected by Borrower; (q) no brokerage commissions or finders fees are due and payable regarding any Lease; (r) each Tenant is in actual, physical occupancy of the premises demised under its Lease; (s) to Borrower’s knowledge, there are no actions or proceedings (voluntary or otherwise) pending against any Tenants or guarantors under Leases, in each case, under bankruptcy or similar insolvency laws or regulations; (t) no event exists which gives any Tenant the right to cease operations at its leased premises (i.e., “go dark”), terminate its Lease or pay reduced or alternative Rent to Borrower under any of the terms of such Lease, such as a co-tenancy provision, and (u) the Deferred Rental Agreements will not result in a Material Adverse Effect.

 

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Section 3.19.    Filing and Recording Taxes. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of this Agreement, the Security Instruments, the Note and the other Loan Documents have been paid or will be paid, and, under current Legal Requirements, the Security Instruments and the other Loan Documents are enforceable in accordance with their terms by Lender (or any subsequent holder thereof), except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Creditors Rights Laws, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 3.20.    Management Agreement. Each Management Agreement is in full force and effect and there is no default thereunder after expiration of applicable notice and cure periods by any party thereto and, to Borrower’s knowledge, no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder. As of the date hereof, no management fees under the Management Agreement are due and payable.

 

Section 3.21.     Illegal Activity/Forfeiture.

 

(a)           No portion of any Individual Property has been or will be purchased, improved, equipped or furnished by Borrower with proceeds of any illegal activity and to Borrower’s knowledge, there are no illegal activities or activities relating to controlled substances at any Individual Property.

 

(b)           There has not been committed by Borrower or its Affiliates or, to Borrower’s knowledge, by any other Person in occupancy of or involved with the operation or use of any Individual Property and there shall never be committed by Borrower or its Affiliates, any act or omission affording the federal government or any state or local government the right of forfeiture as against such Individual Property or any part thereof or any monies paid in performance of Borrower’s obligations under this Agreement, the Note, the Security Instruments or the other Loan Documents. Borrower hereby covenants and agrees not to commit any act or omission affording such right of forfeiture.

 

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Section 3.22.     Taxes. Borrower has filed all federal, state, county, municipal, and city income, personal property and other tax returns required to have been filed by it as of the date hereof and has paid all taxes and related liabilities which have become due and payable on or prior to the date hereof pursuant to such returns or pursuant to any assessments received by it. Borrower has no actual knowledge of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

 

Section 3.23.    Permitted Encumbrances. None of the Permitted Encumbrances, individually or in the aggregate, materially and adversely affects the value or marketability of any Individual Property, materially impairs the use or the operation of any Individual Property or materially impairs Borrower’s ability to pay and/or perform its obligations in a timely manner.

 

Section 3.24.    Third Party Representations. Each of the representations and the warranties made by Guarantor in the other Loan Documents (if any) are true, complete and correct in all material respects.

 

Section 3.25.    Non-Consolidation Opinion Assumptions. All of the factual assumptions made in the Non-Consolidation Opinion, including, but not limited to, any exhibits attached thereto and/or certificates delivered in connection therewith, are true, complete and correct in all material respects.

 

Section 3.26.    Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement, the Security Instruments, the Note or the other Loan Documents.

 

Section 3.27.    Investment Company Act. Borrower is not (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

 

Section 3.28.    Fraudulent Conveyance. Borrower (a) has not entered into the Loan or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (b) received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan Documents, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of Borrower’s assets is and will, immediately following the execution and delivery of the Loan Documents, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the execution and delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).

 

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Section 3.29.    Embargoed Person. As of the date hereof, (a) none of the funds or other assets of any Borrower Party or any Affiliated Manager constitute property of, or are beneficially owned, directly or indirectly, by any Person or government that is subject to trade restrictions or economic sanctions under U.S. law, including, but not limited to, the Patriot Act (including the anti-terrorism provisions thereof), the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder including those related to Specially Designated Nationals and Specially Designated Global Terrorists, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan made by the Lender is in violation of law (including, without limitation, Executive Order 13224 issued on September 24, 1001) with the result that transactions involving or the investment in any such Borrower Party or any such Affiliated Manager (whether directly or indirectly) is prohibited by applicable law or the Loan made by Lender is in violation of applicable law (“Embargoed Person”); (b) none of the funds or other assets of any Borrower Party or any Affiliated Manager constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person; (c) no Embargoed Person has any interest of any nature whatsoever in any Borrower Party or any Affiliated Manager, with the result that transactions involving or the investment in any such Borrower Party (whether directly or indirectly), is prohibited by applicable law or the Loan is in violation of applicable law; and (d) none of the funds of any Borrower Party or any Affiliated Manager have been derived from, or are the proceeds of, any unlawful activity with the result that transactions involving or the investment in any such Borrower Party or any such Affiliated Manager (whether directly or indirectly), is prohibited by applicable law or the Loan is in violation of applicable law; provided, that, the representations and warranties above are made only to Borrower’s knowledge with respect to the direct and/or indirect ownership of any shares of stock in AFT that are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange. Any violation of the foregoing shall, at Lender’s option, constitute an Event of Default hereunder.

 

Section 3.30.    OFAC Compliance. No Borrower nor Guarantor nor any partner or officer, director or employee of any Borrower or Guarantor nor member of such partner nor any other owner of a direct or indirect interest in any Borrower or Guarantor (a) is listed on any Government Lists, (b) is a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (c) has been previously indicted for or convicted of any felony involving any Patriot Act Offense, (d) has engaged in any activity or conduct that would breach any Anti-Corruption Laws or Anti-Money Laundering Laws, (e) is currently under investigation by any Governmental Authority for alleged criminal activity relating to OFAC, Patriot Act Offenses, Anti-Corruption Laws or Anti-Money Laundering Laws, or (f) is a Sanctioned Person. Each Borrower has instituted and maintains policies and procedures designed to cause compliance with Anti-Corruption Laws and Anti-Money Laundering Laws. No part of the proceeds of the Loan will be used, directly or indirectly, in violation of Sanctions or for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended; provided, that, the representations and warranties above are made only to Borrower’s knowledge with respect to the direct and/or indirect ownership of any shares of stock in AFT that are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange.

 

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Section 3.31.    Organizational Chart. The organizational chart attached as Schedule III hereto (the “Organizational Chart”), relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and as of the date hereof.

 

Section 3.32.    Bank Holding Company. Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.

 

Section 3.33.     Ground Lease Representations.

 

(a)           (i) Each Ground Lease is in full force and effect and has not been modified or amended in any manner whatsoever except by amendment previously provided to Lender, (ii) there are no defaults under any Ground Lease by Borrower, or, to Borrower’s knowledge, the applicable landlord thereunder, and, to the best of Borrower’s knowledge, no event has occurred which but for the passage of time, or notice, or both would constitute a default under any Ground Lease, (iii) all rents, additional rents and other sums due and payable under each Ground Lease have been paid in full, (iv) neither Borrower nor the landlord under any Ground Lease has commenced any action or given or received any notice terminating any Ground Lease, (v) each Fee Owner, as debtor in possession or by a trustee for such Fee Owner, has not given any notice of, and Borrower has not consented to, any attempt to transfer any Fee Estate free and clear of the Ground Lease under section 363(f) of the Bankruptcy Code, and (vi) to Borrower’s knowledge, each Fee Owner under each Ground Lease is not subject to any voluntary or involuntary bankruptcy, reorganization or insolvency proceeding and the applicable Fee Estate under each Ground Lease is not an asset in any voluntary or involuntary bankruptcy, reorganization or insolvency proceeding;

 

(b)           Each Ground Lease or a memorandum thereof has been duly recorded, each Ground Lease permits the interest of the lessee thereunder to be encumbered by the related Security Instrument and does not restrict the use of the related Individual Property by such lessee, its successors or assigns in a manner that would adversely affect the security provided by the related Security Instrument and there has not been any modifications, amendments or other changes in the terms of any Ground Lease since its recordation other than those that have been previously provided to Lender;

 

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(c)              Except as indicated in the related Title Insurance Policy, the applicable Borrower’s interest in each Ground Lease is not subject to any lien superior to, or of equal priority with, the related Security Instrument;

 

(d)              Each Ground Lease itself provides and/or the related Fee Owner has agreed in a writing for the benefit of Lender, its successors and assigns that such Ground Lease may not be amended, modified, canceled, surrendered or terminated without the prior written consent of Lender and that any such action without such consent is not binding on Lender, its successors or assigns;

 

(e)               Borrower’s interest in each Ground Lease is assignable upon notice to, but without the consent of, the related Fee Owner and, in the event that it is so assigned, it is further assignable upon notice to, but without the need to obtain the consent of, the related Fee Owner;

 

(f)               Each Ground Lease requires the related Fee Owner to give notice of any default by Borrower to Lender and each Ground Lease further provides that notice of default or termination given under such Ground Lease is not effective against Lender unless a copy of the notice has been delivered to Lender in the manner described in such Ground Lease, and requires that the related Fee Owner will supply an estoppel certificate to Lender in form and substance acceptable to Lender;

 

(g)              Lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of Borrower under each Ground Lease) to cure any default under such Ground Lease, which is curable after the receipt of notice of any default before the related Fee Owner may terminate such Ground Lease;

 

(h)              Each Ground Lease has a term which extends not less than twenty (20) years beyond the Maturity Date (including any extensions thereof in accordance with the terms and conditions of this Agreement);

 

(i)               Each Ground Lease requires the related Fee Owner to enter into a new lease upon termination of such Ground Lease for any reason, including rejection of such Ground Lease in a bankruptcy proceeding;

 

(j)               Under the terms of each Ground Lease and the applicable Loan Documents, taken together, any Net Proceeds will be applied either to the Restoration of all or part of the related Individual Property, with Lender or a trustee appointed by Lender having the right to hold and disburse such Net Proceeds as the Restoration progresses, or to the payment of the outstanding principal balance of the Loan together with any accrued interest thereon; and

 

(k)              Each Ground Lease does not impose restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender.

 

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Section 3.34.       Property Document Representations.

 

(a)               With respect to each Property Document, Borrower hereby represents that (a) each Property Document is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth herein or as set forth in an amendment provided to Lender prior to the date hereof), (b) to Borrower’s knowledge, there are no defaults beyond any applicable notice and cure periods under any Property Document by any party thereto and, to Borrower’s knowledge, no event has occurred which, but for the passage of time, the giving of notice, or both, would constitute a default under any Property Document, and (c) no party to any Property Document has commenced any action or given or received any notice for the purpose of terminating any Property Document.

 

Section 3.35.       No Change in Facts or Circumstances; Disclosure.

 

(a)               As of the date hereof, there has been no material adverse change in any condition, fact, circumstance or event that would make any written financial information provided to Lender inaccurate, incomplete or otherwise misleading in any material respect or that otherwise have a Material Adverse Effect.

 

(b)               Borrower agrees that, unless expressly provided otherwise, all of the representations and warranties of Borrower set forth in this Article 3 and elsewhere in this Agreement and the other Loan Documents shall survive for so long as any portion of the Debt remains owing to Lender. All representations, warranties, covenants and agreements made in this Agreement and in the other Loan Documents shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

 

Section 3.36.       Condominium.

 

(a)               To Borrower’s knowledge, the Condominium Documents are in full force and effect, and each Condominium is validly existing under the applicable Condominium Act.

 

(b)               Borrower has not received written notice that either the DaVita Baltimore Borrower or the Conway NH Borrower is in default under the applicable Condominium Documents.

 

(c)               All Condominium Common Charges payable by each of the DaVita Baltimore Borrower and the Conway NH Borrower have been paid to the extent they are payable on or prior to the date hereof.

 

(d)              Borrower has no right to appoint any voting members of any applicable Condominium board or any officers of any applicable Condominium.

 

Section 3.37.      Waived Tax Deposit Properties. Borrower represents and warrants that the applicable Tenant is responsible for the full payment of Taxes with respect to each Waived Tax Deposit Property.

 

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ARTICLE 4.

 

BORROWER COVENANTS

 

From the date hereof and until payment and performance in full of all obligations of Borrower under this Agreement, the Security Instruments, the Note and the other Loan Documents or the earlier release of the lien of the Security Instruments (and all related obligations) in accordance with the terms of this Agreement, the Security Instrument, the Note and the other Loan Documents, each Borrower hereby covenants and agrees with Lender that:

 

Section 4.1.         Existence. Each Borrower will continuously maintain (a) its existence and shall not dissolve or permit its dissolution, (b) its rights to do business in the State and (c) its franchises and trade names, if any.

 

Section 4.2.         Legal Requirements.

 

(a)               Borrower shall promptly comply and shall cause each Individual Property to comply with all Legal Requirements affecting such Individual Property or the use thereof (which such covenant shall be deemed to (i) include Environmental Laws and (ii) require Borrower to keep all Permits required for the ownership, operation, leasing or maintenance of the Individual Property in full force and effect).

 

(b)               Intentionally omitted.

 

(c)               Borrower shall give prompt notice to Lender of the receipt by Borrower of any notice related to a violation of any applicable Legal Requirements and of the commencement of any proceedings or investigations by any Governmental Authority for violation by an Individual Property or Borrower of any applicable Legal Requirements.

 

(d)               Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower or any Individual Property or any alleged violation of any Legal Requirement, provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted, if applicable, under and be conducted in accordance with the provisions of any instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be permitted by and conducted in accordance with all applicable Legal Requirements; (iii) neither the applicable Individual Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost as a result of such contest by Borrower; (iv) Borrower shall promptly upon final determination thereof comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement determined by the proceeding to have been violated; (v) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower or the applicable Individual Property; (vi) Borrower shall furnish such security as may be required in the proceeding, or if no such security is required, as may be reasonably requested by Lender, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith; and (vii) Borrower provides notice to Lender of such contest within a reasonable time following commencement thereof (which may be simultaneously with the delivery of the next succeeding information delivered pursuant to Section 4.12(a)(i) hereof). Lender may apply any such security or part thereof, as necessary to cause compliance with such Legal Requirement (i) upon not less than ten (10) Business Days written notice to Borrower, when, in the judgment of Lender, the validity, applicability or violation of such Legal Requirement is finally established or (ii) at any time when, in the judgment of Lender, the applicable Individual Property (or any part thereof or interest therein) shall be in imminent danger of being sold, forfeited, terminated, cancelled or lost.

 

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Section 4.3.         Maintenance and Use of Property. Borrower shall cause each Individual Property to be maintained in a good and safe condition and repair, reasonable wear and tear excepted. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property) without the consent of Lender or as otherwise permitted pursuant to Section 4.21 hereof. Subject to Borrower’s ability to release an Individual Property in accordance with Sections 7.4(c) and (d) hereof, Borrower shall perform (or shall cause to be performed) the prompt repair, replacement and/or rebuilding of any part of any Individual Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.14 hereof and shall complete and pay for (or cause the completion and payment for) any structure at any time in the process of construction or repair on the Land. Borrower shall operate each Individual Property for the same category of uses as such Individual Property is currently operated (e.g., retail, commercial office, etc.) and Borrower shall not, without the prior written consent of Lender, (i) change the use of any Individual Property or (ii) initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of any Individual Property or any part thereof. If under applicable zoning provisions the use of all or any portion of any Individual Property is or shall become a nonconforming use, Borrower will not cause and, subject to the terms of the applicable Lease, will use commercially reasonable efforts to not permit Tenants to cause a nonconforming use to be discontinued or the nonconforming Improvement to be abandoned without the express written consent of Lender.

 

Section 4.4.         Waste. Borrower shall not commit or suffer any waste of any Individual Property or make any change in the use of any Individual Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of such Individual Property, or take any action that could reasonably be expected to invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way impair the value of such Individual Property or the security for the Loan. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of any Individual Property, regardless of the depth thereof or the method of mining or extraction thereof.

 

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Section 4.5.         Taxes and Other Charges.

 

(a)               Subject to Section 4.5(b), Borrower shall pay (or cause to be paid) all Taxes and Other Charges now or hereafter levied or assessed or imposed against each Individual Property or any part thereof as the same become due and payable (except with respect to any Waived Tax Deposit Property whenever there is not a Borrower Tax Period with respect to such Waived Tax Deposit Property); provided, however, prior to the occurrence and continuance of an Event of Default, Borrower’s obligation to directly pay Taxes shall be suspended for so long as Borrower complies with the terms and provisions of Section 8.6 hereof. Except with respect to the Waived Tax Deposit Properties whenever there is not a Borrower Tax Period with respect to such Waived Tax Deposit Property, Borrower shall furnish to Lender receipts for the payment of the Taxes and the Other Charges prior to the date the same shall become delinquent (provided, however, that Borrower is not required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Lender pursuant to Section 8.6 hereof). Subject to Section 4.5(b), Borrower shall not suffer and shall promptly cause to be paid and discharged any lien or charge relating to or arising from Taxes or Other Charges which may be or become a lien or charge against any Individual Property (or any portion thereof) (except with respect to any Waived Tax Deposit Property whenever there is not a Borrower Tax Period with respect to such Waived Tax Deposit Property), and shall promptly pay for all utility services provided to each Individual Property (or any portion thereof) (except with respect to those Properties with Leases that require the Tenants to pay such utility services). Borrower shall use commercially reasonable efforts to cause the Tenant with respect to any Waived Tax Deposit Property (whenever there is not a Borrower Tax Period with respect to such Waived Tax Deposit Property) to pay and discharge any lien or charge relating to or arising from Taxes or Other Charges which may be or become a lien or charge against such Waived Tax Deposit Property (or portion thereof) (whenever there is not a Borrower Tax Period with respect to such Waived Tax Deposit Property) and shall use commercially reasonable efforts to cause each Tenant with respect to each of those Properties with Leases that require the Tenants to pay such utility services to promptly pay all utility services provided to each such Property.

 

(b)               Borrower, at its own expense, may contest (or permit to be contested) by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes or Other Charges, provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be permitted by and conducted in accordance with all applicable Legal Requirements; (iii) neither the applicable Individual Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost as a result of such contest of any such Taxes or Other Charges; (iv) Borrower shall promptly upon final determination thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of such contested Taxes or Other Charges from the applicable Individual Property; (vi) Borrower shall furnish such security as may be required in the proceeding, or deliver to Lender such reserve deposits as may be reasonably requested by Lender, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon, if applicable; and (vii) Borrower provides notice to Lender of such contest within a reasonable time following commencement thereof (which may be simultaneously with the delivery of the next succeeding information delivered pursuant to Section 4.12(a)(i) hereof). Lender may pay over any such cash deposit or part thereof held by Lender to the claimant entitled thereto (i) upon not less than ten (10) Business Days written notice to Borrower, when, in the reasonable judgment of Lender, the entitlement of such claimant is established or (ii) at any time when, in the judgment of Lender, the applicable Individual Property (or part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, canceled or lost or there shall be any danger of the lien of the Security Instrument being primed by any related lien. In addition, to the extent any Tenant has the right pursuant to the applicable Lease to contest Taxes, Borrower shall be permitted to permit the applicable Tenant to contest Taxes in a manner permitted pursuant to the applicable Lease and in accordance with applicable Legal Requirements regardless of whether any Event of Default is continuing, and Borrower may execute such documents as are reasonably required in connection with the foregoing.

 

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Section 4.6.         Litigation. Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower which could reasonably be expected to have a Material Adverse Effect.

 

Section 4.7.         Access to Property. Subject to the rights of Tenants and applicable Legal Requirements and compliance with any guidelines (whether or not having the authority of law) issued by any governmental or quasi-governmental agency, including, without limitation, the Center for Disease Control) regarding health and safety, Borrower shall permit agents, representatives and employees of Lender to inspect each Individual Property or any part thereof at reasonable hours upon reasonable advance notice.

 

Section 4.8.         Notice of Default. Borrower shall promptly advise Lender of any material adverse change in Borrower’s and/or Guarantor’s financial condition or of the occurrence of any Event of Default of which Borrower has knowledge.

 

Section 4.9.         Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which could reasonably be expected in any way to adversely affect the rights of Lender hereunder or any rights obtained by Lender under any of the Note, the Security Instruments or the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

 

Section 4.10.      Performance by Borrower. Borrower hereby acknowledges and agrees that Borrower’s observance, performance and fulfillment of each and every material covenant, term and provision to be observed and performed by Borrower under this Agreement, the Security Instruments, the Note and the other Loan Documents is a material inducement to Lender in making the Loan.

 

Section 4.11.       Environmental Remediation.

 

(a)               Borrower shall (i) perform or cause the performance of the environmental investigation and/or Remediation (as defined in the Environmental Indemnity) work at the Properties as set forth on Schedule VI hereto in the manner and in accordance with the time frames (if any) set forth on Schedule VI hereto and (ii) complete or cause the completion of any further investigation and/or Remediation work determined to be legally required and/or necessary and appropriate by an environmental consultant or engineer reasonably satisfactory to Lender based on the investigation and remediation activities set forth on Schedule VI; provided all work performed pursuant to each of the preceding clauses (i) and (ii), shall be performed in compliance with all Environmental Laws (as defined in the Environmental Indemnity) and other applicable Legal Requirements and to the extent necessary and appropriate in order for the Borrower to obtain or otherwise produce written documentation of regulatory closure from an applicable Governmental Authority with jurisdiction over such investigation and remediation in form and substance reasonably satisfactory to Lender, documenting the completion of such investigation and/or remediation such that no further action under any applicable Legal Requirements is required to protect human health and safety with respect to the identified environmental conditions in order to comply with applicable Environmental Laws (provided, however, in the event that it is not the custom or practice of the Governmental Authority to oversee such work or to issue such letter or documentation under such circumstances, such requirement shall be deemed satisfied by delivery of documentation in form and substance reasonably satisfactory to Lender from an environmental consultant or engineer reasonably acceptable to Lender evidencing completion of such work and concluding that no further action is required to protect human health and safety with respect to the identified environmental conditions in compliance with Environmental Laws and consistent with applicable regulatory requirements) (all such environmental investigation and/or Remediation work are hereinafter referred to as the “Environmental Remediation”). Borrower shall complete each of the Environmental Remediation on or before the respective deadline, if any, for each item of environmental investigation and Remediation work as set forth on Schedule VI hereto.

 

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(b)               Borrower shall provide Lender with copies of the reports and other results of the Environmental Remediation promptly after Borrower receives such reports and results and Lender shall be entitled to rely on such reports and other results. Borrower shall promptly notify Lender of any material change in the scope, anticipated duration, timing or cost of the Environmental Remediation.

 

Section 4.12.       Books and Records.

 

(a)               Borrower shall furnish to Lender:

 

(i)           quarterly certified rent rolls for each Individual Property and sales reports with respect to each Individual Property (to the extent provided by the Tenants with respect to such Individual Property), in each instance within sixty (60) days after the end of each calendar quarter;

 

(ii)          within sixty (60) days after the end of each calendar quarter, (A) with respect to Borrower, a quarterly balance sheet (which shall (I) not include any Person other than Borrower and (II) shall show each Borrower individually and on a combined, aggregate basis), (B) a quarterly operating statement (showing both each Individual Property individually and all Individual Properties in the aggregate), in each case, detailing the revenues received, the expenses incurred and the components thereof (i.e. Gross Rents, Operating Income and Operating Expenses) and major capital improvements for the period of calculation and containing appropriate monthly, quarterly and year-to-date information, and (C) with respect to Guarantor, the quarterly consolidated financial statements of AFT, which financial statements shall be (I) prepared on an unaudited basis, in form substantially similar to those previously delivered by AFIN to Lender and which shall include Guarantor’s statement of net worth, and (II) certified by Guarantor or AFIN to Lender as true and correct in all material respects;

 

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(iii)         (A) within one hundred five (105) days after the close of each fiscal year of Borrower, (I) with respect to Borrower, an annual balance sheet (which shall (x) not include any Person other than Borrower and (y) shall show each Borrower individually and on a combined, aggregate basis), (II) an annual operating statement (showing both each Individual Property individually and all Individual Properties in the aggregate), in each case, detailing the revenues received, the expenses incurred and the components thereof (i.e. Gross Rents, Operating Income and Operating Expenses) and major capital improvements for the period of calculation and containing appropriate monthly, quarterly and year-to-date information, and (III) with respect to Guarantor, the annual consolidated financial statements of AFIN, which financial statements shall (w) be prepared on an audited basis, in form substantially similar to those previously delivered by AFIN to Lender and which shall include Guarantor’s balance sheet, statement of net worth and, if available, cash flows for all Individual Properties and entities constituting Borrower, (x) with respect to AFIN’s annual financial statements, be prepared and audited by AFIN’s independent certified public accountants (which accountants shall be reasonably acceptable to Lender), (y) be certified by Guarantor or AFIN to Lender as true and correct in all material respects, and (z) contain such backup and/or supporting information as may be reasonably requested by Lender, and (B) within one hundred twenty (120) days after the close of each fiscal year of Borrower, annual financial statements with respect to Borrower prepared and audited by a “Big Four” public accounting firm or other independent certified public accounting firm reasonably acceptable to Lender (which shall (x) not include any Person other than Borrower and (y) shall show each Borrower individually and on a combined, aggregate basis), including an annual operating statement (showing both each Individual Property individually and all Individual Properties in the aggregate), in each case, detailing the revenues received, the expenses incurred and the components thereof (i.e. Gross Rents, Operating Income and Operating Expenses) and major capital improvements for the period of calculation and containing appropriate monthly, quarterly and year-to-date information;

 

(iv)         upon the occurrence and during the continuance of a Trigger Period, an annual operating budget for the current calendar year presented on a monthly basis for each Individual Property, including cash flow projections for the current year and all proposed capital replacements and improvements and upon the occurrence and during the continuance of a Trigger Period, by no later than December 1 of each calendar year, an annual operating budget for the next succeeding calendar year presented on a monthly basis for each Individual Property, including cash flow projections for the upcoming year and all proposed capital replacements and improvements, which such budgets, in each instance, shall not take effect until approved by Lender, such approval not be unreasonably withheld (after such approval has been given in writing, each such approved budget shall be referred to herein, individually or collectively (as the context requires), as the “Approved Annual Budget”). Lender shall in good faith endeavor to approve each proposed budget (and any revisions thereof) within ten (10) Business Days after Lender’s receipt thereof or, if Lender does not approve of such proposed budget, provide Borrower with a reasonably detailed explanation as to its objections. Until such time that Lender approves a proposed annual budget that requires Lender approval pursuant to this paragraph (iv), (1) to the extent that an Approved Annual Budget does not exist for the immediately preceding calendar year, the budget provided to Lender for informational purposes shall apply, provided that the same shall be adjusted to reflect actual increases in Taxes, Insurance Premiums, rent due under Ground Leases and utilities expenses and (2) to the extent that an Approved Annual Budget exists for the immediately preceding calendar year, such Approved Annual Budget shall apply to the then current calendar year; provided, that such Approved Annual Budget shall be adjusted to reflect (A) actual increases in Taxes, Insurance Premiums, rent due under Ground Leases and utilities expenses, (B) actual increases in other Non-Discretionary Expenses not covered by the preceding clause (A), and (C) other operating expenses and capital expenses provided that such additional operating expenses and capital expenses described in this clause (C) do not result in an increase in the overall budgeted expenses of more than five percent (5%) of the total budgeted expenses set forth in the annual budget or Approved Annual Budget, as applicable, for the preceding year;

 

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(v)          by no later than thirty (30) days after and as of the end of each calendar month during the period prior to Securitization (if required by Lender), and thereafter by no later than thirty (30) days after and as of the end of each calendar quarter, a calculation of the then current Debt Yield, together with such back-up information as Lender shall reasonably require with respect to such calculation of the Debt Yield. Without limiting any requirements of this Section 4.12 or any right of Lender to request additional information in accordance with the terms of this Agreement, the calculation of the Debt Yield to be delivered by Borrower pursuant to this Section 4.12(a)(v) shall be in substantially the form of Schedule XIX attached hereto.

 

(vi)         by no later than thirty (30) days after and as of the end of each calendar month during the period prior to Securitization (if required by Lender) or during the continuance of a Trigger Period or an Event of Default, monthly financial statements (except for the month of January and the last month of each calendar quarter) and rent rolls.

 

(b)               Upon request from Lender (which request shall not be made more than two (2) times in any calendar year unless an Event of Default shall have occurred and is continuing), Borrower shall furnish (or make available) in a timely manner to Lender:

 

(i)           an accounting of all security deposits held in connection with any Lease of any part of any Individual Property, including the name and identification number of the accounts in which such security deposits are held, the name and address of the financial institutions in which such security deposits are held and the name of the Person to contact at such financial institution; and

 

(ii)          evidence reasonably acceptable to Lender of compliance with the terms and conditions of Articles 5 and 9 hereof.

 

(c)               Borrower shall, within ten (10) Business Days of request, furnish Lender (and shall cause Guarantor to furnish to Lender) with such other additional financial or management information (including State and Federal tax returns) as may, from time to time, be reasonably requested by Lender if Borrower and/or Guarantor prepare the same in the ordinary course or the same are reasonably obtainable using systems of Borrower and/or Guarantor that are currently in place. Borrower shall furnish to Lender and its agents space for the examination and audit of any such books and records.

 

(d)               Borrower agrees that (i) Borrower shall keep adequate books and records of account and (ii) all Required Financial Items (defined below) to be delivered to Lender pursuant to Section 4.12 shall: (A) be complete and correct; (B) present fairly the financial condition of the applicable Person; (C) disclose all liabilities that are required to be reflected or reserved against; and (D) be prepared (1) in a manner which is consistent with the manner in which such books and records are maintained and such Required Financial Statements are prepared as of the date of this Agreement or in such other form as may be reasonably acceptable to Lender and certified by a Responsible Officer of Borrower (2) in electronic format and (3) to the extent applicable, in accordance with the Approved Accounting Method. Borrower agrees that all Required Financial Items shall not contain any intentional misrepresentation or omission of a material fact.

 

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(e)               Borrower acknowledges the importance to Lender of the timely delivery of each of the items required by this Section 4.12 and the other financial reporting items required by this Agreement (each, a “Required Financial Item” and, collectively, the “Required Financial Items”). Borrower shall pay to Lender the sum of $2,500.00 per occurrence for each failure by Borrower to deliver any of the Required Financial Items to Lender within ten (10) Business Days after the due date specified herein (a “Reporting Failure”).

 

Section 4.13.       Estoppel Certificates.

 

(a)               After request by Lender, Borrower, within ten (10) Business Days of such request, shall furnish Lender or any proposed assignee with a statement, duly acknowledged and certified, setting forth (i) the original principal amount of the Loan, (ii) the unpaid principal amount of the Loan, (iii) the rate of interest of the Loan, (iv) the terms of payment and maturity date of the Loan, (v) the date installments of interest and/or principal were last paid, (vi) that, except as provided in such statement, no Event of Default exists, (vii) that this Agreement, the Note, the Security Instruments and the other Loan Documents are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification, (viii) whether, to Borrower’s knowledge, any offsets or defenses exist against the obligations secured hereby and, if any are alleged to exist, a detailed description thereof, (ix) that all Leases are in full force and effect and have not been modified or terminated (or if modified or terminated, setting forth all modifications or terminations), (x) the date to which the Rents thereunder have been paid pursuant to the Leases, (xi) whether or not, to the knowledge of Borrower, any of the lessees under the Leases are in default under the Leases, and, if any of the lessees are in default, setting forth the specific nature of all such defaults, (xii) the amount of security deposits held by Borrower under each Lease, and (xiii) as to any other matters reasonably requested by Lender and reasonably related to the obligations created and evidenced hereby and by the Security Instruments or the Properties (or any portion thereof); provided, that, so long as no Event of Default has occurred and is continuing, Borrower shall not be required to deliver such statement to Lender more frequently than once in any twelve month period.

 

(b)               Borrower shall use its commercially reasonable efforts to deliver to Lender, promptly upon request, duly executed estoppel certificates from any one or more Tenants as reasonably required by Lender attesting to such facts regarding the Lease as Lender may reasonably request, including, but not limited to, attestations that each Lease covered thereby is in full force and effect with no defaults beyond applicable notice and cure periods thereunder on the part of any party except only to Tenant’s knowledge as to Borrower defaults (or identifying any defaults beyond applicable notice and cure periods there may be), that none of the Rents have been paid more than one month in advance, except as security, identifying any free rent or other concessions due lessee (if any) and identifying, to Tenant’s knowledge, any defense or offset against the full and timely performance of its obligations under the Lease, provided, that, so long as no Event of Default has occurred and is continuing, Borrower shall not be required to use commercially reasonable efforts to deliver such certificates to Lender more frequently than once in any twelve month period. Notwithstanding the foregoing, if Tenant provides an estoppel in the same form as the one delivered in connection with the closing of the Loan or in a form which complies with the requirements of the applicable Lease, Lender shall accept the same and Borrower shall be deemed to have satisfied the requirements of this subparagraph (b).

 

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(c)               Borrower shall use commercially reasonable efforts to deliver to Lender, within ten (10) Business Days of written request from Lender (or such longer period for delivery of estoppels set forth in such Property Document and/or such Ground Lease), estoppel certificates from each party under any Property Document and/or any Ground Lease in form and substance reasonably acceptable to Lender or in such form required by the applicable Property Document and/or Ground Lease if the applicable Property Document and/or Ground Lease provides a form therefor or in the form delivered in connection with the closing of the Loan, provided that, so long as no Event of Default has occurred and is continuing, Borrower shall not be required to use commercially reasonable efforts to deliver such certificates to Lender more frequently than once in any twelve month period.

 

(d)               Borrower shall use commercially reasonable efforts to deliver to Lender, within thirty (30) days after Lender’s request, an estoppel certificate from the board of directors of the condominium association or other applicable governing body under the Condominium Documents in form and substance reasonably satisfactory to Lender or in such form required under the Condominium Documents; provided that, so long as no Event of Default has occurred and is continuing, Borrower shall not be required to use commercially reasonable efforts to deliver such certificates to Lender more frequently than once in any twelve month period.

 

Section 4.14.       Leases and Rents.

 

(a)               All Leases and all renewals of Leases executed after the date hereof shall (i) provide for rental rates comparable to existing local market rates for similar properties (except for renewals pursuant to the terms and conditions of Leases executed prior to the date hereof, the rental rates for which shall be consistent with the terms of the applicable Lease), (ii) be on commercially reasonable terms with unaffiliated, third parties (unless otherwise consented to by Lender or for renewals pursuant to the terms and conditions of Leases executed prior to the date hereof), and (iii) with respect to Leases entered into after the Closing Date, provide that such Lease is subordinate to the Security Instruments and that the lessee will attorn to Lender and any purchaser at a foreclosure sale, provided, that such subordination and attornment may be contingent on Lender’s agreement not to disturb the Tenant’s use of such premises so long as no event of default under such Lease has occurred and is continuing. Notwithstanding anything to the contrary contained herein, Borrower shall not, without the prior written approval of Lender (which approval shall not be unreasonably withheld, conditioned or delayed), enter into, renew, extend, amend, modify, enter into any Deferred Rental Agreements with respect to, permit any assignment of or subletting under (to the extent Borrower consent is required under the terms of the applicable Lease for the applicable assignment and/or subletting), waive any economic provisions or other material provisions of, release any party to, terminate (except in the case of default by the Tenant thereunder), reduce rents under, accept a surrender of space under (unless required pursuant to the terms and conditions of the applicable Lease), or shorten the term of, in each case, any Major Lease. For the avoidance of doubt, Borrower shall have the right to enter into Leases (and to renew, extend, amend, modify and consent to any assignment of or subletting under Leases) without Lender’s consent other than Major Leases provided that each Lease complies with the terms described in clauses (i), (ii) and (iii) of this Section 4.14(a). To the extent that the Deemed Approval Requirements are fully satisfied in connection with any Borrower request for Lender consent under this subparagraph (a) and Lender thereafter fails to approve or disapprove the same, Lender’s approval shall be deemed given with respect to the matter for which approval was requested.

 

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(b)               Without limitation of subsection (a) above, Borrower (i) shall, subject to applicable Legal Requirements, observe and perform the material obligations imposed upon the lessor under the Leases in a commercially reasonable manner (including, without limitation, as set forth in the last sentence of this paragraph); (ii) shall, subject to applicable Legal Requirements, enforce the terms, covenants and conditions contained in the Leases upon the part of the lessee thereunder to be observed or performed in a commercially reasonable manner; (iii) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); (iv) shall not execute any assignment of lessor’s interest in the Leases or the Rents (except as contemplated by the Loan Documents); (v) shall not, without Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed), alter, modify or change any Lease to the extent the same would, individually or in the aggregate, (A) cause any such Lease to violate Section 4.14(a)(i) through (iii) above or (B) have a Material Adverse Effect; and (vi) shall hold all security deposits under all Leases in accordance with Legal Requirements. Upon request (but not more than two times during any calendar year so long as no Event of Default has occurred and is continuing), Borrower shall furnish (or make available) to Lender executed copies of all Leases. In addition, Borrower shall (i) perform such repairs as are necessary to address any issue relating to the Borrower’s repair obligations under the applicable Lease raised by a Tenant in the estoppel certificate such Tenant delivered to Lender prior to the Closing Date, and (ii) use commercially reasonable efforts to deliver to Lender an updated estoppel certificate from each applicable Tenant containing no objection to the repair status of the applicable Individual Property.

 

(c)               Notwithstanding anything contained herein to the contrary, Borrower shall not willfully withhold from Lender any information reasonably required regarding renewal, extension, amendment, modification, waiver of provisions of, termination, rental reduction of, surrender of space of, or shortening of the term of, any Lease during the term of the Loan. Borrower further agrees to provide Lender with written notice of a Tenant “going dark” under such Tenant’s Lease within ten (10) Business Days after Borrower’s knowledge that such Tenant has “gone dark”, provided that Borrower shall not be required to notify Lender of any suspension of operations by any Tenant under a Lease which is not a Major Lease attributable to compliance with any Legal Requirements restricting the rights of tenants generally (or categories of tenants generally) from operating for business in the applicable premises.

 

(d)               Borrower shall notify Lender in writing, within two (2) Business Days following receipt thereof, of Borrower’s receipt of any cancellation, termination or default fee or payment or other cancellation, termination or default fee or payment paid by any Tenant under any Lease (such payments, collectively, “Termination Fees”), and Borrower shall cause such Termination Fees to be deposited into an Eligible Account with Lender to be disbursed by Lender for tenant improvement and leasing commission costs with respect to the re-leasing of the applicable premises to which such Termination Fees relate within ten (10) Business Days after Borrower’s request therefor, provided no Event of Default is continuing. After the entirety of the space demised under the Lease to which such Termination Fees relate has been leased to a replacement Tenant in accordance with the terms and conditions of this Agreement and the Tenant thereunder is open for business and paying full and unabated rent under such Lease, Lender shall deposit any remaining Termination Fees held by Lender pursuant to this subclause (d) in the Cash Management Account for application in accordance with Section 9.3 hereof. During the continuance of an Event of Default, any such Termination Fees may also be held as collateral for the Debt or applied towards payment of the Debt, as so determined by Lender.

 

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(e)               Lender agrees to reasonably cooperate with any request by Borrower to deliver a subordination and non-disturbance agreement in favor of a Tenant under a Major Lease, on Lender’s then current form of subordination and non-disturbance agreement; provided that Lender will cooperate reasonably in connection with reasonable changes requested thereto. Borrower shall pay all reasonable out-of-pocket costs and expenses actually incurred by Lender in connection with such request.

 

Section 4.15.       Management Agreement.

 

(a)               As of the Closing Date, there are no Management Agreements other than (i) that certain Property Management Agreement dated as of October 23, 2013 between ARC AMWNRKY001, LLC, a Delaware limited liability company and CBRE, Inc., a Delaware corporation, and (ii) that certain Property Management and Leasing Agreement, dated as of the date hereof, by and among each Borrower other than ARC AMWNRKY001, LLC, collectively as owner, and American Finance Properties, LLC as manager. If, at any time, Borrower desires to enter into a replacement Management Agreement with respect to any Individual Property or extend the existing Management Agreements to apply to any additional Individual Property, Borrower shall do so in accordance with the terms and conditions of Section 4.15(g) and (i) hereof.

 

(b)               Borrower shall (i) diligently and promptly perform, observe and enforce all of the terms, covenants and conditions of each Management Agreement on the part of Borrower to be performed, observed and enforced to the end that all things shall be done which are necessary to keep unimpaired the rights of Borrower under such Management Agreement, (ii) promptly notify Lender of any default under any Management Agreement beyond applicable notice and cure periods thereunder; (iii) promptly deliver to Lender a copy of any written notice of default or other material written notice received by Borrower under the Management Agreement; (iv) promptly give notice to Lender of any written notice that Borrower receives which provides that Manager is terminating the Management Agreement or that Manager is otherwise discontinuing its management of the Property; and (v) promptly use commercially reasonable efforts (subject to applicable Legal Requirements) to enforce the performance and observance of all of the covenants required to be performed and observed by Manager under the Management Agreement. The management fee under the Management Agreement shall not exceed (x) in the case of any Affiliated Manager, two percent (2%) of Gross Rents or (y) in the case of any other Manager, three percent (3%) of Gross Rents,

 

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(c)               Borrower shall not, without the prior written consent of Lender (which shall not be unreasonably withheld, conditioned or delayed), (i) surrender, terminate or cancel any Management Agreement, consent to any assignment of any Manager’s interest under the related Management Agreement or otherwise replace Manager or renew or extend any Management Agreement (exclusive of, in each case, any automatic renewal or extension in accordance with its terms) or enter into any other new or replacement management agreement with respect to any Individual Property; provided, however, that Borrower may replace a Manager and/or consent to the assignment of a Manager’s interest under a Management Agreement, in each case to the extent permitted by and in accordance with the applicable terms and conditions hereof and of the other Loan Documents; (ii) reduce or consent to the reduction of the term of a Management Agreement; (iii) increase or consent to the increase of the amount of any charges under a Management Agreement; or (iv) otherwise modify, change, alter or amend, in any material respect, or waive or release any of its material rights and remedies under, a Management Agreement in any material respect. To the extent that the Deemed Approval Requirements are fully satisfied in connection with any Borrower request for Lender consent under this subparagraph (c) and Lender fails to approve or disapprove the same pursuant thereto, Lender’s approval shall be deemed given with respect to the matter for which approval was requested.

 

(d)               If Borrower shall default after applicable notice and cure periods in the performance or observance of any material term, covenant or condition of a Management Agreement on the part of Borrower to be performed or observed, then, without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Borrower from any of its obligations hereunder, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed or observed to be promptly performed or observed on behalf of Borrower, to the end that the rights of Borrower in, to and under the Management Agreement shall be kept unimpaired and free from default. If Manager shall deliver to Lender a copy of any notice sent to Borrower of default under the Management Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon, subject to the rights of tenants. Borrower shall notify Lender if Manager sub-contracts to a third party or an Affiliate any or all of its management responsibilities under the Management Agreement (which sub-contract shall be subject to Lender’s reasonable consent).

 

(e)               Borrower shall, from time to time (but not more frequently than two (2) times in any calendar year unless an Event of Default shall be continuing), use commercially reasonable efforts to obtain from Manager under the Management Agreement such certificates of estoppel with respect to compliance by Borrower with the terms of the Management Agreement as may be reasonably requested by Lender.

 

(f)                In the event that the Management Agreement is scheduled to expire at any time during the term of the Loan, Borrower shall submit to Lender by no later than 30 days prior to such expiration a draft replacement management agreement for approval in accordance with the terms and conditions hereof, which approval shall not be unreasonably withheld but may be conditioned on delivery of a Rating Agency Confirmation; provided, however, that if such replacement management agreement is substantially similar to the Management Agreement (including, without limitation, the fee payable thereunder (subject to any increases contemplated by the existing Management Agreement) to the extent such fee does not exceed (x) in the case of any Affiliated Manager, two percent (2%) of Gross Rents or (y) in the case of any other Manager, three percent (3%) of Gross Rents), neither Lender’s consent nor any Rating Agency Confirmation shall be required. The foregoing shall not apply to any renewal of any Management Agreement entered into in compliance with this Agreement in accordance with the terms thereof.

 

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(g)               Borrower shall have the right to replace Manager or consent to the assignment of Manager’s rights under the Management Agreement without Lender’s consent, in each case, to the extent that (i) no Event of Default has occurred and is continuing, (ii) Lender receives at least thirty (30) days prior written notice of the same, (iii) such replacement or assignment (as applicable) will not result in a Property Document Event and/or any termination or cancellation of any Ground Lease or any default thereunder and (iv) the applicable New Manager is a Qualified Manager engaged pursuant to a Qualified Management Agreement.

 

(h)               Without limitation of the foregoing, if the Management Agreement is terminated or expires (including, without limitation, pursuant to the Assignment of Management Agreement), comes up for renewal or extension (exclusive of, in each case, any automatic renewal or extension in accordance with its terms), ceases to be in full force or effect or is for any other reason no longer in effect (including, without limitation, in connection with any Sale or Pledge), then Lender, at its option, may require Borrower to engage, in accordance with the terms and conditions set forth herein and in the Assignment of Management Agreement, a New Manager to manage the Property, which such New Manager shall (i) if an Event of Default has occurred and is continuing and if opted by Lender, selected by Lender and subject to the reasonable approval of Borrower if Lender has not foreclosed on the Property and (ii) be a Qualified Manager and shall be engaged pursuant to a Qualified Management Agreement.

 

(i)                 As conditions precedent to any engagement of a New Manager hereunder, (i) New Manager and Borrower shall execute an Assignment of Management Agreement in substantially the same form as the Assignment of Management Agreement delivered to Lender on the date hereof, and (ii) if such New Manager is an Affiliated Manager, Borrower shall deliver to Lender a New Non-Consolidation Opinion (or update) with respect to such New Manager and new management agreement, and (iii) if requested by Lender, Borrower shall deliver to Lender a certificate representing that the engagement of such New Manager will not result in a Property Document Event and/or any termination or cancellation of any Ground Lease or any default thereunder.

 

(j)                 Borrower shall notify Lender in writing, within ten (10) Business Days following receipt thereof, of Borrower’s receipt of any early termination fee or similar payment or other termination fee or similar payment paid by any Manager, and Borrower further covenants and agrees that Borrower shall cause any such termination fee or payment to be promptly deposited into the Cash Management Account.

 

(k)               Lender shall have the right to cause Borrower to terminate the applicable Management Agreement and require Borrower to appoint a Qualified Manager, which is not an Affiliate of Borrower, to manage one or more Properties pursuant to a Qualified Management Agreement in accordance with the terms and conditions of this Agreement (i) during the continuance of an Event of Default, (ii) upon a Bankruptcy Action with respect to the applicable Manager, or (iii) upon the occurrence of a material default beyond applicable notice and cure periods by the applicable Manager under the applicable Management Agreement.

 

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(l)                 Lender’s consent (not to be unreasonably withheld, conditioned or delayed) shall be required with respect to any Sale or Pledge of any Affiliated Manager over which Borrower, any SPE Component Entity and/or their respective Affiliates has Control, which consent may be conditioned upon receipt of a New Non-Consolidation Opinion to the extent such Sale or Pledge is to an Affiliate of Borrower, any SPE Component Entity and/or Guarantor.

 

(m)             Any reasonable out-of-pocket costs and expenses actually incurred by Lender pursuant to this Section shall be deemed to constitute a portion of the Debt, shall be secured by the lien of the Security Instrument and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor (and to the extent not paid within thirty (30) days of demand therefor by Lender shall bear interest at the Default Rate).

 

Section 4.16.     Payment for Labor and Materials.

 

(a)               Subject to Section 4.16(b) below, Borrower will promptly pay (or cause to be paid) when due all bills and costs for labor, materials, and specifically fabricated materials incurred by or on behalf of Borrower in connection with each Individual Property (any such bills and costs, a “Work Charge”) and not permit to exist in respect of any Individual Property or any part thereof any lien or security interest with respect to such Work Charges, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of any Individual Property or any part thereof any other or additional lien or security interest other than the liens or security interests created hereby and by the Security Instruments, except for the Permitted Encumbrances.

 

(b)               After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the validity of any Work Charge, the applicability of any Work Charge to Borrower or to any Individual Property or any alleged non-payment of any Work Charge and defer paying the same, provided that (i) no Event of Default has occurred and is continuing; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable Legal Requirements; (iii) neither the applicable Individual Property nor any part thereof or interest therein will be in imminent danger of being sold, forfeited, terminated, cancelled or lost as a result of the contest of the same; (iv) Borrower shall promptly upon final determination thereof pay (or cause to be paid) any such contested Work Charge determined to be valid, applicable and unpaid; (v) such proceeding shall suspend the collection of such contested Work Charge from the applicable Individual Property or Borrower shall have paid the same (or shall have caused the same to be paid) under protest; and (vi) Borrower shall furnish (or cause to be furnished) such security as may be required in the proceeding, or as may be reasonably requested by Lender, to insure payment of such Work Charge, together with all interest and penalties payable in connection therewith. Lender may apply any such security or part thereof, as necessary to pay for such Work Charge (i) upon not less than ten (10) Business Days written notice to Borrower when, in the reasonable judgment of Lender, the validity, applicability and non-payment of such Work Charge is finally established or (ii) at any time when in the judgment of Lender the applicable Individual Property (or any part thereof or interest therein) shall be in imminent danger of being sold, forfeited, terminated, cancelled or lost.

 

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Section 4.17.     Performance of Other Agreements. Borrower shall observe and perform each and every material term to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to each Individual Property (or any portion thereof) and any amendments, modifications or changes thereto.

 

Section 4.18.     Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.

 

Section 4.19.     ERISA.

 

(a)               Neither Borrower nor Guarantor shall be subject to Title I of ERISA or Section 4975 of the Code. Assuming none of the assets of Lender being used in connection with the Loan constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101 and Section 3(42) of ERISA (unless such Lender is relying on an applicable prohibited transaction exemption, the conditions of which are satisfied), neither Borrower nor Guarantor shall engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its rights hereunder or under the other Loan Documents) to be a non-exempt prohibited transaction under ERISA.

 

(b)               Borrower further covenants and agrees to deliver to Lender such certifications or other evidence from time to time throughout the term of the Security Instruments, as requested by Lender in its reasonable discretion, that (i) neither Borrower nor Guarantor is an “employee benefit plan” as defined in Section 3(3) of ERISA, or other retirement arrangement, which is subject to Title I of ERISA or Section 4975 of the IRS Code, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) neither Borrower nor Guarantor is subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans (except where a governmental plan is a counterparty); and (iii) one or more of the following circumstances is true; provided, that, so long as no Event of Default has occurred and is continuing, Borrower shall not be required to deliver such certifications or other evidence more frequently than once in any twelve month period:

 

(A)Equity interests in Borrower and Guarantor are publicly offered securities, within the meaning of 29 C.F.R. § 2510.3 101(b)(2);

 

(B)Less than 25 percent of each outstanding class of equity interests in Borrower and Guarantor are held by “benefit plan investors” within the meaning of Section 3(42) of ERISA; or

 

(C)Each of Borrower and Guarantor qualify as an “operating company” or a “real estate operating company,” within the meaning of 29 C.F.R § 2510.3-101(c) or (e), or is an investment company registered under The Investment Company Act of 1940, as amended.

 

(c)               Neither Borrower nor Guarantor shall maintain, sponsor, contribute to or become obligated to contribute to, or suffer or permit any member of Borrower’s or Guarantor’s “controlled group of corporations” or any trade or business treated as a “single employer” together with the Borrower or Guarantor, to maintain, sponsor, contribute to or become obligated to contribute to a “defined benefit plan” or a “multiemployer plan”. The terms in quotes above are defined in Section 3.7 of this Agreement.

 

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Section 4.20.     No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of any Individual Property with (a) any other real property constituting a tax lot separate from the applicable Individual Property, or (b) any portion of the applicable Individual Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the applicable Individual Property.

 

Section 4.21.     Alterations. Notwithstanding anything contained herein (including, without limitation, Article 8 hereof) to the contrary, Lender’s prior approval shall be required in connection with (I) any alterations by Borrower to any Improvements with respect to any Individual Property (the “Landlord Alterations”) and (II) any alterations to any Improvements with respect to any Individual Property by any Tenant under any Lease to the extent that Borrower has the right to consent to, or approve, such alterations, in each instance (a) that may have a Material Adverse Effect, (b) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the applicable Alteration Threshold, or (c) that are structural in nature, which approval, with respect to each of the preceding clauses (a) through (c) may be granted or withheld in Lender’s reasonable discretion. If the total unpaid amounts incurred and to be incurred with respect to any such Landlord Alterations to the Improvements shall at any time exceed the applicable Alteration Threshold, Borrower shall promptly deliver to Lender as security for the payment of such amounts and as additional security for Borrower’s obligations under the Loan Documents any of the following: (i) cash, (ii) U.S. Obligations, (iii) a Letter of Credit, (iv) other security reasonably acceptable to Lender, (provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same), (v) a completion guaranty from Guarantor (provided that Lender shall have received a New Non-Consolidation Opinion and a Rating Agency Confirmation with respect to the same) or (vi) a completion bond (provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same). Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements over the applicable Alteration Threshold. To the extent that the Deemed Approval Requirements are fully satisfied in connection with any Borrower request for Lender consent under this Section 4.21 and Lender thereafter fails to approve or disapprove the same, Lender’s approval shall be deemed given with respect to the matter for which approval was requested.

 

Notwithstanding anything to the contrary in this Section 4.21, in the event that Borrower must perform any Emergency Alteration, Lender shall be deemed to have approved each such Emergency Alteration provided that (i) it would be impracticable, as reasonably determined by Borrower, under the circumstances to obtain Lender’s prior approval thereof despite Borrower using its commercially reasonable efforts to contact Lender to obtain such approval, or (ii) Lender shall have failed to respond to any request for such approval made by Borrower using its commercially reasonable efforts to contact Lender prior to the date on which such Emergency Alteration is required, as reasonably determined by Borrower, under the circumstances to be made. Borrower acknowledges and agrees to the extent that such Emergency Alteration exceeds the Alteration Threshold, Borrower shall comply with the second sentence of the paragraph immediately above. “Emergency Alteration” shall mean any alteration to an Individual Property required to be made by any Borrower by reason of the occurrence of an unexpected event that is reasonably likely to cause imminent harm to persons or property at an Individual Property or that is reasonably likely to cause a default beyond all applicable notice and cure periods by a Borrower under a Lease or any Property Document.

 

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Section 4.22.     Property Document Covenants.

 

(a)               Without limiting the other provisions of this Agreement and the other Loan Documents, Borrower shall (i) promptly perform and/or observe, in all material respects, all of the material covenants and agreements required to be performed and observed by it under the REAs and do all things reasonably necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any material default by Borrower under the REAs of which it is aware; (iii) enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed under the REAs in a commercially reasonable manner; (iv) cause the applicable Individual Property to which a REA applies to be operated, in all material respects, in accordance with the REAs; and (v) not, without the prior written consent of Lender (not to be unreasonably withheld, conditioned or delayed), (A) enter into any new REA or replace or execute modifications to any existing REA or renew or extend the same (exclusive of, in each case, any automatic renewal or extension in accordance with its terms), (B) surrender, terminate or cancel the REAs, (C) reduce or consent to the reduction of the term of the REAs, (D) increase or consent to the increase of the amount of any charges payable by Borrower under the REAs, (E) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, the REAs in any material respect or (F) following the occurrence and during the continuance of an Event of Default, exercise any rights, make any decisions, grant any approvals or otherwise take any material action under the Property Documents.

 

Section 4.23.     Ground Lease Covenants. Without limitation of the other provisions herein, each Borrower makes the following covenants with respect to each Ground Lease:

 

(a)               Borrower shall (i) pay (or cause to be paid) all rents, additional rents and other sums required to be paid by Borrower, as tenant under and pursuant to the provisions of each Ground Lease when due and payable thereunder, (ii) diligently perform and observe (or cause to be performed and observed) all of the terms, covenants and conditions of each Ground Lease on the part of Borrower, as tenant thereunder, (iii) promptly notify Lender of the giving of any notice by the landlord under any Ground Lease to Borrower of any default by Borrower and deliver to Lender a true copy of each such notice within seven (7) Business Days of receipt, and (iv) promptly notify Lender of any bankruptcy, reorganization or insolvency of the landlord under any Ground Lease or of any notice thereof, and deliver to Lender a true copy of such notice within seven (7) Business Days of Borrower’s receipt.

 

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(b)               Borrower shall not, without the prior consent of Lender, surrender the leasehold estate created by any Ground Lease or terminate or cancel any Ground Lease or modify, change, supplement, alter or amend any Ground Lease, either orally or in writing, and if Borrower shall default in the performance or observance of any term, covenant or condition of any Ground Lease on the part of Borrower and shall fail to cure the same prior to the expiration of any applicable cure period provided thereunder, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants and conditions of such Ground Lease on the part of Borrower to be performed or observed on behalf of Borrower, to the end that the rights of Borrower in, to and under such Ground Lease shall be kept unimpaired and free from default.

 

(c)               Borrower shall exercise each individual option, if any, to extend or renew the term of each Ground Lease within sixty (60) days prior to the expiration of such Ground Lease (the “Renewal Deadline”), and Borrower hereby expressly authorizes and appoints Lender its attorney-in-fact to exercise any such option in the name of and upon behalf of Borrower exercisable upon an Event of Default, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest.

 

(d)               Notwithstanding anything contained in any Ground Lease to the contrary, Borrower shall not, without prior written consent of Lender, sublet any portion of the leasehold estate created by the Ground Lease except in accordance with the express terms and conditions of this Agreement.

 

(e)               With respect to each Individual Property which consists of a leasehold estate crated pursuant to a Ground Lease, neither Borrower nor any Affiliate of Borrower shall acquire the related Fee Estate without Lender’s prior written consent. To the extent Borrower or any Affiliate of Borrower shall acquire any such related Fee Estate, (i) the security interest created by the related Security Instrument shall be spread to cover such related Fee Estate, (ii) Borrower shall (and shall cause any applicable Affiliate of Borrower to) execute any such documents and instruments as Lender shall reasonably require to spread the lien of such Security Instrument to cover such related Fee Estate and ensure that Lender has a first priority perfected security interest with respect to such Fee Estate subject to Permitted Encumbrances, and (iii) Borrower shall obtain such endorsements or additional title coverage as Lender shall reasonably require to insure the lien of such Security Instrument on such related Fee Estate.

 

Section 4.24.     Embargoed Person; Patriot Act Compliance; Anti-Money Laundering Laws.

 

(a)               Each Borrower Party and each Affiliated Manager has performed and shall perform reasonable due diligence to insure that at all times throughout the term of the Loan, including after giving effect to any Sale or Pledge or other transfer permitted pursuant to the Loan Documents, (i) none of the funds or other assets of any Borrower Party and/or any Affiliated Manager constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person; (ii) no Embargoed Person has any interest of any nature whatsoever in any Borrower Party or any Affiliated Manager, as applicable, with the result that the investment in any Borrower Party or any Affiliated Manager, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (iii) none of the funds of any Borrower Party or any Affiliated Manager, as applicable, have been derived from, or are the proceeds of, any unlawful activity, including money laundering, terrorism or terrorism activities, with the result that the investment in any Borrower Party or any such Affiliated Manager, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law, or may cause any Individual Property (or any portion thereof) to be subject to forfeiture or seizure. Any violation of the foregoing shall, at Lender’s option, constitute an Event of Default hereunder.

 

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(b)               Borrower will use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrowers and/or the Properties, including those relating to money laundering and terrorism. Lender shall have the right, from time to time (at no cost to Borrower unless Lender reasonably determines that Borrower has failed to comply with the provisions of this Section 4.24), to audit Borrowers’ compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrowers and/or the Properties, including those relating to money laundering and terrorism. In the event that any Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause such Borrower to comply therewith and any and all reasonable costs and expenses actually incurred by Lender in connection therewith shall be secured by the Mortgages and the other Loan Documents and shall be due and payable within ten (10) Business Days following Lender’s request therefor.

 

(c)               At all times throughout the term of the Loan, including after giving effect to any transfers permitted pursuant to the Loan Documents, no Borrower nor Guarantor nor any partner in any Borrower or Guarantor nor member of any such partner nor any other owner of a direct or indirect interest in any Borrower or Guarantor (i) shall be listed on any Government Lists, (ii) shall be a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) shall have been previously indicted for or convicted of any felony involving any Patriot Act Offense, or (iv) shall be under investigation by any Governmental Authority for alleged criminal activity related to OFC, any Patriot Act Offense, or any violation of any Anti-Corruption Laws or Anti-Money Laundering Laws.

 

(d)               At all times throughout the term of the Loan, including after giving effect to any transfers permitted pursuant to the Loan Documents, (i) none of the funds or other assets of any Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor shall constitute property of, or shall be beneficially owned, directly or indirectly, by any Person is subject to Sanctions, (ii) none of any Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor shall be a Sanctioned Person, (iii) no Sanctioned Person shall have any interest of any nature whatsoever in any Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor with the result that the investment in any Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor would be prohibited by law or the Loan would be in violation of law, and (iv) none of the funds of any Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor shall be derived from any unlawful activity with the result that the investment in Borrower or Guarantor, any partner in any Borrower or Guarantor, any member of any such partner or any other owner of a direct or indirect interest in any Borrower or Guarantor would be prohibited by law or the Loan would be in violation of law.

 

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(e)               No portion of the proceeds of the Loan will be used, directly or indirectly, (i) in violation of Anti-Corruption Laws or Anti-Money Laundering Laws, or (ii) for any payment, promise to pay, or authorization of any payment (or giving of anything of value) to any governmental official or employee, political party, official of a political party, candidate for political office or anyone else acting in an official capacity, in order to obtain, retain or direct business, or obtain any improper advantage, in violation of Anti-Corruption Laws.

 

(f)                Notwithstanding the foregoing, the representations, warrants and covenants above are made only to Borrower’s knowledge with respect to the direct or indirect ownership of any shares of stock in AFT that are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange.

 

Section 4.25.     Condominium Covenants.

 

(a)               Borrower shall comply with all of the terms, covenants and conditions of the Condominium Documents and any rules and regulations that may be adopted for the Condominium, as the same shall be in force and effect from time to time to the extent applicable to Borrower.

 

(b)               Borrower shall pay, or cause to be paid, all assessments for common charges and expenses made against the Condominium unit owned by Borrower pursuant to the Condominium Documents as the same shall become due and payable (subject to Borrower’s rights to contest the same in a manner that would not be reasonably expected to result in a Material Adverse Effect).

 

(c)               Borrower shall not, without Lender’s prior consent, not to be unreasonably withheld, conditioned or delayed, modify, amend or supplement, or consent to or suffer any modification, amendment, or supplementation of any of the Condominium Documents (to the extent within Borrower’s control) or change, alter or amend, or waive or release any of its material rights and remedies under any of the Condominium Documents.

 

(d)               Borrower shall not take any action to terminate the Condominium, withdraw the Condominium from any state, local or federal laws, rules and regulations which affect the establishment and maintenance of condominiums in the applicable state, or cause a partition of the Condominium.

 

(e)               Borrower shall not assign (other than to Lender) or encumber (other than in favor of Lender as security for the Debt) any of its rights under the Condominium Documents.

 

(f)                Borrower shall not, without Lender’s prior consent, exercise any right it may have to vote for, (i) any additions or improvements to the common elements of the Condominium, except as such additions or improvements are permitted pursuant to this Agreement, (ii) any borrowing on behalf of the Condominium, or (iii) the expenditure of any insurance proceeds or condemnation awards for the repair or restoration of the Improvements other than in accordance with the provisions of this Agreement.

 

(g)               To the extent any voting member (including any officers or directors) of any applicable Condominium board is appointed or selected by Borrower after the Closing Date, Borrower shall obtain resignation letters in substantially the same form as the resignation letters delivered to Lender as of the Closing Date from each voting member of such Condominium board appointed by or selected by Borrower and any officers of such Condominium appointed by Borrower to be held by Lender in escrow, which resignation letters may, at Lender’s option, be submitted at any time after Lender’s acceleration of the Loan following an Event of Default.

 

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Section 4.26.     Master Lease Covenants.

 

(a)               Borrower shall perform its obligations under the Master Leases.

 

(b)               Borrower shall enforce in a commercially reasonable manner the terms and conditions of the Master Leases.

 

(c)               Borrower shall not, without Lender’s prior consent, not to be unreasonably withheld, conditioned or delayed, modify, amend or supplement any of the Master Leases or waive any of its material rights under any of the Master Leases.

 

(d)               Borrower shall not, at any time while the Loan is outstanding, permit a Master Lease to demise any property or interests that do not comprise a portion of the Property that is collateral for the Loan.

 

Section 4.27.     Immediate Repairs; Landlord Repair Obligations.

 

(a)               Borrower shall perform the Immediate Repairs and shall complete each of the Immediate Repairs on or before (i) with respect to the Immediate Repairs pertaining to ADA and/or life safety matters, the date that is four (4) months following the Closing Date, and (ii) with respect to all other Immediate Repairs, the date that is one (1) year following the Closing Date.

 

(b)               Borrower represents and warrants to Lender that the applicable Tenant is responsible for the performance of each Immediate Tenant Repair. Borrower will use commercially reasonable efforts to cause the applicable Tenant to complete the Immediate Tenant Repairs pursuant to the terms of the applicable Lease within a reasonable period of time following the Closing Date.

 

(c)               Borrower shall perform the landlord repair obligations pursuant to a Lease described on Schedule XV hereto (which items are inclusive of the initial Unfunded Obligations) and shall complete each of such landlord repair obligations on or before the date that is one (1) year following the Closing Date.

 

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ARTICLE 5.
AENTITY COVENANTS

 

Section 5.1.         Single Purpose Entity/Separateness.

 

(a)               Each Borrower has not since its formation and will not:

 

(i)                 engage in any business or activity other than the leasing, ownership, operation and maintenance of the applicable Individual Property, and activities incidental thereto;

 

(ii)              acquire or own any assets other than (A) the applicable Individual Property and/or Individual Properties, and (B) such incidental Personal Property as may be necessary for the ownership, leasing, maintenance and operation of such applicable Individual Property or Individual Properties, as applicable;

 

(iii)            merge into or consolidate with any Person, become subject to a Division or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;

 

(iv)             fail to observe all organizational formalities, or fail to comply with the provisions of its organizational documents, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable Legal Requirements of the jurisdiction of its organization or formation, or amend, modify, terminate or fail to comply with the special purpose entity/bankruptcy remote provisions of its organizational documents (provided, that, such organizational documents may be amended or modified to the extent that, in addition to the satisfaction of the requirements related thereto set forth therein, Lender’s prior written consent and, if required by Lender, a Rating Agency Confirmation are first obtained);

 

(v)               own any subsidiary, or make any investment in, any Person (other than, with respect to any SPE Component Entity, in the applicable Borrower);

 

(vi)             commingle its funds or assets with the funds or assets of any other Person (except for one or more other Borrowers);

 

(vii)          incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Debt, and/or (B) any prior mortgage-loan financing with respect to the Property that has been paid off in full as of the date hereof, and/or (C) trade and operational indebtedness incurred in the ordinary course of business with trade creditors or in the routine administration of its affairs, provided such indebtedness is (1) unsecured, (2) not evidenced by a note and (3) due not more than sixty (60) days past the date incurred and paid on or prior to such date, and/or (D) such other liabilities as are permitted pursuant to this Agreement; provided however, the aggregate amount of the indebtedness described in clause (C) shall not exceed (I) five percent (5%) of the Allocated Loan Amount with respect to the applicable Individual Property, and (II) at any time with respect to all Properties in the aggregate, two percent (2%) of the outstanding amount of the Loan. No Indebtedness other than the Debt may be secured (senior, subordinate or pari passu) by any Individual Property;

 

(viii)        fail to maintain all of its books, records, financial statements and bank accounts separate from those of any other Person (except for one or more other Borrowers). Borrower’s assets will not be listed as assets on the financial statement of any other Person (except for one or more other Borrowers); provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliates. Borrower has maintained and will maintain its books, records, resolutions and agreements as official records;

 

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(ix)             except for capital contributions and distributions permitted under the terms and conditions of its organizational documents and properly reflected in its books and records, enter into any contract or agreement with any partner, member, shareholder, principal or Affiliate, except, in each case, upon terms and conditions that are substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties;

 

(x)               maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

 

(xi)             assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;

 

(xii)          make any loans or advances under any loan to any Person;

 

(xiii)        fail to file its own tax returns, separate from those of any other Person, except (A) to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file any tax return by applicable Legal Requirements, or (B) if Borrower is required to file consolidated tax returns by applicable Legal Requirements;

 

(xiv)         fail to (A) hold itself out to the public and identify itself, in each case, as a legal entity separate and distinct from any other Person and not as a division or part of any other Person, (B) conduct its business solely in its own name, (C) hold its assets in its own name (provided that it may commingle its assets with one or more other Borrowers) or (D) correct any known misunderstanding regarding its separate identity;

 

(xv)           fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations (to the extent there exists sufficient cash flow from the applicable Individual Property to do so); provided, however, that the foregoing shall not require any owners of Borrower to make additional capital contributions to Borrower;

 

(xvi)         without the prior unanimous written consent of all of its partners, shareholders or members, as applicable, the prior unanimous written consent of its board of directors or managers, as applicable, and the prior written consent of each Independent Director (regardless of whether such Independent Director is engaged at the Borrower or SPE Component Entity level), take any Bankruptcy Action with respect to Borrower or any SPE Component Entity (provided, that, none of any member, shareholder or partner (as applicable) of Borrower or any SPE Component Entity or any board of directors or managers (as applicable) of Borrower or any SPE Component Entity may vote on or otherwise authorize the taking of any of the foregoing actions unless, in each case, there are at least two (2) Independent Directors then serving in such capacity in accordance with the terms of the applicable organizational documents and each of such Independent Directors has consented to such foregoing action);

 

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(xvii)      fail to allocate shared expenses (including, without limitation, shared office space) or fail to use separate stationery, invoices and checks;

 

(xviii)    fail to pay its own liabilities (including, without limitation, salaries of its own employees and a fairly allocated portion of any personnel and overhead expenses that it shares with any Affiliate) from its own funds or fail to maintain a sufficient number of employees in light of its contemplated business operations (in each case to the extent there exists sufficient cash flow from the applicable Individual Property to do so and except for payment of any Borrower’s liabilities by one or more other Borrowers and sharing of employees, personnel or overhead expenses by one or more Borrowers); provided, however, that the foregoing shall not require any owners of Borrower to make additional capital contributions to Borrower;

 

(xix)         acquire obligations or securities of its partners, members, shareholders or other Affiliates, as applicable;

 

(xx)           identify its partners, members, shareholders or other Affiliates, as applicable, as a division or part of it; or

 

(xxi)         fail to conduct its business so that the material factual assumptions made with respect to Borrower in the Non-Consolidation Opinion or in any New Non-Consolidation Opinion cease to be materially true.

 

(b)               If Borrower is a partnership or limited liability company (other than an Acceptable LLC), each general partner (in the case of a partnership) and at least one member (in the case of a limited liability company) of Borrower, as applicable, shall be an Acceptable LLC (each an “SPE Component Entity”) whose sole asset is its interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest). Each SPE Component Entity (i) will at all times comply with each of the covenants, terms and provisions contained in Section 5.1(a)(iii) through (vi) (inclusive) and (viii) through (xxi) (inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section 5.1(c) and (d) hereof, as if such representation, warranty or covenant was made directly by such SPE Component Entity; (ii) will not engage in any business or activity unrelated to owning an interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iii) will not acquire or own any assets other than its partnership, membership, or other equity interest in Borrower (and personal property incidental, ancillary or related to, or necessary or appropriate for, its ownership of such interest); (iv) will at all times continue to own no less than a 0.5% direct equity ownership interest in Borrower; (v) will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), except for trade payables not to exceed $10,000.00 which are incurred in the routine administration of its affairs, are unsecured, are not evidenced by a note and are due not more than ninety (90) days past the date incurred and are either paid on or prior to such date or are being contested in good faith; and (vi) will cause Borrower to comply with the provisions of this Section 5.1. Lender acknowledges that as of the Closing Date each Borrower is an Acceptable LLC and there are no SPE Component Entities.

 

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(c)               In the event Borrower or the SPE Component Entity is an Acceptable LLC, the limited liability company agreement of Borrower or the SPE Component Entity (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the SPE Component Entity (as applicable) (“Member”) to cease to be the member of Borrower or the SPE Component Entity (as applicable) (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPE Component Entity (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPE Component Entity (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPE Component Entity (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPE Component Entity (as applicable) automatically be admitted to Borrower or the SPE Component Entity (as applicable) as a member with a 0% economic interest (“Special Member”) and shall continue Borrower or the SPE Component Entity (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the SPE Component Entity (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPE Component Entity (as applicable) as a Special Member in accordance with requirements of Delaware law and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of the SPE Component Entity or Borrower (as applicable) in accordance with Section 5.2 below. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the SPE Component Entity (as applicable) upon the admission to Borrower or the SPE Component Entity (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the SPE Component Entity (as applicable) that has no interest in the profits, losses and capital of Borrower or the SPE Component Entity (as applicable) and has no right to receive any distributions of the assets of Borrower or the SPE Component Entity (as applicable), (iii) pursuant to the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the SPE Component Entity (as applicable) and shall not receive a limited liability company interest in Borrower or the SPE Component Entity (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the SPE Component Entity (as applicable) and (v) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the SPE Component Entity (as applicable) including, without limitation, the merger, consolidation, Division or conversion of Borrower or the SPE Component Entity (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Component Entity (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the SPE Component Entity (as applicable) as Special Member, Special Member shall not be a member of Borrower or the SPE Component Entity (as applicable), but Special Member may serve as an Independent Director of Borrower or the SPE Component Entity (as applicable).

 

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(d)               The LLC Agreement shall further provide that (i) upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable) agree in writing (A) to continue Borrower or the SPE Component Entity (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Component Entity (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Component Entity (as applicable), (ii) any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower or the SPE Component Entity (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Component Entity (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the SPE Component Entity (as applicable) upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the SPE Component Entity (as applicable).

 

(e)               With respect to each Borrower, (i) such Borrower is and always has been duly formed, validly existing and in good standing in the state in which it was formed and in any other jurisdictions where it is qualified to do business; (ii) such Borrower has no outstanding judgments or liens of any nature against it; (iii) such Borrower is in compliance in all material respects with all laws, regulations and orders applicable to such Borrower and has received all material permits necessary for such Borrower to operate and for which a failure to possess would materially and adversely affect the condition, financial or otherwise, of Borrower; (iv) no Borrower is aware of any pending or threatened litigation involving such Borrower that, if adversely determined, might materially adversely affect the condition (financial or otherwise) of such Borrower, or the condition or ownership of the property owned by such Borrower; (v) such Borrower is not involved in any material dispute with any taxing authority; (vi) such Borrower has paid or has caused to be paid all real estate taxes that are due and payable with respect to its applicable Individual Property except as otherwise permitted pursuant to this Agreement; (vii) such Borrower is not now, a party to any lawsuit, arbitration, summons or legal proceeding that, if adversely determined, might materially adversely affect the condition (financial or otherwise) of such Borrower or the condition or ownership of the property owned by such Borrower nor has Borrower ever been a party to any lawsuit, arbitration, summons or legal proceeding that resulted in a judgment against it that has not been paid in full or otherwise resolved; (viii) all financial statements that Borrower has provided to Lender are true, correct and complete in all material respects and reflect an accurate view of the financial condition of Borrower (taken as a whole) as of the date hereof; (ix) except as set forth in the Environmental Reports, the most recent Phase I environmental audit for the applicable Individual Property owned by such Borrower recommended no action; (x) such Borrower has no material contingent or actual obligations not related to its applicable Individual Property and (xi) at all times since its formation to the date hereof, such Borrower has complied with the separateness covenants set forth in its organizational documents and has been a single purpose entity.

 

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Section 5.2.         Independent Director.

 

(a)               The organizational documents of each Borrower (to the extent such Borrower is Acceptable LLC) or the SPE Component Entity, as applicable, shall provide that at all times there shall be at least two duly appointed independent directors or managers of such entity (each, an “Independent Director”) who each shall (I) not have been at the time of each such individual’s initial appointment, and shall not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director, either (i) a shareholder (or other equity owner) of, or an officer, director (other than in its capacity as Independent Director), partner, member or employee of, any Borrower or any of its respective shareholders, partners, members, subsidiaries or Affiliates, (ii) a customer of, or supplier to, or other Person who derives any of its purchases or revenues from its activities with, any Borrower or any of its respective shareholders, partners, members, subsidiaries or Affiliates, (iii) a Person who Controls or is under common Control with any such shareholder, officer, director, partner, member, employee supplier, customer or other Person, or (iv) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other Person (II) shall have, at the time of their appointment, had at least three (3) years experience in serving as an independent director and (III) be employed by, in good standing with and engaged by Borrower in connection with, in each case, an Approved ID Provider.

 

(b)               The organizational documents of each Borrower and the SPE Component Entity shall further provide that (I) the board of directors or managers of Borrower and the SPE Component Entity and the constituent equity owners of such entities (constituent equity owners, the “Constituent Members”) shall not take any action set forth in Section 5.1(a)(xvi) or any other action which, under the terms of any organizational documents of Borrower or the SPE Component Entity, requires the vote of the Independent Directors unless, in each case, at the time of such action there shall be at least two Independent Directors engaged as provided by the terms hereof and such Independent Directors vote in favor of or otherwise consent to such action; (II) no Independent Director may be removed or replaced without Cause, and any resignation, removal or replacement of any Independent Director shall not be effective without (1) prior written notice to Lender and the Rating Agencies (which such prior written notice must be given on the earlier of five (5) days or three (3) Business Days prior to the applicable resignation, removal or replacement) and (2) evidence that the replacement Independent Director satisfies the applicable terms and conditions hereof and of the applicable organizational documents (which such evidence must accompany the aforementioned notice); (III) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act and notwithstanding any duty otherwise existing at law or in equity, the Independent Directors shall consider only the interests of the Constituent Members and Borrower and any SPE Component Entity (including Borrower’s and any SPE Component Entity’s respective creditors) in acting or otherwise voting on the matters provided for herein and in Borrower’s and SPE Component Entity’s organizational documents (which such fiduciary duties to the Constituent Members and Borrower and any SPE Component Entity (including Borrower’s and any SPE Component Entity’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in Borrower or SPE Component Entity (as applicable) exclusive of (x) all other interests (including, without limitation, all other interests of the Constituent Members), (y) the interests of other Affiliates of the Constituent Members, Borrower and SPE Component Entity and (z) the interests of any group of Affiliates of which the Constituent Members, Borrower or SPE Component Entity is a part); (IV) other than as provided in subsection (III) above, the Independent Directors shall not have any fiduciary duties to any Constituent Members, any directors of Borrower or SPE Component Entity or any other Person; (V) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and (VI) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act, an Independent Director shall not be liable to Borrower, SPE Component Entity, any Constituent Member or any other Person for breach of contract or breach of duties (including fiduciary duties), unless the Independent Director acted in bad faith or engaged in willful misconduct.

 

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Section 5.3.         Change of Name, Identity or Structure. Borrower shall not change (or permit to be changed) Borrower’s or the SPE Component Entity’s (a) name, (b) identity (including its trade name or names), (c) principal place of business set forth on the first page of this Agreement or (d) if not an individual, Borrower’s or the SPE Component Entity’s corporate, partnership or other structure or state of formation, without, in each case, notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s or the SPE Component Entity’s structure or state of formation, without first obtaining the prior written consent of Lender (not to be unreasonably withheld, conditioned or delayed) and, if required by Lender, a Rating Agency Confirmation with respect thereto. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, Borrower shall execute a certificate in form reasonably satisfactory to Lender listing the trade names under which Borrower or the SPE Component Entity intends to operate the applicable Individual Property, and representing and warranting that Borrower or the SPE Component Entity does business under no other trade name with respect to the applicable Individual Property.

 

Section 5.4.         Business and Operations. Borrower will continue to engage in the businesses now conducted by it as and to the extent the same are necessary for the ownership, maintenance, leasing, management and operation of each Individual Property. Borrower will qualify to do business and will remain in good standing under the laws of the State and each other applicable jurisdiction in which each Individual Property is located, in each case, as and to the extent the same are required for the ownership, maintenance, leasing, management and operation of each Individual Property.

 

ARTICLE 6.

 

NO SALE OR ENCUMBRANCE

 

Section 6.1.         Transfer Definitions. As used herein and in the other Loan Documents, “Restricted Party” shall mean Borrower, AFT, Guarantor, any SPE Component Entity or any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of Borrower, Guarantor or any SPE Component Entity; and a “Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) of a legal or beneficial interest.

 

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Section 6.2.         No Sale/Encumbrance.

 

(a)               It shall be an Event of Default hereof if, without the prior written consent of Lender, a Sale or Pledge of the Property or any part thereof or any legal or beneficial interest therein (including, without limitation, the Loan and/or Loan Documents) occurs, a Sale or Pledge of an interest in any Restricted Party occurs and/or Borrower shall acquire any real property in addition to the real property owned by Borrower as of the Closing Date (each of the foregoing, collectively, a “Prohibited Transfer”), other than (i) pursuant to Leases entered into in accordance with the provisions of Section 4.14 and (ii) as permitted pursuant to the express terms of this Article 6, none of which shall constitute a Prohibited Transfer.

 

(b)              A Prohibited Transfer shall include, but not be limited to, (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a Tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest (other than the security interest granted in favor of Lender pursuant to this Agreement and the other Loan Documents) in, Borrower’s right, title and interest in and to any (A) Leases or any Rents, (B) Property Documents or (C) Ground Leases; (iii) if a Restricted Party is a corporation, any merger, consolidation of such Restricted Party with any other Person or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock in one or a series of transactions; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation of such Restricted Party with any other Person or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the partnership interest of any general or limited partner or any profits or proceeds relating to such Sale or Pledge or the creation or issuance of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any Division, any merger or consolidation of such Restricted Party with any other Person or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the Sale or Pledge of the membership interest of any member or any profits or proceeds relating to such Sale or Pledge; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation of such Restricted Party with any other Person or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests; (vii) intentionally omitted; (viii) any action for partition of the Property (or any portion thereof or interest therein) or any similar action instituted or prosecuted by Borrower or by any other Person, pursuant to any contractual agreement or other instrument or under applicable law (including, without limitation, common law) and/or any other action instituted by (or at the behest of) Borrower or its Affiliates or consented to or acquiesced in by Borrower or its Affiliates which results in any termination or cancellation of any Ground Lease, and/or (ix) the incurrence of any property-assessed clean energy loans or similar indebtedness with respect to Borrower and/or the Property, including, without limitation, if such loans or indebtedness are made or otherwise provided by any Governmental Authority and/or secured or repaid (directly or indirectly) by any taxes or similar assessments.

 

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Section 6.3.         Permitted Equity Transfers.

 

(a)               Notwithstanding the restrictions contained in this Agreement, including without limitation, this Article 6, the following equity transfers shall be permitted without Lender’s consent: (i) a transfer (but not a pledge) by devise or descent or by operation of law upon the death of a Restricted Party or any member, partner or shareholder of a Restricted Party (but not the direct interests in Borrower or any SPE Component Entity), (ii) the transfer (but not the pledge), in one or a series of transactions, of the stock, partnership interests or membership interests (as the case may be) in a Restricted Party (but not the direct interests in Borrower or any SPE Component Entity), (iii) (A) the sale, transfer or issuance of shares of stock in AFT or in any Restricted Party (but not the direct interests in Borrower or any SPE Component Entity) that, in each instance, is a publicly traded entity, provided such shares of stock are listed on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange or (B) the sale, transfer or issuance of shares of stock in AFT provided that such shares of stock are sold, transferred or issued in the ordinary course of business through licensed broker dealers in accordance with all applicable Legal Requirements to third party investors in a manner consistent with previous offerings conducted by AFT or its Affiliates as of the Closing Date, (iv) the transfer (but not the pledge), in one or a series of transactions, of the stock, partnership interests or membership interests (as the case may be) by AFT or Guarantor or any direct or indirect legal or beneficial owner of AFT or Guarantor for estate planning purposes to the transferor’s spouse, child, parent, grandparent, grandchild, niece, nephew, aunt, uncle or other immediate family members of such owner, or to a trust for the benefit of such spouse, child, parent, grandparent, grandchild, niece, nephew, aunt, uncle or other immediate family members and (v) a Permitted Pledge; and provided, further, that, the foregoing provisions of clauses (i), (ii), (iii), (iv) and (v) above shall not be deemed to waive, qualify or otherwise limit Borrower’s obligation to comply (or to cause the compliance with) the other covenants set forth herein and in the other Loan Documents (including, without limitation, the covenants contained herein relating to ERISA matters)); provided, further, that, with respect to the transfers listed in clauses (i), (ii), (iii), (iv) and (v) above, (A) if such transfer results in the transfer of ten percent (10%) or more of the direct or indirect interest in Borrower to a Person which, prior to such transfer, did not own ten percent (10%) or more of a direct or indirect interest in Borrower, Lender shall receive not less than thirty (30) days prior written notice of (y) such transfers and (z) with respect to the pledge set forth in clause (v) above, the exercise of any rights or remedies by such Qualified Lender with respect to such pledge (provided, that, for purposes of clarification, with respect to the transfers contemplated in subsection (i) above, the aforesaid notice shall only be deemed to be required thirty (30) days following Borrower’s knowledge thereof and with respect to the transfers contemplated in subsection (iii) above, no notice of such transfer is required); (B) no such transfers shall result in a change in Control of Guarantor, Borrower or Affiliated Manager; (C) (x) after giving effect to such transfers, Guarantor shall (I) own at least a fifty-one percent (51%) direct or indirect equity ownership interest in each of each Borrower and each SPE Component Entity and (II) Control each Borrower and each SPE Component Entity and (y) after giving effect to such transfers, AFT shall (I) own at least a fifty-one percent (51%) direct or indirect equity ownership interest in Guarantor and (II) Control Guarantor; (D) after giving effect to such transfers, each Individual Property which has a Manager as of the date of such transfer shall continue to be managed by Manager or a New Manager approved in accordance with the applicable terms and conditions hereof; (E) such transfers shall be conditioned upon continued compliance with the relevant provisions of Article 5 hereof; (F) in the case of (1) the transfer of the management of any Individual Property to a new Affiliated Manager in accordance with the applicable terms and conditions hereof, or (2) if after giving effect to such transfer more than forty-nine percent (49%) in the aggregate of the direct or indirect interests in Borrower or any SPE Component Entity are owned by any Person and/or its Affiliates that owned less than forty-nine percent (49%) of the direct or indirect interests in Borrower or any SPE Component Entity as of the Closing Date, Borrower shall deliver to Lender a New Non-Consolidation Opinion addressing such transfer; (G) after giving effect to the equity transfer in question (I) the representations contained herein relating to ERISA matters shall be true and correct as if made as of the date of such transfer (and, upon Lender’s request, Borrower shall deliver to Lender an Officer’s Certificate containing such updated representations effective as of the date of the consummation of the applicable equity transfer) and (II) Borrower shall remain in compliance with the covenants contained herein relating to ERISA matters; (H) to the extent that any transfer results in the transferee (either itself or collectively with its affiliates) owning a twenty percent (20%) (or, with respect to any Person not domiciled in the United States, ten percent (10%)) or greater equity interest (directly or indirectly) in Borrower or in any SPE Component Entity (to the extent the transferee (collectively with its affiliates) did not previously own at least twenty percent (20%) (or, with respect to any Person not domiciled in the United States, ten percent (10%)) of the equity interest (directly or indirectly) in Borrower or in any SPE Component Entity), Lender’s receipt of the Satisfactory Search Results shall be a condition precedent to such transfer, (I) such transfers shall not be prohibited pursuant to the terms of the Property Documents and the Ground Leases; (J) after giving effect to such transfers, the Guarantor Control Condition shall continue to be satisfied, (K) intentionally omitted, (L) other than a transfer pursuant to clause (i), subclause (iii)(A) or (B) and/or clause (iv) above, no Event of Default has occurred and is continuing and (M) Borrower shall reimburse Lender within ten (10) Business Days after Lender’s written request for (I) all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees (of any outside counsel, if applicable), actually incurred by Lender (or any Servicer on its behalf) in connection therewith, and (II) all fees, costs and expenses of the Rating Agencies incurred in connection therewith. For the avoidance of doubt, any listing and/or trading of the shares of stock in AFT on the New York Stock Exchange, NASDAQ Global Select Market or another nationally recognized stock exchange or market in accordance with this Section 6.3(a) shall not be a Prohibited Transfer. For purposes of this Section 6.3(a) and for purposes of Section 6.3(b) below, the issuance of stock, partnership interests or other equity interests shall include the issuance of existing classes of stock, partnership interests and/or other equity interests as well as the creation and/or issuance of one or more new classes of stock, partnership interests or other equity interests.

 

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(b)               Notwithstanding the restrictions contained in this Article 6, so long as no Event of Default has occurred and shall be continuing, the sale, transfer or issuance of direct or indirect interests in Guarantor shall be permitted without the consent of Lender provided that: (i) if such sale, transfer or issuance results in the transfer of ten percent (10%) or more of the direct or indirect interest in Borrower to a Person which, prior to such sale, transfer or issuance, did not own ten percent (10%) or more of a direct or indirect interest in Borrower, Lender receives thirty (30) days prior written notice with respect to such sale, transfer or issuance and in connection therewith, Borrower shall pay to Lender a non-refundable processing fee of $10,000.00, (ii) after giving effect to such sale, transfer or issuance, (I) to the extent that Guarantor shall not, after giving effect to such sale, transfer or issuance, (A) own at least a fifty-one percent (51%) direct or indirect interest in each Borrower and each SPE Component Entity and/or (B) Control Borrower and each SPE Component Entity, each Individual Property shall be managed by Manager or a New Manager approved in accordance with the applicable terms and conditions hereof and (II) to the extent that Guarantor shall, after giving effect to such sale, transfer or issuance, (A) own at least a fifty-one percent (51%) direct or indirect interest in each Borrower and each SPE Component Entity and (B) Control Borrower and each SPE Component Entity, each Individual Property that has a Manager as of the date of such sale, transfer or issuance shall continue to be managed by a Manager or a New Manager approved in accordance with the applicable terms and conditions hereof, (iii) after giving effect to the sale, transfer or issuance in question (I) the representations contained herein relating to ERISA matters shall be true and correct as if made as of the date of such sale, transfer or issuance (and, upon Lender’s request, Borrower shall deliver to Lender an Officer’s Certificate containing such updated representations effective as of the date of the consummation of the applicable sale, transfer or issuance) and (II) Borrower shall remain in compliance with the covenants contained herein relating to ERISA matters, (iv) to the extent that such sale, transfer or issuance results in the transferee (either itself or collectively with its affiliates) owning a twenty percent (20%) (or, with respect to any Person not domiciled in the United States, ten percent (10%)) or greater equity interest (directly or indirectly) in Borrower or in any SPE Component Entity (to the extent the transferee (collectively with its affiliates) did not previously own at least twenty percent (20%) (or, with respect to any Person not domiciled in the United States, ten percent (10%)) of the equity interest (directly or indirectly) in Borrower or in any SPE Component Entity, Lender’s receipt of the Satisfactory Search Results shall be a condition precedent to such sale, transfer or issuance; (v) such sale, transfer or issuance is not prohibited under the terms of the Property Documents and the Ground Leases, (vi) after giving effect to such sale, transfer or issuance, Borrower shall remain in compliance with the relevant provisions of Article 5 hereof, (vii) after giving effect to such sale, transfer or issuance, either (A) (x) Guarantor shall (I) own at least a fifty-one percent (51%) direct or indirect equity ownership interest in each Borrower and each SPE Component Entity and (II) Control each Borrower and each SPE Component Entity and (y) AFT shall (I) own at least a fifty-one percent (51%) direct or indirect equity ownership interest in Guarantor and (II) Control Guarantor, or (B) a Qualified Equityholder shall (I) own at least a fifty-one percent (51%) direct or indirect equity ownership interest in each of the Qualified Replacement Guarantor described in the immediately succeeding clause (B)(III) (unless such Qualified Replacement Guarantor is also such Qualified Equityholder), each Borrower and each SPE Component Entity, (II) Control each of the Qualified Replacement Guarantor described in the immediately succeeding clause (B)(III) (unless such Qualified Replacement Guarantor is also such Qualified Equityholder), each Borrower and each SPE Component Entity; and (III) shall deliver to Lender a replacement limited recourse guaranty in form and substance substantially identical to the Guaranty and a replacement environmental indemnity agreement in form and substance substantially identical to the Environmental Indemnity, each executed by a Qualified Replacement Guarantor with respect to actions or omissions first occurring on or after the date of such sale, transfer or issuance; (viii) to the extent that Guarantor shall not, after giving effect to such sale, transfer or issuance, (A) own at least a fifty-one percent (51%) direct or indirect interest in each Borrower and each SPE Component Entity and/or (B) Control each Borrower and each SPE Component Entity, Lender shall have received a Rating Agency Confirmation with respect to such sale, transfer or issuance, (ix) such Qualified Replacement Guarantor shall have furnished to Lender all appropriate papers evidencing such Person’s organization and good standing, and the qualification of the signers to execute the documents referenced in clause (vii)(B)(III) above, which papers shall include certified copies of all relevant documents relating to the organization and formation of such Qualified Replacement Guarantor and of the entities, if any, which are partners or members of the Qualified Replacement Guarantor, (x)(A) if, after giving effect to such sale, transfer or issuance, more than forty-nine percent (49%) in the aggregate of the direct or indirect interests in Borrower or any SPE Component Entity are owned by any Person and/or its Affiliates that owned less than forty-nine percent (49%) of the direct or indirect interests in Borrower or any SPE Component Entity as of the Closing Date, Borrower shall deliver to Lender a New Non-Consolidation Opinion addressing such sale, transfer or issuance and (B) Borrower shall furnish to Lender an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code with respect to the sale, transfer or issuance and the transactions related thereto and an additional opinion of counsel reasonably satisfactory to Lender and its counsel (I) that Qualified Replacement Guarantor’s good standing and due authorization to execute the documents required herein and that the documents referenced in clause (vii)(B)(3) above are valid, binding and enforceable against the Qualified Replacement Guarantor and Borrower, as applicable, in accordance with their terms, and (II) that the Qualified Replacement Guarantor and any entity which is a controlling stockholder, member or general partner of the Qualified Replacement Guarantor have been duly organized, and are in existence and good standing, (xi) unless Guarantor is replaced with a Qualified Replacement Guarantor as set forth herein, such sale, transfer or issuance shall not result in Guarantor’s non-compliance with the net worth and liquidity requirements provided in the Guaranty, and (xii) Borrower shall have paid to Lender, concurrently with the closing of such sale, transfer or issuance (I) all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees (of any outside counsel, if applicable), actually incurred by Lender (or any Servicer on its behalf) in connection therewith (II) all fees, costs and expenses of the Rating Agencies incurred in connection therewith, in each case, if any.

 

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(c)               Upon request from Lender in connection with any transfer set forth above and otherwise no more than once each calendar quarter, Borrower shall promptly provide Lender with a revised version of the organizational chart delivered to Lender in connection with the Loan reflecting any equity transfer consummated in accordance with this Section 6.3.

 

Section 6.4.         Lender’s Rights. Lender reserves the right to condition the consent to a Prohibited Transfer requested hereunder upon (a) a modification of the terms hereof and on assumption of this Agreement and the other Loan Documents as so modified by the proposed Prohibited Transfer, (b) payment of a transfer fee in the amount of $750,000.00 and all of Lender’s expenses incurred in connection with such Prohibited Transfer, (c) receipt of a Rating Agency Confirmation with respect to the Prohibited Transfer, (d) the proposed transferee’s continued compliance with the covenants set forth in this Agreement, including, without limitation, the covenants in Article 5, (e) receipt of a New Non-Consolidation Opinion with respect to the Prohibited Transfer and/or (f) such other conditions and/or legal opinions as Lender shall determine in its sole discretion to be in the interest of Lender. All out-of-pocket expenses incurred by Lender shall be payable by Borrower whether or not Lender consents to the Prohibited Transfer. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Prohibited Transfer without Lender’s consent. This provision shall apply to every Prohibited Transfer, whether or not Lender has consented to any previous Prohibited Transfer.

 

Section 6.5.         Economic Sanctions, Anti-Money Laundering and Transfers. Borrower shall (a) at all times comply with the representations and covenants contained in Sections 3.29 and 4.24 such that the same remain true, correct and not violated or breached and (b) not permit a Prohibited Transfer to occur and shall cause the ownership requirements specified in this Article 6 (including, without limitation, those stipulated in Section 6.3 hereof) to be complied with at all times. Borrower hereby represents that, other than in connection with the Loan, the Loan Documents and any Permitted Encumbrances, as of the date hereof, there exists no Sale or Pledge of Borrower and/or any SPE Component Entity.

 

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Section 6.6.         Immaterial Transfers and Easements.

 

(a)               Borrower may, without the consent of Lender, (i) make immaterial Transfers of unimproved, non-income producing portions of an Individual Property to Governmental Authorities for dedication or public use (each an “Outparcel”), and (ii) grant easements, restrictions, covenants, reservations and rights of way in the ordinary course of business for access, water and sewer lines, telephone or other fiber optic or other data transmission lines, electric lines or other utilities or for other similar purposes, provided that no such Transfer, conveyance or encumbrance set forth in the foregoing clauses (i) or (ii) shall materially impair the value, use or operation of such Individual Property or reasonably be expected to have a Material Adverse Effect. In connection with any Transfer permitted pursuant to this Section 6.6, Lender shall execute and deliver such instruments in form and substance reasonably satisfactory to Lender as may be reasonably necessary, in the case of the Transfers referred to in clause (i) above, to release the portion of the Individual Property affected by such Condemnation or such Transfer from the lien of the applicable Security Instrument or, in the case of clause (ii) above, to subordinate the lien of the applicable Security Instrument to such easements, restrictions, covenants, reservations and rights of way or other similar grants upon receipt by Lender of:

 

(i)           fifteen (15) days’ prior written notice thereof;

 

(ii)          a copy of the instrument or instruments of Transfer;

 

(iii)         a certificate from an officer of Borrower stating (1) with respect to any Transfer, the consideration, if any, being paid for the Transfer, and (2) that such Transfer does not materially impair the value, use or operation of applicable the Individual Property and would not reasonably be expected to have a Material Adverse Effect; and

 

(iv)         reimbursement of all of Lender’s reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) actually incurred in connection with such Transfer (which shall be paid by Borrower whether or not the proposed Transfer actually occurs).

 

(b)               Notwithstanding the foregoing provisions of this Section 6.9, for so long as the Loan is included in a REMIC Trust in connection with a Securitization, no release of the Outparcel from the lien of the applicable Security Instrument will be permitted unless, immediately after such release, either (i) the Loan-to-Value Ratio is equal to or less than one hundred twenty-five percent (125%) (such value to be determined, in Lender’s sole discretion, by any commercially reasonable method permitted to a REMIC Trust, based solely on the value of the real property excluding personal property and going concern value, if any) or (ii) the principal balance of the Loan is paid down by the least of the following amounts: (A) an amount equal to the net proceeds or other compensation paid by a Governmental Authority in connection with a Transfer described in Section 6.9(a)(i), (B) the fair market value of the Outparcel at the time of release, or (C) an amount such that the Loan-to-Value Ratio (as so determined by Lender) does not increase after the release, unless Lender receives an opinion of counsel that the Securitization will not fail to maintain its status as a REMIC Trust as a result of the release.

 

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ARTICLE 7.

 

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 7.1.         Insurance.

 

(a)               Each Borrower shall obtain and maintain, or cause to be obtained and maintained, insurance for each Borrower and each Individual Property providing at least the following coverages:

 

(i)           insurance with respect to the Improvements insuring against any peril now or hereafter included within the classification “All Risk” or “Special Perils” (including, without limitation, fire, lightning, windstorm/named storm, hail, terrorism and similar acts of sabotage, explosion, riot, riot attending a strike, civil commotion, vandalism, aircraft, vehicles and smoke), in each case (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Agreement shall mean actual replacement value exclusive of costs of excavations, foundations, underground utilities and footings, with a waiver of depreciation; (B) written on a no co-insurance form; (C) providing for no deductible in excess of $100,000.00 except (I) with respect to earthquake, hail and windstorm/named storms, which such insurance shall provide for no deductible in relation to such coverage in excess of 5% of the total insurable value of the Property, subject to a minimum of $250,000.00 and (II) as otherwise expressly and specifically permitted herein; (D) at all times insuring against at least those hazards that are commonly insured against under a “special causes of loss” form of policy, as the same shall exist on the date hereof, and together with any increase in the scope of coverage provided under such form after the date hereof; and (E) providing coverage for contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of Construction Endorsements together with an “Ordinance or Law Coverage” endorsement in amounts reasonably acceptable to Lender. The Full Replacement Cost shall be re-determined from time to time (but not more frequently than once in any twelve (12) calendar months) at the reasonable request of Lender by an appraiser or contractor designated and paid by Borrower and reasonably approved by Lender, or by an engineer or appraiser in the regular employ of the insurer. After the first appraisal, additional appraisals may be based on construction cost indices customarily employed in the trade. No omission on the part of Lender to request any such ascertainment shall relieve Borrower of any of its obligations under this Subsection;

 

(ii)          commercial general liability insurance against all claims for personal injury, bodily injury, death or property damage occurring upon, in or about the applicable Individual Property, including “Dram Shop” or other liquor liability coverage if alcoholic beverages are sold, manufactured or distributed from the applicable Individual Property, such insurance (A) to be on the so-called “occurrence” form with a general aggregate limit of not less than $2,000,000.00 and a per occurrence limit of not less than $1,000,000.00, with no deductible or self-insured retention; (B) to continue at not less than the aforesaid limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; (4) contractual liability for all insured contracts; (5) contractual liability covering the indemnities contained in Article 13 hereof to the extent the same is available; and (6) acts of terrorism and similar acts of sabotage;

 

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(iii)         loss of rents and/or business interruption insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in Subsection 7.1(a)(i), (iv) and (vi) through (viii); (C) in an amount equal to 100% of the projected gross income from the applicable Individual Property (on an actual loss sustained basis) for a period continuing until the Restoration of the applicable Individual Property is completed; the amount of such business interruption/loss of rents insurance shall be determined prior to the Closing Date and at least once each year thereafter based on Lender’s determination of the projected gross income from the applicable Individual Property for a eighteen (18) month period; and (D) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and the Personal Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that the applicable Individual Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period. Notwithstanding anything to the contrary contained herein or in any other Loan Documents, to the extent that insurance proceeds are payable to Lender pursuant to this Subsection (the “Rent Loss Proceeds”) and Borrower is entitled to disbursement of Net Proceeds for Restoration in accordance with the terms hereof, such Rent Loss Proceeds shall be deposited by Lender in the Cash Management Account and disbursed as provided in Article 9 hereof; provided, however, that (I) nothing herein contained shall be deemed to relieve Borrower of its obligations to pay the obligations secured hereunder on the respective dates of payment provided for in the Note except to the extent such amounts are actually paid out of the Rent Loss Proceeds and (II) in the event the Rent Loss Proceeds are paid in a lump sum in advance and Borrower is entitled to disbursement of such Rent Loss Proceeds in accordance with the terms hereof, Lender or Servicer shall hold such Rent Loss Proceeds in a segregated interest-bearing Eligible Account (which shall deemed to be included within the definition of the “Accounts” hereunder) and Lender or Servicer shall estimate the number of months required for Borrower to restore the damage caused by the applicable Casualty, shall divide the applicable aggregate Rent Loss Proceeds by such number of months and shall disburse such monthly installment of Rent Loss Proceeds from such Eligible Account into the Cash Management Account each month during the performance of such Restoration;

 

(iv)         at all times during which structural construction, repairs or alterations are being made with respect to the Improvements (A) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) the insurance provided for in Subsection 7.1(a)(i) written in a so-called builder’s risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to Subsection 7.1(a)(i), (3) including permission to occupy the applicable Individual Property, and (4) with an agreed amount endorsement waiving co-insurance provisions;

 

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(v)         if and when Borrower has any employees, workers’ compensation, subject to the statutory limits of the state in which the applicable Individual Property is located, and employer’s liability insurance with a limit of at least $1,000,000.00 per accident and per disease per employee, and $1,000,000.00 for disease aggregate in respect of any work or operations on or about the applicable Individual Property, or in connection with the applicable Individual Property or its operation (if applicable);

 

(vi)         comprehensive boiler and machinery insurance covering all mechanical and electrical equipment and pressure vessels and boilers in an amount not less than their replacement cost or in such other amounts as shall be reasonably required by Lender;

 

(vii)        if any portion of the Improvements is at any time located in an area identified by (A) the Federal Emergency Management Agency in the Federal Register as an area having special flood hazards and/or (B) the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, or any successor law (the “Flood Insurance Acts”), flood hazard insurance in an amount equal to the maximum limit of coverage available for the applicable Individual Property under the Flood Insurance Acts or its equivalent as determined by Lender (plus such higher amount as Lender may require in its sole discretion);

 

(viii)      earthquake, for any Individual Property located in seismic zone 3 or 4, in amounts equal to one-and-one-half times (1.5x) the probable maximum loss of the applicable Individual Property plus loss of rents/business interruption as required pursuant to subsection (iii) above as determined by Lender in its sole discretion and in form and substance satisfactory to Lender. In the event earthquake coverage is provided pursuant to a blanket policy, such earthquake coverage shall be in amount not less than the annual aggregate gross loss estimates as indicated in a portfolio seismic risk analysis for the 500-year return period for all high risk locations insured by such coverage (such analysis to be approved by Lender and secured by the applicable Borrower, and which shall include consideration of business interruption and loss amplification using the most current RMS software, or its equivalent) provided that the insurance pursuant to this Subsection (viii) shall be otherwise on terms consistent with the all risk insurance policy required under Section 7.1(a)(i);

 

(ix)          umbrella liability insurance, including acts of terrorism and similar acts of sabotage, in an amount not less than $100,000,000.00 per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above;

 

(x)          pollution legal liability insurance coverage for claims for clean-up costs and third party legal liability related to the Properties listed on Schedule XVI (“PLL Policy”) with the following terms and conditions: (A) such coverage shall be written on claims made form effective as of the Closing Date for a term of eight years, (B) such coverage shall have limits of liability of Three Million and No/100 Dollars ($3,000,000.00) individually for each pollution condition and Fifteen Million and No/100 Dollars ($15,000,000.00) in the aggregate, and a deductible of Fifty Thousand and No/100 Dollars ($50,000.00), (C) the premium shall paid in full on or before the Closing Date, (D) the Lender shall be named an Additional Insured, (E) automatic rights of assignment in the event of default pursuant to a Lender Assignment – No Consent endorsement, (F) the PLL Policy shall not be cancelled by Borrower without Lender’s written consent, (G) the PLL Policy shall not be cancelled by the Underwriters without prior written notice to Lender, (H) the PLL Policy shall be dedicated solely to the Properties listed on Schedule XVI and no additional Properties shall be added during the PLL term; and (I) other than to increase coverage, the PLL Policy shall not be materially changed by Borrower, (including, without limitation, to remove a Property from coverage) without Lender’s prior written consent;

 

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(xi)          motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, of One Million and No/100 Dollars ($1,000,000.00) (if applicable); and

 

(xii)        such other insurance and in such amounts as (A) may be required pursuant to the terms of the Property Documents and the Ground Leases and (B) Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the applicable Individual Property located in or around the region in which the applicable Individual Property is located.

 

(b)               All insurance provided for in Subsection 7.1(a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from time to time after the date hereof, in such amounts as may be satisfactory to Lender, issued by financially sound and responsible insurance companies approved to do business in the state in which the applicable Individual Property is located and approved by Lender. The insurance companies must have a general policy rating of (1) (x) “A” or better by S&P, (y)“A2” or better by Moody’s, if Moody’s rates the Securities and rates the applicable insurance company, and (z) “A” or better by Fitch, to the extent Fitch rates the Securities and rates the applicable insurance company (each such insurer shall be referred to below as a “Qualified Insurer”); provided, however for multi-layered policies, (A) if four (4) or fewer insurance companies issue the Policies, then at least 75% of the insurance coverage represented by the Policies must be provided by insurance companies with a rating of “A” or better by S&P, “A2” or better by Moody’s, to the extent Moody’s rates the Securities and rates the applicable insurance company, and “A” or better by Fitch, to the extent Fitch rates the Securities and rates the applicable insurance company, with no remaining carrier below “BBB” by S&P, “Baa2” or better by Moody’s, to the extent Moody’s rates the Securities and rates the applicable insurance company, and “BBB” or better by Fitch, to the extent Fitch rates the Securities and rates the applicable insurance company, or (B) if five (5) or more insurance companies issue the Policies, then at least sixty percent (60%) of the insurance coverage represented by the Policies must be provided by insurance companies with a rating of “A” or better by S&P, “A2” or better by Moody’s, to the extent Moody’s rates the Securities and rates the applicable insurance company, and “A” or better by Fitch, to the extent Fitch rates the Securities and rates the applicable insurance company, with no remaining carrier below “BBB” by S&P, “Baa2” or better by Moody’s, to the extent Moody’s rates the Securities and rates the applicable insurance company, and “BBB” or better by Fitch, to the extent Fitch rates the Securities and rates the applicable insurance company), and (2) a rating of “A:X” or better in the current Best’s Insurance Reports. Notwithstanding the foregoing, Lender accepts Aspen American Insurance Company, rated A XV with AM Best, provided that (1) the rating of Aspen American Insurance Company is not withdrawn or downgraded below the date hereof and (2) at renewal of the current policy term, Borrower shall replace Aspen American Insurance Company with an insurance company meeting the rating requirements set forth hereinabove. For so long the Terrorism Risk Insurance Program Reauthorization Act of 2015 or subsequent statute, extension or reauthorization (“TRIPRA”) is in effect and continues to cover both foreign and domestic acts of terrorism, Lender shall accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. Notwithstanding anything to the contrary herein, if TRIPRA or a similar or subsequent statute, extension or reauthorization thereof is not in effect, then provided that terrorism insurance is commercially available, Borrower shall be required carry terrorism insurance throughout the term of the Loan as required by the preceding sentence, but in such event Borrower shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable at such time in respect of the property and business interruption/rental loss insurance required hereunder (without giving effect to the cost of the terrorism components of such casualty and business interruption/rental loss insurance), and if the cost of terrorism insurance exceeds such amount, Borrower shall purchase the maximum amount of terrorism insurance available with funds equal to such amount. Prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to Subsection 7.1(a), Borrower shall deliver complete copies of the Policies marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”), provided, however, that in the case of renewal Policies, Borrower may furnish Lender with binders and Acord Form 28 Certificates therefor to be followed by the original Policies when issued.

 

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(c)               Borrower shall not obtain (or permit to be obtained) (i) any umbrella or blanket liability or casualty Policy unless, in each case, such Policy is approved in advance in writing by Lender, Lender’s interest is included therein as provided in this Agreement, such Policy is issued by a Qualified Insurer and such Policy includes such changes to the coverages and requirements set forth herein as may be required by Lender (including, without limitation, increases to the amount of coverages required herein) or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Subsection 7.1(a) to be furnished by, or which may be reasonably required to be furnished by, Borrower. In the event Borrower obtains (or causes to be obtained) separate insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause complete copies of each Policy to be delivered as required in Subsection 7.1(a). Notwithstanding Lender’s approval of any umbrella or blanket liability or casualty Policy hereunder, Lender reserves the right, in its reasonable discretion, to require Borrower to obtain a separate Policy in compliance with this Section 7.1. Without limitation of any provision hereof, (i) Lender’s consent required hereunder with respect to any umbrella or blanket policy shall be subject to receipt of the schedule of locations and values with respect to the same, portfolio PML reports for the catastrophic perils of earthquake and windstorm/named storm, and such other information as requested by Lender or the Rating Agencies and (ii) any umbrella or blanket Policy shall otherwise provide the same protection as would a separate Policy insuring only such Individual Property in compliance with the provisions of Section 7.1(a) as determined by Lender. Borrower shall notify Lender of any material changes to the blanket policy, including changes to the limits under the policy as of Closing Date or an aggregation of the insured values covered under the blanket policy, including the reduction of flood (SFHA), earthquake or wind/named storm limits or the addition of locations that are subject to the perils of flood (special flood hazard area locations), earthquake or Tier 1 wind/named storm, and such changes shall be subject to Lender’s approval, which shall not be unreasonably withheld. Lack of a written response by Lender within five (5) Business Days of receipt by Lender of all requested information shall be deemed approval of such changes.

 

(d)               All Policies of insurance provided for or contemplated by Subsection 7.1(a) shall name Borrower as a named insured and, in the case of liability Policies (except for the Policies referenced in Subsections 7.1(a)(v) and (xi) and for Subsection 7.1(a)(x) for which Lender shall also be a named insured), shall name Lender as an additional insured, as their respective interests may appear, and, in the case of property damage Policies (including, but not limited to, terrorism, rent loss, business interruption, boiler and machinery, earthquake and flood insurance), such Policies shall contain a standard noncontributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender. Borrower shall promptly forward to Lender a copy of each written notice received by Borrower of any modification, reduction or cancellation of any of the Policies or of any of the coverages afforded under any of the Policies. Notwithstanding the foregoing, the Borrower shall be named as Loss Payee, Additional Interest or the equivalent thereof, as it pertains to the flood hazard insurance provided through the Flood Insurance Act or its equivalent, when such policy is provided by a Tenant.

 

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(e)               All Policies of insurance provided for in Subsection 7.1(a) shall:

 

(i)                 with respect to property damage Policies, provide that (1) the following shall in no way affect the validity or enforceability of the Policy insofar as Lender is concerned: (A) any act or negligence of Borrower, of anyone acting for Borrower or of any other Person named as an insured, additional insured and/or loss payee, (B) any foreclosure or other similar exercise of remedies and (C) the failure to comply with the provisions of the Policy which might otherwise result in a forfeiture of the insurance or any part thereof; and (2) the Policy shall not be cancelled without at least 30 days’ written notice, except for ten (10) days’ written notice for cancellation due to non-payment of premium;

 

(ii)              with respect to all other Policies, if available using commercially reasonable efforts, provide that the Policy shall not be materially changed (other than to increase the coverage provided thereby), terminated or cancelled without at least 30 days’ written notice, except for ten (10) days’ written notice for cancellation due to non-payment of premium, to Lender and any other party named therein as an insured;

 

(iii)            if available using commercially reasonable efforts, provide that the issuer(s) of the Policy shall give ten (10) days’ written notice to Lender if the issuers elect not to renew the Policy prior to its expiration; and

 

(iv)             not contain any provision which would make Lender liable for any Insurance Premiums thereon or subject to any assessments or commissions thereunder provided that, Lender shall, at its option and with no obligation to do so, have the right to directly pay Insurance Premiums in order to avoid cancellation, expiration and/or termination of the Policy due to non-payment of Insurance Premiums.

 

(f)                Borrower shall promptly forward to Lender a copy of each written notice received by any Borrower Party of any modification, reduction or cancellation of any of the Policies or of any of the coverages afforded under any of the Policies.

 

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(g)               If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, upon not less than ten (10) days’ notice to Borrower (or such shorter period of time as may be necessary to avoid the lapse of any such insurance) to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Security Instrument and shall bear interest at the Default Rate.

 

(h)               In the event of a foreclosure of the Security Instrument or other transfer of title to any Individual Property (or any portion thereof) in extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to the Policies then in force concerning the applicable Individual Property (or any portion thereof) and all proceeds payable thereunder shall thereupon vest exclusively in Lender.

 

(i)                 As an alternative to the Policies required to be maintained pursuant to the preceding provisions of this Section 7.1, Borrower will not be in default under this Section 7.1 if Borrower maintains (or causes to be maintained) Policies which (i) have coverages, deductibles and/or other related provisions other than those specified above and/or (ii) are provided by insurance companies not meeting the credit ratings requirements set forth above (any such Policy, a “Non-Conforming Policy”), provided, that, prior to obtaining such Non-Conforming Policies (or permitting such Non-Conforming Policies to be obtained), Borrower shall have (1) received Lender’s prior written consent thereto not to be unreasonably withheld, delayed or conditioned and (2) confirmed that Lender has received a Rating Agency Confirmation with respect to any such Non-Conforming Policy. Notwithstanding the foregoing, Lender hereby reserves the right to deny its consent to any Non-Conforming Policy regardless of whether or not Lender has consented to the same on any prior occasion.

 

(j)                 Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or insurance proceeds lawfully or equitably payable in connection with any Individual Property (or any portion thereof), and Lender shall be reimbursed for any expenses incurred in connection therewith (including reasonable, actual attorneys’ fees and disbursements, and the payment by Borrower of the expense of an appraisal on behalf of Lender in case of a Casualty or Condemnation affecting any Individual Property or any part thereto) out of such Awards or insurance proceeds.

 

Section 7.2.         Casualty. Subject to Borrower’s ability to release an Individual Property in accordance with Sections 7.4(c) and (d) hereof, if any Individual Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”) which is reasonably estimated by Borrower to cost $250,000.00 or more to repair, Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the Restoration of the applicable Individual Property and otherwise comply with the provisions of Section 7.4. Borrower shall pay all costs of any such Restoration (including, without limitation, any applicable deductibles under the Policies) whether or not such costs are covered by the Net Proceeds. Lender may, but shall not be obligated to, make proof of loss if not made promptly by Borrower.

 

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Section 7.3.         Condemnation.

 

(a)               Borrower shall promptly give Lender notice of the actual or threatened commencement of any proceeding for the Condemnation of any Individual Property (or portion thereof) of which Borrower has written knowledge and shall deliver to Lender copies of any and all material papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including but not limited to any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If any Individual Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 7.4. Borrower shall pay all costs of Restoration whether or not such costs are covered by the Net Proceeds. If any Individual Property (or any portion thereof) is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.

 

(b)               Notwithstanding anything to the contrary contained herein or in any other Loan Document, if the Loan or any portion thereof is included in a REMIC Trust and, immediately following a release of any portion of the lien of the Security Instrument in connection with a Condemnation of an Individual Property (but taking into account any proposed Restoration on the remaining portion of such Individual Property) (based solely on real property and excluding any personal property or going concern value), the Loan-to-Value Ratio (as determined in Lender’s reasonable discretion, by any commercially reasonable method permitted to a REMIC Trust) is greater than 125%, the principal balance of the Loan must be paid down by an amount not less than the least of the following amounts: (i) the net amount of the Award, after deduction of Lender’s and Borrower’s reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), (ii) the fair market value of the released property at the time of the release, or (iii) an amount such that the Loan-to-Value Ratio (as determined in Lender’s reasonable discretion, by any commercially reasonable method permitted to a REMIC Trust) does not increase after the release, unless Lender receives an opinion of counsel that if such amount is not paid, the Securitization will not fail to maintain its status as a REMIC Trust as a result of the related release of such portion of the lien of the Security Instrument.

 

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Any such prepayment shall be deemed a voluntary prepayment and shall be subject to Section 2.7(a) hereof (other than the requirements to provide ten (10) days’ notice to Lender and other than payment of any Yield Maintenance Premium or other prepayment premium or penalty (as applicable)).

 

Section 7.4.         Restoration. The following provisions shall apply in connection with the Restoration of any Individual Property:

 

(a)               If the Net Proceeds shall be less than the Restoration Threshold and the costs of completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Section 7.4(b)(i) (other than clause (F) thereof) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement.

 

(b)               If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the Restoration are equal to or greater than the Restoration Threshold, Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 7.4(b).

 

(i)                 The Net Proceeds shall be made available for Restoration provided that each of the following conditions are met:

 

(A)             no Event of Default shall have occurred and be continuing;

 

(B)              (1) in the event the Net Proceeds are insurance proceeds, less than thirty percent (30%) of each of (i) fair market value of the applicable Individual Property as reasonably determined by Lender, and (ii) rentable area of the applicable Individual Property has been damaged, destroyed or rendered unusable as a result of a Casualty or (2) in the event the Net Proceeds are condemnation proceeds, less than ten percent (10%) of each of (i) the fair market value of the applicable Individual Property as reasonably determined by Lender and (ii) rentable area of the applicable Individual Property is taken, such land is located along the perimeter or periphery of the applicable Individual Property, no portion of the Improvements is located on such land and such taking does not materially impair the existing access to the applicable Individual Property;

 

(C)              Leases demising in the aggregate a percentage amount equal to or greater than 70% of the total rentable space in the applicable Individual Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such fire or other casualty or taking, whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration, notwithstanding the occurrence of any such Casualty or Condemnation, whichever the case may be, and Borrower furnishes to Lender evidence reasonably satisfactory to Lender that all Tenants under Major Leases shall continue to operate their respective space at the applicable Individual Property after the completion of the Restoration;

 

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(D)       Borrower shall commence (or shall cause the commencement of) the Restoration as soon as reasonably practicable (but in no event later than sixty (60) days after the issuance of a building permit with respect thereto) and shall diligently pursue the same to reasonably satisfactory completion in compliance with all applicable Legal Requirements, including, without limitation, all applicable Environmental Laws, and the applicable requirements of the Property Documents and the Ground Leases, if any;

 

(E)       Lender shall be reasonably satisfied that any operating deficits which will be incurred with respect to the applicable Individual Property as a result of the occurrence of any such fire or other casualty or taking will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 7.1(a)(iii) above, or (3) by other funds of Borrower;

 

(F)       Lender shall be reasonably satisfied that the Net Proceeds together with any cash or cash equivalent deposited by Borrower with Lender are sufficient to cover the cost of the Restoration;

 

(G)       Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) six (6) months prior to the Maturity Date, (2) the earliest date required for such completion under the terms of any Leases, the Ground Leases and the Property Documents, (3) such time as may be required under applicable Legal Requirements or (4) the expiration of the insurance coverage referred to in Section 7.1(a)(iii) above;

 

(H)       the applicable Individual Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable Legal Requirements, the Ground Leases and the Property Documents;

 

(I)        the Restoration shall be done and completed in an expeditious and diligent fashion and in compliance with all applicable Legal Requirements, the Ground Leases and the Property Documents; and

 

(J)        the Ground Leases and the Property Documents will remain in full force and effect during and after the Restoration and a Property Document Event shall not occur as a result of the applicable Casualty, Condemnation and/or Restoration.

 

(ii)              The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Section 7.4(b), shall constitute additional security for the Debt and other obligations under this Agreement, the Security Instrument, the Note and the other Loan Documents. The Net Proceeds (other than the Rent Loss Proceeds) shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the related Restoration item have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company issuing the Title Insurance Policy.

 

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(iii)            All plans and specifications required in connection with the Restoration shall be subject to prior review and acceptance in all respects by Lender and by an independent consulting engineer reasonably selected by Lender (the “Casualty Consultant”), in each case not to be unreasonably withheld, conditioned or delayed. Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors engaged in the Restoration shall be subject to prior review and acceptance by Lender and the Casualty Consultant, in each case not to be unreasonably withheld, conditioned or delayed. All reasonable out-of-pocket costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s fees, shall be paid by Borrower. Borrower shall have the right to settle all claims under the Policies jointly with Lender, provided that (a) no Event of Default exists, (b) Borrower promptly and with commercially reasonable diligence negotiates a settlement of any such claims and (c) the insurer with respect to the Policy under which such claim is brought has not raised any act of the insured as a defense to the payment of such claim. If an Event of Default exists, Lender shall, at its election, have the exclusive right to settle or adjust any claims made under the Policies in the event of a Casualty.

 

(iv)             In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus the Restoration Retainage. The term “Restoration Retainage” as used in this Subsection 7.4(b) shall mean an amount equal to 10% of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until such time as the Casualty Consultant certifies to Lender that Net Proceeds representing 50% of the required Restoration have been disbursed. There shall be no Restoration Retainage with respect to costs actually incurred by Borrower for work in place in completing the last 50% of the required Restoration. The Restoration Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Subsection 7.4(b), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Restoration Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed (subject only to non-material punch list items) in accordance with the provisions of this Subsection 7.4(b) and that all approvals necessary for the re-occupancy and use of the applicable Individual Property have been obtained from all appropriate governmental and quasi-governmental authorities, and Lender receives evidence reasonably satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Restoration Retainage, provided, however, that Lender will release the portion of the Restoration Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed (subject only to non-material punch list items) all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, and the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company insuring the lien of the Security Instrument. If required by Lender, the release of any such portion of the Restoration Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

 

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(v)               Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

 

(vi)             If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 7.4(b) shall constitute additional security for the Debt and other obligations under this Agreement, the Security Instrument, the Note and the other Loan Documents.

 

(vii)            The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed (subject only to non-material punch list items) in accordance with the provisions of this Section 7.4(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under this Agreement, the Security Instrument, the Note or any of the other Loan Documents.

 

(c)               Provided that no Event of Default has occurred and is continuing, all Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Subsection 7.4(b)(vii) shall be retained and applied by Lender toward the payment of the Debt whether or not then due and payable pro rata among the Notes (without Yield Maintenance Premium or other penalty or prepayment fee). If Lender shall receive and retain Net Proceeds, the lien of the Security Instruments shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.

 

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(d)               In addition to the foregoing, in connection with any partial Condemnation or any Casualty, if (i) any Net Proceeds shall be equal to or greater than sixty percent (60%) of the Allocated Loan Amount in respect of the applicable Individual Property or (ii) provided no Event of Default shall be continuing, any Net Proceeds shall be equal to or greater than the Restoration Threshold and after Borrower shall have used commercially reasonable efforts to satisfy each of the other conditions set forth in Section 7.4(b)(i) Borrower shall be unable to satisfy all such conditions and Lender does not disburse the Net Proceeds to Borrower for Restoration, then Borrower shall have the right, but not the obligation to elect not to proceed with a Restoration and to prepay the Loan in an amount equal to the Release Price of the applicable Individual Property and any Interest Shortfall associated therewith (a “Casualty/Condemnation Prepayment”) utilizing the Net Proceeds (together with other funds of the Borrower if such Net Proceeds are less than the Release Price and any Interest Shortfall associated therewith) and obtain the release of the applicable Individual Property from the lien of the Security Instrument thereon (and related Loan Documents), provided that (i) Borrower shall have satisfied the requirements of Section 2.9 hereof (including, without limitation, Section 2.9(h) hereof), (ii) Borrower shall consummate the Casualty/Condemnation Prepayment on or before the second Monthly Payment Date occurring following date the Net Proceeds shall be available to Borrower for such Casualty/Condemnation Prepayment and (iii) Borrower shall pay to Lender, concurrently with making such Casualty/Condemnation Prepayment, any other amounts required pursuant to Section 2.9 hereof (without duplication of the Release Price and Interest Shortfall payable pursuant to this subclause (d)). For the avoidance of doubt, unless such payment is made during the continuance of an Event of Default, no Yield Maintenance Premium or other premium or penalty or charge shall be due with respect to a Casualty/Condemnation Prepayment.

 

ARTICLE 8.

 

RESERVE FUNDS

 

Section 8.1.         Immediate Repair Funds.

 

(a)               On the Closing Date, Borrower shall deposit into an Eligible Account held by Cash Management Bank (the “Immediate Repair Account”) an amount equal to $529,901.00, such amount representing 110% of the estimated costs of the Immediate Repairs. Amounts deposited pursuant to this Section 8.1 are referred to herein as the “Immediate Repair Funds”.

 

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(b)               Lender shall cause the disbursement to Borrower of the Immediate Repair Funds upon satisfaction by Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and specifies the Immediate Repairs to be paid; (ii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured; (iii) Lender shall have received a certificate from Borrower (A) stating that all Immediate Repairs to be funded by the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, such certificate to be accompanied by a copy of any license, permit or other approval by any Governmental Authority, if any, required in connection with the Immediate Repairs, (B) identifying each Person that supplied materials or labor in connection with the Immediate Repairs to be funded by the requested disbursement, and (C) stating that each such Person has been paid in full or will be paid in full upon such disbursement (or for ongoing work, such Person has been or will be paid upon such disbursement for the work identified in such certificate from Borrower with respect to such disbursement), such certificate to be accompanied by, as applicable, partial (with respect to such ongoing work) or complete lien waivers, invoices and/or other evidence of payment reasonably satisfactory to Lender; (iv) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such Immediate Repair relates is less than $5,000,000.00 and the cost of the Immediate Repairs exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such Immediate Repair relates is equal to or greater than $5,000,000.00 and the cost of the Immediate Repairs exceeds $500,000.00, a title search for the applicable Individual Property indicating that the applicable Individual Property is free from all liens, claims and other encumbrances other than Permitted Encumbrances; (v) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such Immediate Repair relates is less than $5,000,000.00 and the cost of the Immediate Repairs exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such Immediate Repair relates is equal to or greater than $5,000,000.00 and the cost of the Immediate Repairs exceeds $500,000.00, Lender shall have received a report reasonably satisfactory to Lender in its reasonable discretion from an architect or engineer reasonably approved by Lender in respect of such architect or engineer’s inspection of the required repairs; and (vi) Lender shall have received such other evidence as Lender shall reasonably request that the Immediate Repairs to be funded by the requested disbursement have been completed (or, if the work is ongoing, are in the process of being completed). Lender shall not be required to disburse Immediate Repair Funds more frequently than once each calendar month nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the total Immediate Repair Funds is less than the Minimum Disbursement Amount, in which case only one disbursement of the amount remaining in the account shall be made). Following the completion of all Immediate Repairs as reasonably determined by Lender, so long as no Event of Default has occurred and is continuing, Lender shall cause any Immediate Repair Funds remaining in the Immediate Repair Account to be deposited into the Cash Management Account to be applied in accordance with Section 9.3 hereof.

 

Section 8.2.         Replacement Reserve Funds.

 

(a)               Borrower shall deposit (to the extent not deposited pursuant to Section 9.3(f) hereof) into an Eligible Account held by Cash Management Bank (the “Replacement Reserve Account”) on each Monthly Payment Date following the occurrence and during the continuance of a Trigger Period an amount equal to the Replacement Reserve Monthly Deposit for the Replacements; provided that Borrower’s obligation to deposit funds into the Replacement Reserve Account shall be suspended during any period when the balance of funds then on deposit in the Replacement Reserve Account is in an amount equal to the Replacement Reserve Cap. Amounts deposited pursuant to this Section 8.2 are referred to herein as the “Replacement Reserve Funds”.

 

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(b)               Lender shall cause the disbursement of Replacement Reserve Funds only for Replacements. Lender shall cause the disbursement to Borrower of the Replacement Reserve Funds upon satisfaction by Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and specifies the Replacements to be paid; (ii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured, (iii) Lender shall have received a certificate from Borrower (A) stating that the items to be funded by the requested disbursement are Replacements, (B) stating that all Replacements at the applicable Individual Property to be funded by the requested disbursement have been completed (or, for ongoing work, are in the process of being completed) in a good and workmanlike manner and in accordance with all applicable Legal Requirements, such certificate to be accompanied by a copy of any license, permit or other approval required by any Governmental Authority, if any, in connection with the Replacements, (C) identifying each Person that supplied materials or labor in connection with the Replacements to be funded by the requested disbursement and (D) stating that each such Person has been paid in full or will be paid in full upon such disbursement (or for ongoing work, such Person has been or will be paid upon such disbursement for the work identified in such certificate from Borrower with respect to such disbursement), such certificate to be accompanied by, as applicable, partial (with respect to such ongoing work) or complete lien waivers, invoices and/or other evidence of payment reasonably satisfactory to Lender; (iv) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such individual Replacement relates is less than $5,000,000.00 and the cost of such individual Replacement exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such individual Replacement relates is equal to or greater than $5,000,000.00 and the cost of the individual Replacement exceeds $500,000, a title search for the applicable Individual Property indicating that the applicable Individual Property is free from all liens, claims and other encumbrances other than Permitted Encumbrances; (v) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such individual Replacement relates is less than $5,000,000.00 and the cost of such individual Replacement exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such individual Replacement relates is equal to or greater than $5,000,000.00 and the cost of the individual Replacement exceeds $500,000.00, Lender shall have received a report reasonably satisfactory to Lender in its reasonable discretion from an architect or engineer reasonably approved by Lender in respect of such architect or engineer’s inspection of the required repairs; and (vi) Lender shall have received such other evidence as Lender shall reasonably request that the Replacements at the Property to be funded by the requested disbursement have been completed (or, for ongoing work, are in the process of being completed). Lender shall not be required to cause the disbursement of Replacement Reserve Funds more frequently than once each calendar month nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the total amount of Replacement Reserve Funds is less than the Minimum Disbursement Amount, in which case only one disbursement of the amount remaining in the account shall be made).

 

(c)               Nothing in this Section 8.2 shall (i) make Lender responsible for making or completing the Replacements; (ii) require Lender to expend funds in addition to the Replacement Reserve Funds to complete any Replacements; (iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender to demand from Borrower additional sums to complete any Replacements.

 

(d)               Borrower shall permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties to enter onto the Property during normal business hours (subject to the rights of Tenants under their Leases) to inspect the progress of any Replacements and all materials being used in connection therewith and to examine all plans and shop drawings relating to such Replacements. Borrower shall cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other Persons described above in connection with inspections described in this Section.

 

(e)               Provided no Event of Default has occurred and is continuing, Lender shall cause any Replacement Reserve Funds remaining in the Replacement Reserve Account to be disbursed to Borrower provided that no Trigger Period is continuing.

 

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Section 8.3.         Leasing Reserve Funds.

 

(a)               Borrower shall deposit (to the extent not deposited pursuant to Section 9.3(g) hereof) into an Eligible Account held by Cash Management Bank (the “Leasing Reserve Account”) on each Monthly Payment Date following the occurrence and during the continuance of a Trigger Period the Leasing Reserve Monthly Deposit for tenant improvements and leasing commissions that may be incurred following the date hereof (but not including any tenant improvements or leasing commissions already reserved for pursuant to Section 8.8 hereof); provided that Borrower’s obligation to deposit funds into the Leasing Reserve Account shall be suspended during any period when the balance of funds then on deposit in the Leasing Reserve Account is in an amount equal to the Leasing Reserve Cap. Amounts deposited pursuant to this Section 8.3 are referred to herein as the “Leasing Reserve Funds”.

 

(b)               Lender shall cause the disbursement to Borrower of the Leasing Reserve Funds upon satisfaction by Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and specifies the tenant improvement costs and leasing commissions to be paid; (ii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured; (iii) Lender shall have reviewed and approved the Lease (to the extent that Lender’s approval is required under the provisions of this Agreement) and related leasing commissions in respect of which Borrower is obligated to pay or reimburse certain tenant improvement costs and leasing commissions, which approval shall not be unreasonably withheld, conditioned or delayed; (iv) Lender shall have received and approved a budget for tenant improvement costs and a schedule of leasing commissions payments and the requested disbursement will be used to pay all or a portion of such costs and payments; (v) Lender shall have received a certificate from Borrower (A) stating that all tenant improvements at the applicable Individual Property to be funded by the requested disbursement have been completed (or, for ongoing work, are in the process of being completed) in good and workmanlike manner and in accordance with all applicable federal, state and local laws, rules and regulations, such certificate to be accompanied by a copy of any license, permit or other approval, if any, by any Governmental Authority required in connection with the tenant improvements, (B) identifying each Person that supplied materials or labor in connection with the tenant improvements to be funded by the requested disbursement and (C) stating that each such Person has been paid in full or will be paid in full upon such disbursement (or for ongoing work, such Person has been or will be paid upon such disbursement for the work identified in such certificate from Borrower with respect to such disbursement), such certificate to be accompanied by lien waivers, invoices and/or other evidence of payment reasonably satisfactory to Lender; (vi) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such individual tenant improvement relates is less than $5,000,000.00 and the cost of such individual tenant improvement exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such individual tenant improvement relates is equal to or greater than $5,000,000.00 and the cost of the individual tenant improvement exceeds $500,000.00, a title search for the applicable Individual Property indicating that the applicable Individual Property is free from all liens, claims and other encumbrances not previously approved by Lender; and (vii) Lender shall have received such other evidence as Lender shall reasonably request that the tenant improvements at the applicable Individual Property to be funded by the requested disbursement have been completed (to the extent applicable) and/or leasing commissions to be funded by the requested disbursement are due and payable and are paid for or will be paid upon such disbursement to Borrower. Lender shall not be required to disburse Leasing Reserve Funds more frequently than once each calendar month nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the total amount of Leasing Reserve Funds is less than the Minimum Disbursement Amount, in which case only one disbursement of the amount remaining in the account shall be made).

 

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(c)               Provided no Event of Default has occurred and is continuing, Lender shall cause any Leasing Reserve Funds remaining in the Leasing Reserve Account to be disbursed to Borrower provided that no Trigger Period is continuing.

 

Section 8.4.         Ground Rent Funds. On each Monthly Payment Date occurring on and after the occurrence and continuance of a Trigger Period (to the extent not deposited pursuant to Section 9.3(a) hereof), Borrower shall pay (or cause to be paid) to Lender one-twelfth of an amount which would be sufficient to pay the Ground Rent payable, or estimated by Lender, in its reasonable discretion, to be payable during the ensuing twelve (12) months with respect to each Individual Property under each related Ground Lease in order to pay installments of Ground Rent at least thirty (30) days prior to the due date for such Ground Rent (the “Monthly Ground Rent Deposit”), which deposits shall be held in an Eligible Account by Cash Management Bank and hereinafter referred to as the “Ground Rent Account” (amounts held in the Ground Rent Account are hereinafter referred to as the “Ground Rent Funds”). Additionally, if, at any time, Lender determines, in its reasonable discretion, that amounts on deposit in or scheduled to be deposited in the Ground Rent Account will be insufficient to pay all Ground Rent due under the Ground Lease at least thirty (30) days prior to the due date for such Ground Rent, Borrower shall make a True Up Payment with respect to such insufficiency into the Ground Rent Account. Borrower agrees to promptly notify Lender of any changes to the amounts, schedules and instructions for payment of any Ground Rent of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for Ground Rent directly from the landlord under such applicable Ground Lease. Provided there are sufficient amounts in the Ground Rent Account and no Event of Default exists, Lender shall be obligated to pay the Ground Rent as it becomes due on its respective due dates on behalf of Borrower by applying the Ground Rent Funds to the payment of such Ground Rent.

 

Section 8.5.         Excess Cash Flow Funds.

 

(a)               After the occurrence and during the continuance of a Trigger Period, subject to the last sentence of this paragraph, all amounts required to be deposited pursuant to Section 9.3(j) hereof shall be deposited on each Business Day into an Eligible Account with Cash Management Bank (the “Excess Cash Flow Account”) in the amount required to be deposited pursuant to Section 9.3(j) hereof (each such deposit being herein referred to as the “Monthly Excess Cash Flow Deposits” and the amounts on deposit in the Excess Cash Flow Account being herein referred to as the “Excess Cash Flow Funds”). Provided no Event of Default is continuing, the requirement to make any deposits of Excess Cash Flow into the Excess Cash Flow Account shall be waived to the extent funds on deposit therein are equal to at least $75,000,000.00, and in such event, any funds that would otherwise be required to be deposited into the Excess Cash Flow Account in excess of such funds that would be required to cause the balance therein to equal $75,000,000.00 shall be remitted to Borrower.

 

(b)               During the continuance of a Trigger Period (Full) pursuant only to clause (ii) of the definition thereof or a Trigger Period (Partial), Lender will release excess Cash Flow Funds within ten (10) Business Days following Borrower’s request therefor to pay for Operating Expenses and other capital expenses set forth in the Approved Annual Budget and such other operating costs and capital expenses that have been approved by Lender, such approval not to be unreasonably withheld, conditioned or delayed.

 

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(c)               Provided no Event of Default has occurred and is continuing, Lender shall cause any Excess Cash Flow Funds remaining in the Excess Cash Flow Account to be disbursed to Borrower provided that no Trigger Period is continuing.

 

Section 8.6.         Tax and Insurance Funds. Borrower shall pay (or cause to be paid) to Lender on each Monthly Payment Date occurring on and after the occurrence and continuance of a Trigger Period (to the extent not deposited pursuant to Section 9.3(b) and (c) hereof) (a) (i) with respect to each Individual Property other than a Waived Tax Deposit Property, one-twelfth of an amount which would be sufficient to pay the Taxes payable, or estimated by Lender to be payable, during the next ensuing twelve (12) months assuming that said Taxes are to be paid in full on the Tax Payment Date and (ii) upon the occurrence and following a Borrower Tax Period with respect to any Waived Tax Deposit Property, one-twelfth of an amount which would be sufficient to pay the Taxes payable, or reasonably estimated by Lender to be payable, during the next ensuing twelve (12) months with respect to each Waived Tax Deposit Property that is subject to a Borrower Tax Period assuming that said Taxes are to be paid in full on the Tax Payment Date (the “Monthly Tax Deposit”), each of which such deposits shall be held in an Eligible Account with Cash Management Bank (the “Tax Account”), and (b) at the option of Lender, if the liability or casualty Policy maintained by Borrower covering the Property (or any portion thereof) shall not constitute an approved blanket or umbrella Policy pursuant to Subsection 7.1(c) hereof, or Lender shall require Borrower to obtain a separate Policy pursuant to Subsection 7.1(c) hereof, one-twelfth of an amount which would be sufficient to pay the Insurance Premiums due for the renewal of the coverage afforded by the Policies upon the expiration thereof (the “Monthly Insurance Deposit”), each of which such deposits shall be held in an Eligible Account with Cash Management Bank (the “Insurance Account”; amounts held in the Tax Account and the Insurance Account are collectively herein referred to as the “Tax and Insurance Funds”). Additionally, if, at any time after the occurrence and during the continuance of a Trigger Period, Lender reasonably determines that amounts on deposit in or scheduled to be deposited in (i) the Tax Account will be insufficient to pay all applicable Taxes in full on the Tax Payment Date and/or (ii) the Insurance Account will be insufficient to pay all applicable Insurance Premiums in full on the Insurance Payment Date, Borrower shall make a True Up Payment with respect to such insufficiency into the applicable Reserve Account. Borrower agrees to promptly notify Lender of any changes to the amounts, schedules and instructions for payment of any Taxes and Insurance Premiums of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for Taxes directly from the appropriate taxing authority. Provided there are sufficient amounts in the Tax Account and Insurance Account, respectively, and no Event of Default exists, Lender shall be obligated to pay the Taxes and Insurance Premiums as they become due on their respective due dates on behalf of Borrower by applying the Tax and Insurance Funds to the payment of such Taxes and Insurance Premiums. If the amount of the Tax and Insurance Funds shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 4.5 and 7.1 hereof, Lender shall, in its discretion, return any excess to Borrower or credit such excess against future payments to be made to the Tax and Insurance Funds. Provided no Event of Default has occurred and is continuing, Lender shall cause any Tax and Insurance Funds remaining in the Tax Account and/or the Insurance Account to be disbursed to Borrower provided that no Trigger Period is continuing.

 

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Section 8.7.         Environmental Remediation Funds.

 

(a)               On the Closing Date, Borrower shall deposit into an Eligible Account held by Cash Management Bank (the “Environmental Remediation Account”) an amount equal to $145,200.00, such amount representing 110% of the estimated costs of the Environmental Remediation Borrower is required to perform pursuant to Section 4.11 hereof. Amounts deposited pursuant to this Section 8.7 are referred to herein as the “Environmental Remediation Funds.

 

(b)               Lender shall cause the disbursement to Borrower of the Environmental Remediation Funds upon satisfaction by Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and either (I) specifies the Environmental Remediation to be paid or (II) provides evidence reasonably acceptable to Lender that ongoing investigation or Remediation in accordance with the terms and conditions of Section 8.7(a) above shall have disclosed that the amounts reserved with respect to an Individual Property for Environmental Remediation are no longer necessary; (ii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured; (iii) Lender shall have received a certificate from Borrower (A) stating that all Environmental Remediation to be funded by the requested disbursement has been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements and in accordance with the terms and conditions of Section 8.7(a) above, such certificate to be accompanied by a copy of any license, permit or other approval by any Governmental Authority, if any, required in connection with the Environmental Remediation, (B) identifying each Person that supplied materials or labor in connection with the Environmental Remediation to be funded by the requested disbursement, and (C) stating that each such Person has been paid in full or will be paid in full upon such disbursement (or for ongoing work, such Person has been or will be paid upon such disbursement for the work identified in such certificate from Borrower with respect to such disbursement), such certificate to be accompanied by, as applicable, partial (with respect to such ongoing work) or complete lien waivers, invoices and/or other evidence of payment reasonably satisfactory to Lender; (iv) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such Environmental Remediation relates is less than $5,000,000.00 and the cost of such individual Environmental Remediation exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such Environmental Remediation relates is equal to or greater than $5,000,000.00 and the cost of the individual Environmental Remediation exceeds $500,000.00, a title search for the applicable Individual Property indicating that the applicable Individual Property is free from all liens, claims and other encumbrances other than Permitted Encumbrances; (v) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such Environmental Remediation relates is less than $5,000,000.00 and the cost of such individual Environmental Remediation exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such Environmental Remediation relates is equal to or greater than $5,000,000.00 and the cost of the individual Environmental Remediation exceeds $500,000.00, Lender shall have received a report reasonably satisfactory to Lender in its reasonable discretion from an environmental consultant or engineer reasonably approved by Lender in respect of such consultant or engineer’s inspection of the required Environmental Remediation; and (vi) Lender shall have received such other evidence as Lender shall reasonably request that the Environmental Remediation to be funded by the requested disbursement has been completed and are paid for or will be paid upon such disbursement to Borrower. Lender shall not be required to disburse Environmental Remediation Funds more frequently than once each calendar month nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the total Environmental Remediation Funds is less than the Minimum Disbursement Amount, in which case only one disbursement of the amount remaining in the account shall be made). Following the completion of all Environmental Remediation as reasonably determined by Lender, so long as no Event of Default has occurred and is continuing, Lender shall cause any Environmental Remediation Funds remaining in the Environmental Remediation Account to be deposited into the Cash Management Account to be applied in accordance with Section 9.3 hereof.

 

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Section 8.8.         Unfunded Obligations Funds.

 

(a)               On the Closing Date Borrower shall deposit into an Eligible Account held by Cash Management Bank (the “Unfunded Obligations Account”) the sum of $221,659.00 for free rent and rent credits and other credits, and other obligations of Borrower (including, without limitation, obligations to perform repairs at the applicable Individual Property) to Tenants under Leases that are outstanding on the Closing Date as set forth on Schedule VII hereto (the “Unfunded Obligations”). Borrower represents and warrants that Schedule VII is a true, correct and complete list of all free rent and rent credits and other credits, and other obligations of Borrower (including, without limitation, obligations to perform repairs at the applicable Individual Property) to Tenants under Leases that are outstanding on the Closing Date. Amounts deposited pursuant to this Section 8.8 are referred to herein as the “Unfunded Obligations Funds”. Borrower shall pay and/or perform the Unfunded Obligations when due.

 

(b)               Lender shall cause the disbursement to Borrower the Unfunded Obligations Funds (or portions thereof) upon satisfaction by Borrower of each of the following conditions: (i) Borrower shall submit a request for payment to Lender at least ten (10) days prior to the date on which Borrower requests such payment be made and, if such request relates to a disbursement of Unfunded Obligations Funds for rent credits and/or other credits and/or security deposits, such request shall provide evidence reasonably satisfactory to Lender that such rent and/or other credits under the applicable Lease for which Borrower is requesting disbursement of Unfunded Obligations Funds has expired and/or have been paid to the Tenant, (ii) on the date such request is received by Lender and on the date such payment is to be made, no Event of Default shall exist and remain uncured; (iii) to the extent the amount of the requested disbursement for any item set forth on Schedule VII (together with any previous disbursements for such item) exceeds the amount set forth on Schedule VII, Lender shall have reasonably approved such disbursement; (iv) Lender shall have received a certificate from Borrower (A) stating that (I) with respect to disbursements of Unfunded Obligations Funds for credits for tenant improvements and/or for payment of the cost of any landlord obligations to perform repairs at the applicable Individual Property, all tenant improvements and/or repairs at the Property to be funded by the requested disbursement have been completed in good and workmanlike manner and in accordance with all applicable federal, state and local laws, rules and regulations, such certificate to be accompanied by a copy of any license, permit or other approval by any Governmental Authority, if any, required in connection with the tenant improvements and/or repairs, and (II) with respect to disbursement of Unfunded Obligations Funds for rent credits and/or other credits, the applicable rent credits and/or other credits under the Lease for which disbursement is sought by Borrower have expired and/or have been paid to Tenant, (B) with respect to disbursements of Unfunded Obligations Funds for credits for tenant improvements and/or for payment of the cost of any landlord obligations to perform repairs at the applicable Individual Property, identifying each Person that supplied materials or labor in connection with the tenant improvements and/or repairs to be funded by the requested disbursement, and (C) with respect to disbursements of Unfunded Obligations Funds for credits for tenant improvements and/or for payment of the cost of any landlord obligations to perform repairs at the applicable Individual Property, stating that each such Person has been paid in full with respect to all amounts then due or will be paid in full with respect to all amounts then due upon such disbursement (or for ongoing work, such Person has been or will be paid upon such disbursement for the work identified in such certificate from Borrower with respect to such disbursement), such certificate to be accompanied by, as applicable, partial (with respect to such ongoing work) or complete lien waivers, invoices and/or other evidence of payment reasonably satisfactory to Lender; (v) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such credits for individual tenant improvement and/or repair relates is less than $5,000,000.00 and the cost of such individual tenant improvement and/or repair exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such credits for individual tenant improvement and/or repair relates is equal to or greater than $5,000,000.00 and the cost of the individual tenant improvement and/or repair exceeds $500,000.00, a title search for the applicable Individual Property indicating that the applicable Individual Property is free from all liens, claims and other encumbrances other than Permitted Encumbrances, (vi) at Lender’s option, if (A) the Allocated Loan Amount of the Individual Property to which such credits for individual tenant improvement and/or repair relates is less than $5,000,000.00 and the cost of such individual tenant improvement and/or repair exceeds $250,000.00 or (B) the Allocated Loan Amount of the Individual Property to which such individual tenant improvement and/or repair relates is equal to or greater than $5,000,000.00 and the cost of the individual tenant improvement and/or repair exceeds $500,000.00, Lender shall have received a report reasonably satisfactory to Lender in its reasonable discretion from an architect or engineer reasonably approved by Lender in respect of such architect or engineer’s inspection of such tenant improvement and/or repair, and (vii) with respect to any Unfunded Obligations Lender for payment of the cost of any landlord obligations to perform repairs at the applicable Individual Property, Lender shall have received such other evidence as Lender shall reasonably request that the applicable repairs to be funded by the requested disbursement have been completed (or, if the work is ongoing, are in the process of being completed). Lender shall not be required to disburse Unfunded Obligations Funds more frequently than once each calendar month nor in an amount less than the Minimum Disbursement Amount (or a lesser amount if the total amount of Unfunded Obligations Funds remaining, is less than the Minimum Disbursement Amount, in which case only one disbursement of the amount remaining in the account shall be made). Notwithstanding the foregoing, any disbursement of Unfunded Obligations Funds with respect to rent credits and/or other credits shall instead of being disbursed to Borrower be deposited into the Cash Management Account for application in accordance with the Cash Management Agreement on the next Monthly Payment Date. Following the completion of all Unfunded Obligations as reasonably determined by Lender, so long as no Event of Default has occurred and is continuing, Lender shall cause any Unfunded Obligations Funds remaining in the Unfunded Obligations Account to be deposited into the Cash Management Account to be applied in accordance with Section 9.3 hereof.

 

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Section 8.9.         Intentionally Omitted.

 

Section 8.10.      The Accounts Generally.

 

(a)               Borrower grants to Lender a first-priority perfected security interest in each of the Accounts and any and all sums now or hereafter deposited in the Accounts as additional security for payment of the Debt. Until expended or applied or disbursed in accordance herewith, the Accounts and the funds deposited therein shall constitute additional security for the Debt. The provisions of this Section 8.10 (together with the other related provisions of the other Loan Documents) are intended to give Lender and/or Servicer “control” of the Accounts and the Account Collateral and serve as a “security agreement” and a “control agreement” with respect to the same, in each case, within the meaning of the UCC. Borrower acknowledges and agrees that the Accounts are subject to the sole dominion, control and discretion of Lender, its authorized agents or designees, subject to the terms hereof, and Borrower shall have no right of withdrawal with respect to any Account except with the prior written consent of Lender or as otherwise provided herein. The funds on deposit in the Accounts shall not constitute trust funds and (other than funds in the Cash Management Account and/or the Restricted Account) may be commingled with other monies held by Cash Management Bank. Notwithstanding anything to the contrary contained herein, unless otherwise consented to in writing by Lender, Borrower shall only be permitted to request (and Lender shall only be required to disburse) Reserve Funds on account of the liabilities, costs, work and other matters (as applicable) for which said sums were originally reserved hereunder, in each case, in accordance with the terms of this Agreement.

 

(b)               Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in the Accounts or the sums deposited therein or permit any lien to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. Subject to the Security Instruments, Borrower hereby authorizes Lender to file a financing statement or statements under the UCC in connection with any of the Accounts and the Account Collateral in the form required to properly perfect Lender’s security interest therein. Borrower agrees that at any time and from time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby (including, without limitation, any security interest in and to any Permitted Investments) or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Account or Account Collateral.

 

(c)               Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon the occurrence and during the continuance of an Event of Default, without notice from Lender or Servicer (i) Borrower shall have no rights in respect of the Accounts, (ii) Lender may liquidate and transfer any amounts then invested in Permitted Investments pursuant to the applicable terms hereof to the Accounts or reinvest such amounts in other Permitted Investments as Lender may reasonably determine is necessary to perfect or protect any security interest granted or purported to be granted hereby or pursuant to the other Loan Documents or to enable Lender to exercise and enforce Lender’s rights and remedies hereunder or under any other Loan Document with respect to any Account or any Account Collateral, and (iii) Lender shall have all rights and remedies with respect to the Accounts and the amounts on deposit therein and the Account Collateral as described in this Agreement and in the Security Instrument, in addition to all of the rights and remedies available to a secured party under the UCC, and, notwithstanding anything to the contrary contained in this Agreement or in the Security Instruments, may apply the amounts of such Accounts as Lender determines in its sole discretion including, but not limited to, payment of the Debt.

 

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(d)               The insufficiency of funds on deposit in the Accounts shall not absolve Borrower of the obligation to make any payments, as and when due pursuant to this Agreement and the other Loan Documents, and such obligations shall be separate and independent, and not conditioned on any event or circumstance whatsoever.

 

(e)               Borrower shall indemnify Lender and hold Lender harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages (excluding consequential, incidental, special, indirect, exemplary and punitive damages and lost profits except to the extent Lender or its Affiliates are responsible therefor to third parties), obligations and costs and expenses (including litigation costs and reasonable attorneys fees and expenses) arising from or in any way connected with the Accounts, the sums deposited therein or the performance of the obligations for which the Accounts were established, except to the extent arising from the gross negligence or willful misconduct of Lender, Servicer or their respective agents or employees. Borrower shall assign to Lender all rights and claims Borrower may have against all Persons supplying labor, materials or other services which are to be paid from or secured by the Accounts; provided, however, that Lender may not pursue any such right or claim unless an Event of Default has occurred and remains uncured.

 

(f)                Borrower and Lender (or Servicer on behalf of Lender) shall maintain (or cause to be maintained) each applicable Account as an Eligible Account, except as otherwise expressly agreed to in writing by Lender. In the event that Cash Management Bank no longer satisfies the criteria for an Eligible Institution, Borrower shall cooperate with Lender in transferring the applicable Accounts to an institution that satisfies such criteria. Borrower hereby grants Lender power of attorney (irrevocable for so long as the Loan is outstanding) with respect to any such transfers and the establishment of accounts with a successor institution, which power of attorney Lender may exercise only during the continuation of an Event of Default.

 

(g)               Interest accrued on any Account other than an Interest Bearing Account shall not be required to be remitted either to Borrower or to any Account and may instead be retained by Lender. Funds deposited in the Interest Bearing Accounts shall be invested in Permitted Investments as provided for in Section 8.10(h) hereof. Interest accrued, if any, on sums on deposit in the Interest Bearing Accounts shall be remitted to and become part of the applicable Account. All such interest that so becomes part of the applicable Account shall be disbursed in accordance with the disbursement procedures contained herein applicable to such Account; provided, however, that Lender may, at its election, retain any such interest for its own account during the occurrence and continuance of an Event of Default.

 

(h)               Provided no Event of Default is continuing, sums on deposit in the Interest Bearing Accounts shall, upon Borrower’s written request, be invested in Permitted Investments selected by Lender or Servicer provided (i) such investments are then regularly offered by Lender (or Servicer on behalf of Lender) for accounts of this size, category and type (Borrower acknowledges that the Servicer or Lender may only offer as an investment opportunity the right to place funds on deposit in the applicable Accounts in an interest bearing account (bearing interest at the money market rate)), (ii) such investments are permitted by applicable federal, State and local rules, regulations and laws, (iii) the maturity date of the Permitted Investment is not later than the date on which sums in the Interest Bearing Accounts are required to be disbursed pursuant to the terms hereof, and (iv) no Event of Default shall have occurred and be continuing. All income earned from the aforementioned Permitted Investments shall be property of Borrower and Borrower hereby irrevocably authorizes and directs Lender (or Servicer on behalf of Lender) to hold any income earned from the aforementioned Permitted Investments as part of the applicable Interest Bearing Account. Borrower shall be responsible for payment of any federal, State or local income or other tax applicable to income earned from Permitted Investments. No other investments of the sums on deposit in the Interest Bearing Accounts shall be permitted. Lender shall not be liable for any loss sustained on the investment of any funds in the Interest Bearing Accounts unless due to the gross negligence or willful misconduct of Lender.

 

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(i)                 Borrower acknowledges and agrees that it solely shall be, and shall at all times remain, liable to Lender, Servicer and Cash Management Bank, as applicable, for all fees, charges, costs and expenses in connection with the Accounts, the execution and delivery of this Agreement and the enforcement hereof, including, without limitation, any monthly or annual fees or charges as may be assessed by Lender, Servicer or Cash Management Bank in connection with the administration of the Accounts (but subject to Section 17.6 hereof) and the reasonable fees and expenses of legal counsel to Lender, Cash Management Bank and Servicer as needed to enforce, protect or preserve the rights and remedies of Lender and/or Servicer under this Agreement.

 

Section 8.11.       Letters of Credit.

 

(a)               Notwithstanding anything herein to the contrary, in lieu of maintaining any of the Tax Account, the Insurance Account, the Replacement Reserve Account, the Leasing Reserve Account, the Unfunded Obligations Account, the Ground Rent Account and/or the Excess Cash Flow Account, Borrower may from time to time deliver to Lender one or more Letters of Credit in accordance with the provisions of this Section 8.11 (i) in replacement of the amounts then required to be on deposit in the applicable Reserve Account, and/or (ii) as frequently as every three (3) months in an amount that Borrower reasonably projects will be deposited into the applicable Reserve Account during the succeeding three (3) month period; provided that, to the extent of any shortfall in the amount of any such Letter of Credit delivered pursuant to this clause (ii), (x) Borrower shall be required to promptly deposit such amount with Lender for deposit into the applicable Reserve Account (or deliver a replacement Letter of Credit in the increased amount) and (y) in the case of the Excess Cash Flow Account, Lender shall retain its rights to deposit into the Excess Cash Flow Account any amounts of Excess Cash Flow in excess of the amount of any Letter of Credit that has been delivered to Lender pursuant to the terms hereof. In the event Borrower delivers one or more Letters of Credit in lieu of making deposits into a Reserve Account as set forth herein, Borrower shall be required to deliver to Lender contemporaneously with its quarterly reporting required hereunder a reconciliation of the actual amounts that would be required to be on deposit in the applicable Reserve Account and, if such reconciliation shows any deficiency, a replacement Letter of Credit or true-up deposit with respect to any such deficiency. Any Letter of Credit from time to time delivered in replacement of funds on deposit or to be on deposit in any Reserve Account shall be in an amount at least equal to (i) with respect to the Tax Account, the Insurance Account, the Unfunded Obligations Account, the Leasing Reserve Account, the Replacement Reserve Account and/or the Ground Rent Account, the amount required to be on deposit in the applicable Reserve Account on the date such Letter of Credit is delivered to Lender, and/or (ii) with respect to the Excess Cash Flow Account, amounts projected to be deposited into the Excess Cash Flow Account during the succeeding three (3) month period, and Borrower shall give Lender no less than ten (10) days written notice of Borrower’s election to deliver a Letter of Credit together with a draft of the proposed Letter of Credit and Borrower shall pay to Lender all of Lender’s reasonable out-of-pocket costs and expenses in connection therewith. Upon such delivery to Lender of a Letter of Credit in the amount equal to the amount required to be held in the applicable Reserve Account on the date of delivery of such Letter of Credit and provided that no Event of Default has occurred and is continuing, Lender shall promptly cause the Cash Management Bank to disburse any funds held by the Cash Management Bank in cash in the applicable Reserve Account to Borrower. No party other than Lender shall be entitled to draw on any such Letter of Credit. In the event that any disbursement of any Reserve Funds relates to a portion thereof provided through a Letter of Credit, any “disbursement” of said funds as provided above shall be deemed to refer to (i) Borrower providing Lender a replacement Letter of Credit in an amount equal to the original Letter of Credit posted less the amount of the applicable disbursement provided hereunder and (ii) Lender, after receiving such replacement Letter of Credit, returning such original Letter of Credit to Borrower.

 

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(b)               Each Letter of Credit delivered hereunder shall be additional security for the payment of the Debt. Upon the occurrence and during the continuance of an Event of Default, Lender shall have the right, at its option, to draw on any Letter of Credit and to apply all or any part thereof to the payment of the items for which such Letter of Credit was established or to apply each such Letter of Credit to payment of the Debt in such order, proportion or priority as Lender may determine. Any such application to the Debt shall be subject to the terms and conditions hereof relating to application of sums to the Debt. Lender shall have the additional rights to draw in full any Letter of Credit: (i) if Lender has received a notice from the issuing bank that the Letter of Credit will not be renewed and a substitute Letter of Credit is not provided at least forty five (45) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (ii) if Lender has not received a notice from the issuing bank that it has renewed the Letter of Credit at least forty five (45) days prior to the date on which such Letter of Credit is scheduled to expire and a substitute Letter of Credit is not provided at least forty five (45) days prior to the date on which the outstanding Letter of Credit is scheduled to expire; (iii) upon receipt of notice from the issuing bank that the Letter of Credit will be terminated (except if the termination of such Letter of Credit is permitted pursuant to the terms and conditions hereof or a substitute Letter of Credit is provided by no later than forty five (45) days prior to such termination); (iv) if Lender has received notice that the bank issuing the Letter of Credit shall cease to be an Approved Bank and Borrower has not substituted a Letter of Credit from an Approved Bank within fifteen (15) days after notice; and/or (v) if the bank issuing the Letter of Credit shall fail to (A) issue a replacement Letter of Credit in the event the original Letter of Credit has been lost, mutilated, stolen and/or destroyed or (B) consent to the transfer of the Letter of Credit to any Person designated by Lender in connection with a Secondary Market Transaction. If Lender draws upon a Letter of Credit pursuant to the terms and conditions of this Agreement, provided no Event of Default exists, Lender shall apply all or any part thereof for the purposes for which such Letter of Credit was established. Notwithstanding anything to the contrary contained in the above, Lender is not obligated to draw any Letter of Credit upon the happening of an event specified in clause (i), (ii), (iii), (iv) or (v) above and shall not be liable for any losses sustained by Borrower due to the insolvency of the bank issuing the Letter of Credit if Lender has not drawn the Letter of Credit.

 

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(c)               Notwithstanding anything herein to the contrary, in the event that Borrower elects to deliver a Letter of Credit pursuant to this Section 8.11 for which an Affiliate of Borrower provides collateral, and if such Letter of Credit, together with all outstanding Letters of Credit, is in an aggregate amount equal to or greater than ten percent (10%) of the principal amount of the Loan, then Borrower shall deliver a New Non-Consolidation Opinion which takes into account such Letters of Credit.

 

ARTICLE 9.

CASH MANAGEMENT

 

Section 9.1.         Establishment of Certain Accounts.

 

(a)               Borrower shall, simultaneously herewith, establish an Eligible Account (the “Restricted Account”) with KeyBank National Association (in such capacity, the “Restricted Account Bank”) pursuant to the Restricted Account Agreement in the name of ARG 1CBHGNJ001, LLC for the sole and exclusive benefit of Lender into which Borrower shall deposit, or cause to be deposited, all revenue generated by the Property. Pursuant to the Restricted Account Agreement, funds on deposit in the Restricted Account shall be transferred on each Business Day during the continuance of a Trigger Period to the Cash Management Account.

 

(b)               Lender, on Borrower’s behalf, shall establish an Eligible Account (the “Cash Management Account”) with an Eligible Institution (the “Cash Management Bank”), in the name of Borrower for the sole and exclusive benefit of Lender in accordance with that certain Cash Management Agreement, dated as of the date hereof, by and among the Cash Management Bank, Borrower and Lender (as the same may be amended, restated or modified from time to time, the “Cash Management Agreement”). In addition, Lender, on Borrower’s behalf, shall establish with Lender, Cash Management Bank or Servicer an account (which may be a sub-account of the Cash Management Account) into which Borrower shall deposit, or cause to be deposited the amounts required for the payment of Debt Service under the Loan (the “Debt Service Account”).

 

Section 9.2.         Deposits into the Restricted Account; Maintenance of Restricted Account; Disbursements from Restricted Account.

 

(a)               Borrower represents, warrants and covenants that, so long as the Debt remains outstanding, (i) Borrower shall, and shall cause Manager to, immediately deposit all revenue derived from the Properties and received by Borrower or Manager, as the case may be, into the Restricted Account; (ii) Borrower shall instruct Manager to immediately deposit (A) all revenue derived from the Properties collected by Manager, if any, pursuant to the Management Agreement (or otherwise) into the Restricted Account and (B) all funds otherwise payable to Borrower by Manager pursuant to the Management Agreement (or otherwise in connection with the Properties) into the Restricted Account; (iii) (A) Borrower shall promptly instruct each Tenant now occupying space at the Properties, pursuant to a notice in substantially the form approved by Lender, directing them to pay all rent and other sums due under the Lease to which they are a party into the Restricted Account (such notice, the “Tenant Direction Notice”), (B) simultaneously with the execution of any Lease entered into on or after the date hereof in accordance with the applicable terms and conditions hereof, Borrower shall furnish each Tenant under each such Lease the Tenant Direction Notice, and (C) Borrower shall continue to send the aforesaid Tenant Direction Notices until each addressee thereof complies with the terms thereof; (iv) there shall be no other accounts maintained by Borrower or any other Person into which revenues from the ownership and operation of the Properties (or any portion thereof) are directly deposited; and (v) neither Borrower nor any other Person shall open any other such account with respect to the direct deposit of income in connection with the Properties (or any portion thereof). Until deposited into the Restricted Account, any Rents and other revenues from the Properties held by Borrower shall be deemed to be collateral and shall be held in trust by it for the benefit, and as the property, of Lender pursuant to the Security Instruments and shall not be commingled with any other funds or property of Borrower. Borrower warrants and covenants that it shall not rescind, withdraw or change any notices or instructions required to be sent by it pursuant to this Section 9.2 without Lender’s prior written consent not to be unreasonably withheld, conditioned or delayed.

 

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(b)               Borrower shall maintain the Restricted Account for the term of the Loan, which Restricted Account shall be under the sole dominion and control of Lender (subject to the terms hereof and of the Restricted Account Agreement). The Restricted Account shall have a title evidencing the foregoing in a manner reasonably acceptable to Lender. Borrower hereby grants to Lender a first-priority security interest in the Restricted Account and all deposits at any time contained therein and the proceeds thereof and will take all commercially reasonable actions necessary to maintain in favor of Lender a perfected first priority security interest in the Restricted Account. Borrower hereby authorizes Lender to file UCC Financing Statements and continuations thereof to perfect Lender’s security interest in the Restricted Account and all deposits at any time contained therein and the proceeds thereof. All reasonable costs and expenses for establishing and maintaining the Restricted Account (or any successor thereto) shall be paid by Borrower. All monies now or hereafter deposited into the Restricted Account shall be deemed additional security for the Debt while such funds are in the Restricted Account. Borrower shall pay all sums due from Borrower under and otherwise comply with the Restricted Account Agreement. Borrower shall not alter or modify either the Restricted Account or the Restricted Account Agreement, in each case without the prior written consent of Lender. The Restricted Account Agreement shall permit (and Borrower shall provide) Lender online access to bank and other financial statements relating to the Restricted Account (including, without limitation, a listing of the receipts being collected therein). In connection with any Secondary Market Transaction, Lender shall have the right to cause the Restricted Account to be entitled with such other designation as Lender may select to reflect an assignment or transfer of Lender’s rights and/or interests with respect to the Restricted Account. Lender shall provide Borrower with prompt written notice of any such renaming of the Restricted Account. Borrower shall not further pledge, assign or grant any security interest in the Restricted Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. The Restricted Account (i) shall be an Eligible Account and (ii) shall not be commingled with other monies held by Borrower or Bank. Upon (A) Bank ceasing to be an Eligible Institution, (B) the Restricted Account ceasing to be an Eligible Account, (C) any resignation by Bank or termination of the Restricted Account Agreement by Bank or Lender, and/or (D) the occurrence and continuance of an Event of Default, Borrower shall, within fifteen (15) days of Lender’s request, (1) terminate the existing Restricted Account Agreement, (2) appoint a new Bank (which such Bank shall (I) be an Eligible Institution, (II) other than during the continuance of an Event of Default, be selected by Borrower and approved by Lender, and (III) during the continuance of an Event of Default, be selected by Lender), (3) cause such Bank to open a new Restricted Account (which such account shall be an Eligible Account) and enter into a new Restricted Account Agreement with Lender and Borrower on substantially the same terms and conditions as the previous Restricted Account Agreement, and (4) send new Tenant Direction Notices and the other notices required pursuant to the terms hereof relating to such new Restricted Account Agreement and Restricted Account. Borrower constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution to complete or undertake any action required of Borrower under this Section 9.2 in the name of Borrower in the event Borrower fails to do the same. Such power of attorney shall be deemed to be a power coupled with an interest and cannot be revoked.

 

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(c)               During the continuance of a Trigger Period, all funds on deposit in the Restricted Account shall be swept on each Business Day into the Cash Management Account and applied and disbursed in accordance with this Agreement.

 

Section 9.3.        Disbursements from the Cash Management Account. Upon the occurrence and during the continuance of a Trigger Period, provided no Event of Default is then continuing, on each Business Day, Lender or Servicer, as applicable, shall allocate all funds, if any, on deposit in the Cash Management Account and disburse such funds in the following amounts and order of priority:

 

(a)               First, to the extent that a Trigger Period has occurred and is continuing, funds sufficient to pay the Monthly Ground Rent Deposit due for the Monthly Payment Date on or immediately succeeding the date of such deposit, if any, shall be deposited into the Ground Rent Account;

 

(b)               Second, to the extent that a Trigger Period has occurred and is continuing, funds sufficient to pay the Monthly Tax Deposit due for the Monthly Payment Date on or immediately succeeding the date of such deposit, if any, shall be deposited in the Tax Account;

 

(c)               Third, to the extent that a Trigger Period has occurred and is continuing, funds sufficient to pay the Monthly Insurance Deposit due for the Monthly Payment Date on or immediately succeeding the date of such deposit, if any, shall be deposited in the Insurance Account;

 

(d)               Fourth, funds sufficient to pay any interest accruing at the Default Rate and late payment charges, if any, shall be deposited into the Debt Service Account;

 

(e)               Fifth, funds sufficient to pay the Debt Service due for the Monthly Payment Date on or immediately succeeding the date of such deposit shall be deposited in the Debt Service Account;

 

(f)                Sixth, to the extent that a Trigger Period has occurred and is continuing, funds sufficient to pay the Replacement Reserve Monthly Deposit due for the Monthly Payment Date on or immediately succeeding the date of such deposit, if any, shall be deposited in the Replacement Reserve Account;

 

(g)               Seventh, to the extent that a Trigger Period has occurred and is continuing, funds sufficient to pay the Leasing Reserve Monthly Deposit due for the Monthly Payment Date on or immediately succeeding the date of such deposit, if any, shall be deposited in the Leasing Reserve Account;

 

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(h)               Eighth, funds sufficient to pay any other amounts due and owing to Lender and/or Servicer pursuant to the terms hereof and/or of the other Loan Documents, if any, shall be deposited with or as directed by Lender;

 

(i)                Ninth, to the extent that a Trigger Period has occurred and is continuing, to Borrower, funds in an amount equal to the Op Ex Monthly Amount; and

 

(j)                Tenth, all amounts remaining in the Cash Management Account after deposits for items (a) through (i) above (“Excess Cash Flow”) shall be disbursed as follows: (i) to the extent that a Trigger Period (Full) has occurred and is continuing, all Excess Cash Flow shall be deposited into the Excess Cash Flow Account, (ii) to the extent that a Trigger Period (Partial) has occurred and is continuing, (A) fifty percent (50%) of the Excess Cash Flow shall be deposited into the Excess Cash Flow Account and (B) fifty percent (50%) of the Excess Cash Flow shall be disbursed to Borrower, or (iii) to the extent that no Trigger Period exists, all Excess Cash Flow shall be disbursed to Borrower.

 

Section 9.4.        Withdrawals from the Debt Service Account. Prior to the occurrence and continuance of an Event of Default, funds on deposit in the Debt Service Account, if any, shall be used to pay Debt Service when due, together with any late payment charges or interest accruing at the Default Rate.

 

Section 9.5.        Payments Received Under this Agreement. Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, provided no Event of Default has occurred and is continuing, Borrower’s obligations with respect to the monthly payment of Debt Service and amounts due for the Reserve Accounts shall (provided Lender is not prohibited from withdrawing or applying any funds in the applicable Accounts by operation of law) be deemed satisfied to the extent sufficient amounts are deposited in applicable Accounts to satisfy such obligations on the dates each such payment is required, regardless of whether any of such amounts are so applied by Lender.

 

ARTICLE 10.

EVENTS OF DEFAULT; REMEDIES

 

Section 10.1.      Event of Default.

 

The occurrence of any one or more of the following events shall constitute an “Event of Default”:

 

(a)               if (A) any monthly Debt Service payment or the payment due on the Maturity Date is not paid when due, (B) any deposit to any of the Accounts required hereunder or under the other Loan Documents is not paid when due or (C) any other portion of the Debt is not paid when due and such non-payment continues for five (5) Business Days following notice to Borrower that the same is due and payable; except, in each case, to the extent sums sufficient to pay such Debt Service or any other portion of the Debt have been deposited with Lender for such specific purpose in accordance with the terms of this Agreement and Lender’s access to such sums is not restricted or constrained by Borrower or its Affiliates;

 

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(b)               if any of the Taxes or Other Charges are not paid prior to the date on which penalties and interest would be due except to the extent (A) sums sufficient to pay the Taxes or Other Charges in question had been reserved hereunder prior to the applicable due date for the Taxes or Other Charges in question for the express purpose of paying the Taxes or Other Charges in question and Lender failed to pay the Taxes or Other Charges in question when required hereunder, (B) Lender’s access to such sums was not restricted or constrained by Borrower or its Affiliates and (C) no other Event of Default was continuing;

 

(c)               if the Policies are not kept in full force and effect or if evidence of the same is not delivered to Lender as provided in Section 7.1 hereof;

 

(d)               intentionally omitted;

 

(e)               if any of the representations or covenants contained in Article 5 are breached or violated; provided, that, (A) with respect to any failure to comply with the requirements relating to trade and operational indebtedness set forth in Section 5.1(a)(vii) hereof, it shall only be an Event of Default if Borrower does not cure such failure within fifteen (15) days after notice thereof from Lender to Borrower and (B) except as provided in (A) of this clause (e) with respect to trade and operational indebtedness, any such breach or violation shall not constitute an Event of Default (1) if such breach or violation is inadvertent and non-recurring, (2) if such breach or violation is curable, Borrower shall promptly cure such breach within thirty (30) days from the earlier of (I) Borrower’s knowledge of such breach or violation or (II) notice thereof from Lender and (3) Borrower shall have within such thirty (30) day period delivered to Lender a New Non-Consolidation Opinion to the effect that such breach or violation does not negate or impair the Non-Consolidation Opinion previously delivered to Lender;

 

(f)                if (A) a Prohibited Transfer shall occur in violation of this Agreement or (B) any representation or covenants contained in Section 6.5 hereof is breached or violated in any material respect unless, with respect to this clause (B), (I) such breach or violation was immaterial, inadvertent and non-recurring and (II) Borrower corrects (or causes to be corrected) such failure within thirty (30) days of obtaining knowledge thereof;

 

(g)               if there is a breach of any of the covenants contained within any of Section 4.22 and Section 4.23 in any material respect, which breach continues for a period of thirty (30) days after Borrower’s receipt of notice from Lender;

 

(h)               if any representation or warranty made herein (other than the representations or warranties described in clause (e) of this Section 10.1), in the Guaranty or in the Environmental Indemnity or in any other guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender by or on behalf of Borrower in connection with the Loan shall have been false or misleading in any material adverse respect when made; provided that if such untrue representation or warranty is susceptible of being cured, Borrower shall have the right to cure such representation or warranty within thirty (30) days of receipt of notice from Lender;

 

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(i)                if (i) Borrower, any SPE Component Entity or Guarantor shall commence any case, proceeding or other action (A) under any Creditors Rights Laws seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, liquidation or dissolution, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or substantially all of its assets, or Borrower, any SPE Component Entity or Guarantor shall make a general assignment for the benefit of its creditors; (ii) there shall be commenced against Borrower, any SPE Component Entity or Guarantor any case, proceeding or other action of a nature referred to in clause (i) above (other than any case, action or proceeding already constituting an Event of Default by operation of the other provisions of this subsection) which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of ninety (90) days; (iii) there shall be commenced against Borrower, any SPE Component Entity or Guarantor any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or substantially all of its assets (other than any case, action or proceeding already constituting an Event of Default by operation of the other provisions of this subsection) which results in the entry of any order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof; (iv) Borrower, any SPE Component Entity, any Affiliated Manager or Guarantor shall collude with respect to, approve of, or acquiesce in, any of the actions set forth in clause (i), (ii), or (iii) above; (v) Borrower, any SPE Component Entity or Guarantor shall admit in writing its inability to pay its debts as they become due; (vi) Borrower or any SPE Component Entity is substantively consolidated with any other entity in connection with any proceeding under the Bankruptcy Code or any other Creditors Rights Laws involving Guarantor or its subsidiaries and/or Affiliates; or (vii) a Bankruptcy Event occurs (provided, that if there is any inconsistency between the other provisions of this subclause (i) and the definition of Bankruptcy Event, the other provisions of this subclause (i) shall control);

 

(j)                if Borrower shall be in default beyond applicable notice and grace periods under any other mortgage, deed of trust, deed to secure debt or other security agreement covering any part of the Property whether it be superior or junior in lien to the Security Instruments;

 

(k)               if any Individual Property becomes subject to any mechanic’s, materialman’s or other lien other than a lien for any Taxes not then due and payable and the lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of thirty (30) days after Borrower first receives notice of the same;

 

(l)                 if any federal tax lien is filed against Borrower, any SPE Component Entity, Guarantor or any Individual Property and same is not discharged of record (by payment, bonding or otherwise) within thirty (30) days after Borrower first receives notice of the same;

 

(m)             if Borrower shall fail to deliver to Lender, within ten (10) Business Days after request by Lender, the estoppel certificates required by Section 4.13(a) hereof and such failure continues for five (5) Business Days after Borrower’s receipt of notice thereof from Lender;

 

(n)              if any default occurs under any guaranty or indemnity executed in connection herewith (including, without limitation, the Environmental Indemnity and/or the Guaranty) and such default continues after the expiration of applicable grace periods, if any;

 

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(o)               if any of the factual assumptions as to Borrower and/or any SPE Component Entity contained in the Non-Consolidation Opinion, or in any New Non-Consolidation Opinion (including, without limitation, in any schedules thereto and/or certificates delivered in connection therewith) are untrue or shall become untrue as a result of Borrower’s and/or any SPE Component Entity’s violation of Article 5 hereof in any material respect and, provided no action has been filed with respect to Borrower or any SPE Component Entity under any Creditor Rights Law prior to the time that Lender becomes aware of the untrue assumption, Borrower shall fail to deliver to Lender within ten (10) Business Days after Lender’s request a New Non-Consolidation Opinion without such assumption;

 

(p)               if Borrower defaults under the Management Agreement beyond the expiration of applicable notice and grace periods, if any, thereunder (and the Manager terminates the same) or if the Management Agreement is canceled, terminated or surrendered, expires pursuant to its terms or otherwise ceased to be in full force and effect, unless, in each such case, Borrower, within thirty (30) days of such cancellation, termination, surrender, expiration or cessation, enters into a Qualified Management Agreement with a Qualified Manager in accordance with the applicable terms and provisions hereof;

 

(q)               if Borrower fails to appoint a New Manager within ten (10) Business Days of the request of Lender and/or fails to comply with any limitations on instructing the Manager and such failure continues for more than ten (10) Business Days after notice from Lender, each as required by and in accordance with, as applicable, the terms and provisions of, this Agreement, the Assignment of Management Agreement and the Security Instrument;

 

(r)                if (A) Borrower shall fail (beyond any applicable notice or grace period) to pay any rent, additional rent or other charges payable under any Ground Lease as and when payable thereunder (unless funds are on deposit with Lender for such purpose and Lender’s access to such funds is not restricted or constrained by Borrower or its Affiliates), (B) Borrower defaults under any Ground Lease beyond the expiration of applicable notice and grace periods, if any, thereunder, (C) any Ground Lease is amended, supplemented, replaced, restated or otherwise modified by Borrower without Lender’s prior written consent, in each instance, to the extent that Lender’s consent is required pursuant to this Agreement, (D) any Ground Lease and/or the estate created thereunder is canceled, rejected, terminated, surrendered or expires pursuant to its terms without Lender’s consent (to the extent that Lender’s consent is required pursuant to this Agreement), or (E) a Property Document Event occurs which results in a Material Adverse Effect;

 

(s)               With respect to any default or breach of any term, covenant or condition of this Agreement not specified in subsections (a) through (r) above or not otherwise specifically specified as an Event of Default in this Agreement, if the same is not cured (i) within ten (10) days after notice from Lender (in the case of any default which can be cured by the payment of a sum of money) or (ii) for thirty (30) days after notice from Lender (in the case of any other default or breach); provided, that, with respect to any default or breach specified in subsection (ii), if the same cannot reasonably be cured within such thirty (30) day period and Borrower shall have commenced to cure the same within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure the same, it being agreed that no such extension shall be for a period in excess of one hundred twenty (120) days; or

 

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(t)               if any default not specified above exists under any of the other Loan Documents beyond any applicable cure periods contained in such Loan Documents or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Debt or to permit Lender to accelerate the maturity of all or any portion of the Debt.

 

Section 10.2.     Remedies.

 

(a)               Upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in Section 10.1(f) above with respect to Borrower or any SPE Component Entity) and at any time thereafter Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement, the Security Instruments, the Note and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in the Properties, including, without limitation, declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in this Agreement, the Security Instruments, the Note and the other Loan Documents against Borrower and the Property, including, without limitation, all rights or remedies available at law or in equity. Upon any Event of Default described in Section 10.1(f) above with respect to Borrower or any SPE Component Entity, the Debt and all other obligations of Borrower under this Agreement, the Security Instruments, the Note and the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in the Security Instruments, the Note and the other Loan Documents to the contrary notwithstanding.

 

(b)              Upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement, the Security Instruments, the Note or the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under this Agreement, the Security Instruments, the Note or the other Loan Documents with respect to the Properties. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singularly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by applicable law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by applicable law, equity or contract or as set forth herein or in the Security Instruments, the Note or the other Loan Documents. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

 

(c)               With respect to Borrower and the Properties, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to any Individual Property for the satisfaction of any of the Debt in preference or priority to any other Individual Property, and Lender may seek satisfaction out of all of the Properties or any part thereof, in its absolute discretion in respect of the Debt. In addition, Lender shall have the right from time to time to partially foreclose the Security Instruments in any manner and for any amounts secured by the Security Instruments then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose one or more of the Security Instruments to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose one or more of the Security Instruments to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by one or more of the Security Instruments as Lender may elect. Notwithstanding one or more partial foreclosures, the Properties shall remain subject to the Security Instruments to secure payment of sums secured by the Security Instruments and not previously recovered.

 

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(d)               Upon the occurrence and during the continuance of an Event of Default, Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, security instruments and other security documents (the “Severed Loan Documents”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until five (5) Business Days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power. Borrower shall not be obligated to pay any costs or expenses incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents and the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date.

 

(e)               Notwithstanding anything to the contrary contained herein or in any other Loan Document, any amounts recovered from the Property (or any portion thereof) or any other collateral for the Loan and/or paid to or received by Lender may, after an Event of Default, be applied by Lender toward the Debt in such order, priority and proportions as Lender in its sole discretion shall determine.

 

(f)                Upon the occurrence and during the continuance of an Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder or being deemed to have cured any Event of Default hereunder, make, do or perform any such obligation of Borrower hereunder in such manner and to such extent as Lender may deem necessary. Upon the occurrence and during the continuance of an Event of Default, Lender is authorized to enter upon the Properties and/or any Individual Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Properties and/or any Individual Property for such purposes, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by applicable law), with interest as provided in this Section, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any action or proceeding shall bear interest at the Default Rate, for the period after such cost or expense was incurred into the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by the liens, claims and security interests provided to Lender under the Loan Documents and shall be immediately due and payable upon demand by Lender therefore.

 

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ARTICLE 11.

SECONDARY MARKET

 

Section 11.1.      Securitization.

 

(a)               Lender shall have the right (i) to sell or otherwise transfer the Loan (or any portion thereof and/or interest therein), (ii) to sell participation interests in the Loan (or any portion thereof and/or interest therein) or (iii) to securitize the Loan (or any portion thereof and/or interest therein) in a single asset securitization or a pooled asset securitization. The transactions referred to in clauses (i), (ii) and (iii) above shall hereinafter be referred to collectively as “Secondary Market Transactions” and the transactions referred to in clause (iii) shall hereinafter be referred to as a “Securitization”. Any certificates, notes or other securities issued in connection with a Securitization are hereinafter referred to as “Securities”. Notwithstanding the foregoing, Lender agrees that in the event it effects one or more Securitizations of any portion of the Loan consisting of a pooled asset Securitization, the portion of the Loan contributed to such Securitization shall not exceed twenty percent (20%), of the aggregate principal amount of all mortgage loans included or expected to be included in the Securitization.

 

(b)           If requested by Lender, Borrower and Guarantor shall cooperate with Lender in satisfying the market standards to which Lender customarily adheres or which may be reasonably required in the marketplace or by the Rating Agencies in connection with any Secondary Market Transactions (but in no event shall such cooperation result in any increase in any obligations of Borrower or rights of Lender or decrease in any rights of Borrower or obligations of Lender under the Loan Documents or change in any of the economic or monetary provisions of the Loan or the Loan Documents and not result in any “rate creep” under the Loan Agreement (other than due to the occurrence and continuance of an Event of Default), Borrower acknowledging and agreeing that Borrower and/or Guarantor complying with requests by Lender pursuant to, and in accordance with, this Section 11.1 in and of itself shall not be deemed to increase any obligations of Borrower or decrease any rights of Borrower) which cooperation shall, include, without limitation, to:

 

(i)               (A) provide updated financial and other information with respect to the Properties, the business operated at the Properties, Borrower, Guarantor, SPE Component Entity and any Affiliated Manager, and updated budgets relating to the Properties, which (in each case) are available or reasonably obtainable using systems of Borrower that are currently in place (the “Updated Information”), together, if customary, with appropriate verification of the Updated Information through letters of auditors or opinions of counsel reasonably acceptable to Lender and acceptable to the Rating Agencies, (B) cooperate with Lender in obtaining updated appraisals, market studies, environmental reviews (Phase I’s and, if appropriate, Phase II’s), property condition reports and other due diligence investigations of the Properties and (C) use commercially reasonable efforts to obtain revisions with respect to the Property Documents and Ground Leases as requested by the Rating Agencies in form and substance reasonably acceptable to Lender and acceptable to the Rating Agencies;

 

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(ii)              provide new and/or updated opinions of counsel, which may be relied upon by Lender and the Rating Agencies, as to substantive non-consolidation, matters of Delaware and federal bankruptcy law relating to limited liability companies with respect to Borrower and SPE Component Entities and due execution and enforceability of the Loan Documents, customary in Secondary Market Transactions or required by the Rating Agencies, which counsel and opinions shall be reasonably satisfactory in form and substance to Lender and satisfactory in form and substance to the Rating Agencies;

 

(iii)            provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents consistent with the facts covered by such representations and warranties as they exist on the date thereof; and

 

(iv)            execute such amendments to the Loan Documents and Borrower’s or any SPE Component Entity’s organizational documents as may be reasonably requested by Lender or requested by the Rating Agencies in order to effect any Secondary Market Transaction, including, without limitation, (A) to amend and/or supplement the Independent Director provisions provided herein and therein, in each case, in accordance with the applicable requirements of the Rating Agencies, (B) bifurcating the Loan into two or more components, re-allocating the Loan among existing components or existing Notes, reducing the number of components of the Loan or of any Note and/or creating additional separate notes and/or creating additional senior/subordinate note structure(s), including, without limitation, re-allocating the principal amounts of the Loan (any of the foregoing, a “Loan Bifurcation”) and (C) to modify all operative monthly payment dates (including but not limited to payment dates, interest period start dates and end dates, etc.) under the Loan Documents, by up to ten (10) days; provided, however, that (I) Borrower and/or Guarantor shall not be required to so modify or amend any Loan Document if such modification or amendment would change any economic or non-economic term, including without limitation the interest rate or the stated maturity (except as would not have any adverse effect on Borrower, Guarantor and/or any of their Affiliates) or otherwise increase the obligations or decrease the rights of Borrower pursuant to the Loan Documents or increase the rights or reduce the obligations of Lender, except in connection with a Loan Bifurcation which may result in varying fixed interest rates but will have the same weighted average coupon of the original Note throughout the term (i.e., there shall be no “rate creep”) (except following an Event of Default) and (II) none of Borrower nor any SPE Component Entity shall be required to modify its organizational structure or make any other modification, if such modification would cause it or any of its Affiliates or direct or indirect owners to incur any additional tax liability or suffer other adverse consequences. Borrower and Lender acknowledge and agree that the execution of any Loan Bifurcation in accordance with terms and conditions hereof shall not in and of itself increase the obligations or decrease the rights of Borrower pursuant to the Loan Documents.

 

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(c)               If, at the time a Disclosure Document is being prepared for a Securitization, Lender reasonably expects that Borrower alone or Borrower and one or more Affiliates of Borrower collectively, or the Properties alone or the Properties and Related Properties collectively, will be a Significant Obligor, Borrower shall furnish to Lender upon reasonable request the following financial information:

 

(i)               If Lender reasonably expects that the principal amount of the Loan together with any Related Loans, as of the cut-off date for such Securitization, may equal or exceed ten percent (10%), but be less than twenty percent (20%), of the aggregate principal amount of all mortgage loans included or expected to be included in the Securitization, net operating income for the Property and the Related Properties or selected financial data as required under Item 1112(b)(1) of Regulation AB, or

 

(ii)              If Lender reasonably expects that the principal amount of the Loan together with any Related Loans, as of the cut-off date for such Securitization, may equal or exceed twenty percent (20%) of the aggregate principal amount of all mortgage loans included or expected to be included in the Securitization, the financial statements required under Item 1112(b)(2) of Regulation AB.

 

(d)          In the event all or a portion of the Loan is included in a securitization involving a registered public offering of Securities pursuant to the Securities Act, and if Lender reasonably determines that Borrower alone or Borrower and one or more Affiliates of Borrower collectively, or the Properties alone or the Properties and the Related Properties, collectively, are a Significant Obligor, then Borrower shall furnish to Lender, on an ongoing basis, net operating income for the Property or Related Properties or selected financial data or financial statements meeting the requirements of Item 1112(b)(1) or (2) of Regulation AB, as specified by Lender, but only for so long as such entity or entities are a Significant Obligor and either (x) filings pursuant to the Exchange Act in connection with or relating to the Securitization (an “Exchange Act Filing”) are required to be made under applicable Legal Requirements or (y) comparable information is required to otherwise be “available” to holders of Securities under Regulation AB or applicable Legal Requirements.

 

(e)               Any financial data or financial statements required pursuant to Section 11.1(d) above shall be furnished to Lender (1) with respect to quarterly reporting, not later than forty-one (41) days after the end of the fiscal quarter of Borrower and (2) with respect to all other reporting, no later than five (5) Business Days prior to the date required pursuant to Regulation AB.

 

(f)                If requested by Lender, Borrower shall provide Lender, promptly following Lender’s request therefor, and in any event within the time periods required to comply with Regulation AB or other Legal Requirements relating to a Securitization (but no earlier than five (5) Business Days following notice from Lender), with any other or additional financial statements, or financial, statistical or operating information, as Lender shall reasonably determine to be required pursuant to Regulation AB, or any amendment, modification or replacement thereto or other Legal Requirements relating to a Securitization.

 

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(g)               All financial data and statements provided by Borrower hereunder in connection with a Securitization shall meet (and shall be accompanied by such auditors’ reports or consents and such certificates as may be necessary to comply with) the requirements of Regulation AB and other Legal Requirements, in each case to the extent applicable and as specified by Lender.

 

Section 11.2.     Disclosure.

 

(a)           Borrower (on its own behalf and on behalf of each other Borrower Party) understands that information provided to Lender by Borrower, any other Borrower Party and/or their respective agents, counsel and representatives may be (i) included in (A) the Disclosure Documents and (B) filings under the Securities Act and/or the Exchange Act and (ii) made available to Investors, the Rating Agencies and service providers, in each case, in connection with any Secondary Market Transaction.

 

(b)               Borrower and Guarantor shall indemnify Lender and its officers, directors, partners, employees, representatives, agents and affiliates against any losses, claims, damages (other than special, consequential, incidental, indirect, exemplary or punitive damages or lost profits except to the extent Lender or its Affiliates are responsible therefor to third parties) or liabilities (collectively, the “Liabilities”) to which Lender and/or its officers, directors, partners, employees, representatives, agents and/or affiliates may become subject in connection with any Provided Information contained in any Disclosure Document and/or any Covered Rating Agency Information, in each case, insofar as such Liabilities arise out of or are based upon any untrue statement of any material fact in the Provided Information and/or arise out of or are based upon the omission to state a material fact in the Provided Information required to be stated therein or necessary in order to make the statements in the applicable Disclosure Document and/or Covered Rating Agency Information, in light of the circumstances under which they were made, not misleading.

 

(c)               Borrower and Guarantor shall provide in connection with each of (i) a preliminary and a final private placement memorandum, offering memorandum or offering circular, (ii) a free writing prospectus, (iii) a preliminary and final prospectus or prospectus supplement and (iv) a structural and collateral term sheet, as applicable, an agreement (A) certifying that Borrower has examined the portions of such Disclosure Documents specified in writing by Lender and that each such Disclosure Document, as it relates to Borrower, Borrower Affiliates, the Properties (or any portion thereof), any Affiliated Manager, Guarantor, the Ground Leases, the Management Agreements and the use of Loan proceeds (but excluding (I) any forward-looking budgets and projections, (II) any underwritten financial information (except to the extent such underwritten financial information is included in the Provided Information), (III) any information (including financial information or forecasted information) that is solely obtained from any third party report, including, without limitation appraisals, property condition reports or environmental reports, and (IV) any statements and information relating to the cities and regions in which the Properties are located (other than the Property addresses), including local market information and local market performance data) (collectively, with the Provided Information, the “Covered Disclosure Information”), does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, (B) indemnifying Lender (and for purposes of this Section 11.2(c), Lender hereunder shall include its officers and directors), the Affiliate of Lender (“Lender Affiliate”) that has filed the registration statement relating to the Securitization (the “Registration Statement”), each of its directors, each of its officers who have signed the Registration Statement or Affiliate of Lender that has acted as sponsor or depositor in connection with the Securitization, and each Person that controls the Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Lender Group”), and Lender Affiliate, and any other placement agent, initial purchaser or underwriter with respect to the Securitization, each of their respective directors and each Person who controls Lender Affiliate or any other placement agent or underwriter within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”) for any Liabilities to which Lender, the Lender Group or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Covered Disclosure Information or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated in the Covered Disclosure Information or necessary in order to make the statements in the Covered Disclosure Information, in light of the circumstances under which they were made, not misleading and (C) agreeing to reimburse Lender, the Lender Group and/or the Underwriter Group for any out-of-pocket legal or other expenses reasonably incurred by Lender, the Lender Group and the Underwriter Group in connection with investigating or defending the Liabilities; provided, however, that (I) Borrower and Guarantor will be liable in any such case under Section 11.2(b) or clauses (B) or (C) above only to the extent that any such loss claim, damage or liability arises out of or is based upon any such untrue statement or omission made therein in reliance upon and in conformity with information furnished to Lender by or on behalf of Borrower in connection with the preparation of the Disclosure Document or in connection with the underwriting or closing of the Loan, including, without limitation, financial statements of Borrower, operating statements and rent rolls with respect to the Properties, or is contained in the Disclosure Documents with respect to the matters referenced in clause (A) above (but, in each case, excluding forward-looking budgets and projections), (II) Borrower and Guarantor shall not be obligated to provide the certification set forth in clause (A) above or be liable under Section 11.2(b) or clause (B) or (C) above if Borrower has not been afforded five (5) Business Days to review and comment on the applicable sections of the applicable Disclosure Document, and (III) Borrower and Guarantor shall not be liable under Section 11.2(b) or clause (B) or (C) above with respect to any statement or omission or any failure of Lender to accurately transcribe any portion of the Covered Disclosure Information provided by Borrower if Borrower shall have notified Lender as to the existence of such untrue statement, omission or inaccuracy within a reasonable period of time prior to pricing of the securities and Lender shall have failed to cause such Disclosure Document to be revised accordingly. The indemnification provided for in clauses (B) and (C) above shall be effective (subject to the proviso set forth in the immediately preceding sentence) whether or not the indemnification agreement described above is provided. The aforesaid indemnity will be in addition to any liability which Borrower and Guarantor may otherwise have subject to Section 13.1.

 

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(d)               In connection with filings under Exchange Act and/or the Securities Act, Borrower and Guarantor shall (i) indemnify Lender, the Lender Group and the Underwriter Group for Liabilities to which Lender, the Lender Group or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon the omission or alleged omission to state in the financial reporting required to be provided pursuant to Section 11.1(d) hereof a material fact required to be stated in such financial reporting in order to make the statements in connection with such filings under Exchange Act and/or the Securities Act, in light of the circumstances under which they were made, not misleading and (ii) reimburse Lender, the Lender Group or the Underwriter Group for any out-of-pocket legal or other expenses reasonably incurred by Lender, the Lender Group or the Underwriter Group in connection with defending or investigating the Liabilities; provided, however, that Borrower and Guarantor will be liable in any such case under this Section 11.2(d) only to the extent that any such loss claim, damage or liability arises out of or is based upon any such untrue statement or omission made therein in reliance upon and in conformity with information furnished to Lender by or on behalf of Borrower in connection with the preparation of such filings under Exchange Act and/or the Securities Act or in connection with the underwriting or closing of the Loan, including, without limitation, financial statements of Borrower, operating statements and rent rolls with respect to the Properties, or is contained in the Disclosure Documents with respect to the matters referenced in Section 11.2(c)(A) above (but, in each case, excluding forward-looking budgets and projections).

 

(e)               Promptly after receipt by an Indemnified Person under this Section 11.2 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Indemnifying Person under this Section 11.2, notify the Indemnifying Person in writing of the commencement thereof (but the omission to so notify the Indemnifying Person will not relieve the Indemnifying Person from any liability which the Indemnifying Person may have to any Indemnified Person hereunder except to the extent that failure to notify causes prejudice to the Indemnifying Person). In the event that any action is brought against any Indemnified Person, and it notifies the Indemnifying Person of the commencement thereof, the Indemnifying Person will be entitled, jointly with any other Indemnifying Person, to participate therein and, to the extent that it (or they) may elect by written notice delivered to the Indemnified Person promptly after receiving the aforesaid notice from such Indemnified Person, to assume the defense thereof with counsel reasonably satisfactory to such Indemnified Person. After notice from the Indemnifying Person to such Indemnified Person under this Section 11.2, such Indemnifying Person shall pay for any legal or other expenses subsequently incurred by such Indemnifying Person in connection with the defense thereof; provided, however, if the defendants in any such action include both the indemnified party and the Indemnifying Person and the indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the Indemnifying Person, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party at the cost of the Indemnifying Person.

 

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After notice from such Indemnifying Person to such Indemnified Person of its election to so assume the defense of such claim or action, such Indemnifying Person shall not be liable to such Indemnified Person for any legal or other expenses subsequently incurred by such Indemnified Person in connection with the defense thereof, unless, (1) if the defendants in any such action include both an Indemnified Person and any of the Indemnifying Persons and an Indemnified Person shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Persons that are different from or additional to those available to an Indemnifying Person, the Indemnified Person or Persons shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Person at the expense of the Indemnifying Persons, (2) the Indemnifying Person shall not have employed counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of commencement of the action (provided that the Indemnified Person has provided the Indemnifying Person with ten (10) days prior written notice that it intends to exercise its rights pursuant to this clause (2) and the Indemnifying Person has not employed counsel reasonably satisfactory to the Indemnified Person within such 10-day period), or (3) the Indemnifying Person has authorized in writing the employment of counsel of the Indemnified Person at the expense of the Indemnifying Person.

 

Without the prior written consent of the applicable Indemnified Persons (which consent shall not be unreasonably withheld), no Indemnifying Person shall settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless (i) such Indemnifying Person shall have given the Indemnified Persons reasonable prior written notice thereof and shall have obtained an unconditional release of each Indemnified Person from all liability arising out of such claim, action, suit or proceedings and (ii) such settlement, compromise or judgment does not include a statement as to, or admission of, fault, culpability or a failure to act by or on behalf of any Indemnified Person. As long as an Indemnifying Person has complied with its obligations to defend and indemnify hereunder, such Indemnifying Person shall not be liable for any settlement made by any Indemnified Person(s) without the consent of such Indemnifying Person (which consent shall not be unreasonably withheld or delayed). Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel to which the Indemnified Person is entitled pursuant to this Agreement, the Indemnifying Person shall be liable for any settlement, compromise or entry of a judgment in connection with any proceeding effected without its written consent if (i) such settlement, compromise or judgment is entered into or entered, as applicable, more than ninety (90) days after receipt by the Indemnifying Person of such request, (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement, compromise or judgment, and (iii) such settlement, compromise or judgment does not include a statement as to, or an admission of, fault, culpability or failure to act by or on behalf of any such Indemnifying Person; provided, that the Indemnified Person has provided the Indemnifying Person with five (5) Business Days prior notice of its intent to exercise its rights under this sentence.

 

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The Indemnifying Person agrees that if any indemnification or reimbursement sought pursuant to this Agreement is judicially determined to be unenforceable for any reason or is insufficient to hold any Indemnified Person harmless (with respect only to the Liabilities from which such Indemnified Person is entitled to be held harmless under this Agreement), then the Indemnifying Persons, on the one hand, and such Indemnified Person, on the other hand, shall contribute to the Liabilities for which such indemnification or reimbursement is held unavailable or is insufficient: (x) in such proportion as is appropriate to reflect the relative benefits to the Indemnifying Persons, on the one hand, and such Indemnified Person, on the other hand, from the transactions to which such indemnification or reimbursement relates; or (y) if the allocation provided by clause (x) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (x) but also the relative faults of the Indemnifying Persons, on the one hand, and all Indemnified Persons, on the other hand, as well as any other equitable considerations. Notwithstanding the foregoing, no party found liable for a fraudulent misrepresentation shall be entitled to contribution from any other party who is not also found liable for such fraudulent misrepresentation, and the Indemnifying Persons agree that in no event shall the amount to be contributed by the Indemnified Persons collectively pursuant to this paragraph exceed the amount of the fees (by underwriting discount or otherwise) actually received by such Indemnified Persons in connection with the closing of the Loan or the Securitization.

 

The Indemnifying Persons agree that the indemnification, contribution and reimbursement obligations set forth in this Agreement shall apply whether or not any Indemnified Person is a formal party to any lawsuits, claims or other proceedings. The Indemnifying Persons further agree that the Indemnified Persons are intended third party beneficiaries under this Agreement.

 

(f)                The liabilities and obligations of each of Borrower, Guarantor and Lender under this Section 11.2 (subject in each case to Article 13) shall survive the termination of this Agreement and the satisfaction and discharge of the Debt. Failure by Borrower and/or any Borrower Party to comply with the provisions of Section 11.1 and/or Section 11.2 within the timeframes specified therein and/or as otherwise required by Lender shall, if not cured within five (5) Business Days, at Lender’s option, constitute an Event of Default. Borrower (on its own behalf and on behalf of each Borrower Party) hereby expressly authorizes and appoints Lender its attorney-in-fact to take any actions required of any Borrower Party under Sections 11.1, 11.2, 11.6 and/or 11.8 in the event any Borrower Party fails to do the same, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest.

 

(g)               Notwithstanding anything to the contrary contained in this Article 11, in connection with Lender’s efforts to effect a Securitization pursuant to Section 11.1, all reasonable third party costs and expenses actually incurred by Borrower and Guarantor (excluding legal fees and expenses incurred by Borrower, Guarantor or their Affiliates and any indemnification obligations of Borrower, Guarantor or their respective Affiliates) (collectively, the “Cooperation Costs”) shall be reimbursed by Lender, provided that each Borrower Party shall bear its own cost of any ongoing financial reporting required pursuant to the terms hereof; provided, further, that each Borrower Party (and its Affiliates) shall bear its own cost of compliance with its obligations under Section 11.6, Section 11.8 and/or Section 11.9 hereof to the extent Lender has notified Borrower of its good faith intention to pursue any such matter pursuant to Section 11.6, Section 11.8 and/or Section 11.9 hereof within thirty (30) days following the Closing Date. In the event a Borrower Party incurs any Cooperation Costs in connection with its compliance with its obligations under Section 11.6, Section 11.8 and/or Section 11.9 hereof and the conditions set forth in clauses (i) and (ii) of the preceding sentence have not been satisfied, such Cooperation Costs shall be reimbursed by Lender.

 

Section 11.3.     Reserves/Escrows. In the event that Securities are issued in connection with the Loan, all funds held by Lender in escrow or pursuant to reserves in accordance with this Agreement and the other Loan Documents shall be deposited in “eligible accounts” at “eligible institutions” and, to the extent applicable, invested in “permitted investments” as then defined and required by the Rating Agencies.

 

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Section 11.4.     Servicer. At the option of Lender, the Loan may be serviced by a servicer/special servicer/trustee selected by Lender (collectively, the “Servicer”) and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to such Servicer pursuant to a servicing agreement between Lender and such Servicer; provided, however, Lender shall remain liable hereunder regardless of any such delegation. Subject to such party’s agreement to perform the applicable responsibilities pursuant to commercially reasonable terms, Lender shall appoint KeyBank National Association as the initial master servicer of a standalone Securitization of the Loan, and provided KeyBank National Association is willing to continue to perform the applicable responsibilities pursuant to commercially reasonable terms, KeyBank National Association shall continue to serve as the master servicer of any such standalone Securitization of the Loan, subject to change only for cause pursuant to the customary terms (including, without limitation, a failure by KeyBank National Association to satisfy the requirements to act as a servicer, and the commission of an act that would disqualify KeyBank National Association from acting as servicer) of the servicing agreement with respect to a standalone Securitization of the Loan.

 

Section 11.5.     Rating Agency Costs. In connection with any Rating Agency Confirmation or other Rating Agency consent, approval or review required hereunder (other than the initial review of the Loan by the Rating Agencies in connection with a Securitization), Borrower shall pay all of the costs and expenses of Lender, Servicer and each Rating Agency in connection therewith, and, if applicable, shall pay any fees imposed by any Rating Agency in connection therewith.

 

Section 11.6.     Mezzanine Option. Lender shall have the option (the “Mezzanine Option”) at any time prior to Securitization to divide the Loan into two parts, a mortgage loan and a mezzanine loan, provided, that (i) the total loan amounts for such mortgage loan and such mezzanine loan shall equal the then outstanding amount of the Loan immediately prior to Lender’s exercise of the Mezzanine Option, and (ii) the weighted average interest rate of such mortgage loan and mezzanine loan shall at all times equal the Interest Rate and there shall be no rate creep (except, with respect to such mezzanine loan, following an event of default under such mezzanine loan and with respect to a prepayment of the mortgage loan in connection with the Casualty and/or Condemnation and except, with respect to such mortgage loan, following an event of default under such mortgage loan). Borrower shall cooperate with Lender in Lender’s exercise of the Mezzanine Option in good faith and in a timely manner, which such cooperation shall include, but not be limited to, (i) executing such amendments to the Loan Documents and Borrower or any SPE Component Entity’s organizational documents as may be reasonably requested by Lender or requested by the Rating Agencies (provided, that any such amendment shall not change any economic or non-economic term, including the interest rate or the stated maturity, or otherwise have an adverse effect on Borrower, Guarantor and/or any of their Affiliates or increase the obligations or decrease the rights of Borrower pursuant to the Loan Documents and will not increase the rights or decrease the obligations of Lender, except as provided in clause (ii) of the immediately preceding sentence), (ii) creating one or more Single Purpose Entities (the “Mezzanine Borrower”), which such Mezzanine Borrower shall (A) own, directly or indirectly, 100% of the equity ownership interests in Borrower (the “Equity Collateral”), and (B) execute such agreements, instruments and other documents as may be required by Lender in connection with the mezzanine loan (including, without limitation, a promissory note evidencing the mezzanine loan and a pledge and security agreement pledging the Equity Collateral to Lender as security for the mezzanine loan); and (iii) delivering such opinions, title endorsements, UCC title insurance policies, documents and/or instruments relating to the Property Documents, Ground Leases and other diligence materials as may be reasonably required by Lender or required by the Rating Agencies, but none of the foregoing shall increase the obligations of Borrower or rights of Lender or decrease the rights of Borrower or obligations of Lender under the Loan Documents or change any of the economic or monetary provisions of the Loan or the Loan Documents. Borrower and Lender acknowledge and agree that the execution of any documents in connection with Lender’s exercise of the Mezzanine Option in accordance with terms and conditions hereof shall not in itself increase the obligations or decrease the rights of Borrower pursuant to the Loan Documents.

 

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Section 11.7.     Conversion to Registered Form. At the request of Lender, Borrower shall appoint, as its agent, a registrar and transfer agent (the “Registrar”) reasonably acceptable to Lender which shall maintain, subject to such reasonable regulations as it shall provide, such books and records as are necessary for the registration and transfer of the Note in a manner that shall cause the Note to be considered to be in registered form for purposes of Section 163(f) of the IRS Code. The option to convert the Note into registered form once exercised may not be revoked. Any agreement setting out the rights and obligation of the Registrar shall be subject to the reasonable approval of Lender. Borrower may revoke the appointment of any particular person as Registrar, effective upon the effectiveness of the appointment of a replacement Registrar. The Registrar shall not be entitled to any fee from Borrower or Lender or any other lender in respect of transfers of the Note and other Loan Documents.

 

Section 11.8.     Uncross of Properties.

 

(a)               Borrower agrees that at any time Lender shall have the unilateral right to elect to, from time to time, uncross any of the Properties (such uncrossed Property or Properties, collectively, the “Affected Property” and the remaining Property or Properties, collectively, the “Unaffected Property”) in order to separate the Loan from the portion of the Debt to be secured by the Affected Property (such portion of the Debt to be secured by the Affected Property, the “Uncrossed Loan” and the remaining portion of the Debt secured by the Unaffected Property, the “Remaining Loan”). In furtherance thereof, Lender shall have the right to (i) sever and/or divide the Note and the other Loan Documents so that (A) the original Loan Documents (collectively, the “Remaining Loan Documents”) evidence and secure only the Remaining Loan and relate only to the Unaffected Property and (B) amended and/or new documents and other instruments (collectively, the “Uncrossed Loan Documents”) evidence and secure only the Uncrossed Loan and relate only to the Affected Property, (ii) allocate the applicable portion of each of the Reserve Funds relating to the Affected Property to the Uncrossed Loan, (iii) release any cross-default and/or cross-collateralization provisions applicable to such Affected Property (but such Affected Property shall be cross-defaulted an cross-collateralized with each other Affected Property) and (iv) take such additional reasonable actions consistent therewith (including, without limitation, requiring delivery of the Uncrossed Loan Documents and amendments to the Loan Documents, in each case, to give effect to the foregoing); provided, that the Uncrossed Loan Documents and the Remaining Loan Documents, shall not, in the aggregate, increase (A) any monetary obligation of Borrower under the Loan Documents or (B) any other obligation of Borrower under the Loan Documents; provided, however, none of the foregoing shall increase the obligations or decrease the rights of Borrower pursuant to the Loan Documents nor increase the rights or decrease the obligations of Lender (Borrower acknowledging and agreeing that Borrower complying with requests by Lender pursuant to, and in accordance with, this Section 11.8 in and of itself shall not be deemed to increase any obligations of Borrower or decrease any rights of Borrower). In connection with the uncrossing of any such Affected Property as provided for in this Section 11.8 (an “Uncrossing Event”), the Remaining Loan shall be reduced by an amount equal to amount of the Uncrossed Loan and the Uncrossed Loan shall be in an amount equal to the Allocated Loan Amount applicable to the Affected Property.

 

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(b)               Borrower shall (and shall cause each Borrower Party to) fully cooperate with Lender to effectuate each Uncrossing Event. Without limitation of the foregoing, upon Lender’s request, Borrower shall (and shall cause each Borrower Party to), among other things, (i) deliver evidence to Lender that the single purpose nature and bankruptcy remoteness of the Borrower(s) owning Properties other than the Affected Property following such Uncrossing Event have not been adversely affected and are in accordance with the terms and provisions of the Remaining Loan Documents; (ii) deliver evidence to Lender that the single purpose nature and bankruptcy remoteness of the Borrower(s) owning the Affected Property following such release have not been adversely affected and are in accordance with the terms and provisions of the Uncrossed Loan Documents; (iii) deliver to Lender such legal opinions and updated legal opinions as Lender reasonably shall require or the Rating Agencies shall require (including, without limitation, an update to the Non-Consolidation Opinion acceptable to the Rating Agencies and reasonably acceptable to Lender or a New Non-Consolidation Opinion and Borrower shall use commercially reasonable efforts to deliver an opinion of counsel for Borrower that is standard in commercial lending transactions and subject only to customary qualifications, assumptions and exceptions opining that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code); (iv) take the actions contemplated in subsection (a) above (including, without limitation, executing the Uncrossed Loan Documents and amendments to the Loan Documents); and (v) deliver such title endorsements, title insurance policies, documents and/or instruments relating to the Property Documents, Ground Leases and other materials as may be required by Lender or the Rating Agencies.

 

Section 11.9.     Syndication. Without limiting Lender’s rights under Section 11.1, the provisions of this Section 11.9 shall only apply prior to a Securitization and following a Securitization of the Loan, the provisions of this Section 11.9 (and the related terms defined herein and used elsewhere in the Loan Documents) shall be deemed deleted in their entirety.

 

(a)               Sale of Loan, Co-Lenders, Participations and Servicing.

 

(i)          Lender and any Co-Lender may, at their option, without Borrower’s consent (but with notice to Borrower), sell with novation all or any part of their right, title and interest in, and to, and under the Loan (the “Syndication”), to one or more additional lenders (each a “Co-Lender”). Each additional Co-Lender shall enter into an assignment and assumption agreement (the “Assignment and Assumption”) assigning a portion of Lender’s or Co-Lender’s rights and obligations under the Loan, and pursuant to which the additional Co-Lender accepts such assignment and assumes the assigned obligations. From and after the effective date specified in the Assignment and Assumption (i) each Co-Lender shall be a party hereto and to each Loan Document to the extent of the applicable percentage or percentages set forth in the Assignment and Assumption and, except as specified otherwise herein, shall succeed to the rights and obligations of Lender and the Co-Lenders hereunder and thereunder in respect of the Loan, and (ii) Lender, as lender and each Co-Lender, as applicable, shall, to the extent such rights and obligations have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations hereunder and under the Loan Documents from and after the date of such transfer.

 

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(ii)         The liabilities of Lender and each of the Co-Lenders shall be several and not joint, and Lender’s and each Co-Lender’s obligations to Borrower under this Agreement shall be reduced by the amount of each such Assignment and Assumption. Neither Lender nor any Co-Lender shall be responsible for the obligations of any other Co-Lender. Lender and each Co-Lender shall be liable to Borrower only for their respective proportionate shares of the Loan.

 

(iii)        Borrower agrees that it shall, in connection with any sale of all or any portion of the Loan, whether in whole or to an additional Co-Lender or Participant, within ten (10) Business Days after requested by Agent, furnish Agent with the certificates required under Sections 4.12 and 4.13 hereof and such other information as reasonably requested by any additional Co-Lender or Participant in performing its due diligence in connection with its purchase of an interest in the Loan.

 

(iv)       As of the Closing Date, CF (or an Affiliate of CF) shall act as administrative agent for itself and the Co-Lenders (together with any successor administrative agent, the “Agent”) pursuant to this Section 11.9. Borrower acknowledges that CF, as Agent, shall have the sole and exclusive authority to execute and perform this Agreement and each Loan Document on behalf of itself, as a Lender and as agent for itself and the Co-Lenders subject to the terms of the Co-Lending Agreement. Each Lender acknowledges that CF, as Agent, shall retain the exclusive right to grant approvals and give consents with respect to all matters requiring consent hereunder. Except as otherwise provided herein, Borrower shall have no obligation to recognize or deal directly with any Co-Lender, and no Co-Lender shall have any right to deal directly with Borrower with respect to the rights, benefits and obligations of Borrower under this Agreement, the Loan Documents or any one or more documents or instruments in respect thereof. Borrower may rely conclusively on the actions of CF as Agent to bind CF and the Co-Lenders, notwithstanding that the particular action in question may, pursuant to this Agreement or the Co-Lending Agreement be subject to the consent or direction of some or all of the Co-Lenders. CF may resign as Agent of the Co-Lenders, in its sole discretion, or if required to by the Co-Lenders in accordance with the term of the Co-Lending Agreement, in each case without the consent of but upon prior written notice to Borrower. Upon any such resignation, a successor Agent shall be determined pursuant to the terms of the Co-Lending Agreement. The term Agent shall mean any successor Agent.

 

(v)        Notwithstanding any provision to the contrary in this Agreement, the Agent (as Agent only) shall not have any duties or responsibilities except those expressly set forth herein (and in the Co-Lending Agreement) and except as expressly set forth herein and in the Co-Lending Agreement, no covenants, functions, responsibilities, duties, obligations or liabilities of Agent shall be implied by or inferred from this Agreement, the Co-Lending Agreement, or any other Loan Document, or otherwise exist against Agent.

 

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(vi)       Except to the extent its obligations hereunder and its interest in the Loan have been assigned pursuant to one or more Assignments and Assumption, CF, as Agent, shall have the same rights and powers under this Agreement as any other Co-Lender and may exercise the same as though it were not Agent, respectively. The term “Co-Lender” or “Co-Lenders” shall, unless otherwise expressly indicated, include CF in its individual capacity. CF and the other Co-Lenders and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, Borrower, or any Affiliate of Borrower and any Person who may do business with or own securities of Borrower or any Affiliate of Borrower, all as if they were not serving in such capacities hereunder and without any duty to account therefor to each other.

 

(vii)      If required by any Co-Lender, Borrower hereby agrees to execute supplemental notes in the principal amount of such Co-Lender’s pro rata share of the Loan substantially in the form of the Note, and such supplemental note shall (i) be payable to order of such Co-Lender, (ii) be dated as of the Closing Date, and (iii) mature on the Maturity Date. Such supplemental note shall provide that it evidences a portion of the existing indebtedness hereunder and under the Note and not any new or additional indebtedness of Borrower. The term “Note” as used in this Agreement and in all the other Loan Documents shall include all such supplemental notes.

 

(viii)     CF, as Agent, shall maintain at its domestic lending office or at such other location as CF, as Agent, shall designate in writing to each Co-Lender and Borrower a copy of each Assignment and Assumption delivered to and accepted by it and a register for the recordation of the names and addresses of the Co-Lenders, the amount of each Co-Lender’s proportionate share of the Loan and the name and address of each Co-Lender’s agent for service of process (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, CF, as Agent, and the Co-Lenders may treat each person or entity whose name is recorded in the Register as a Co-Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection and copying by Borrower or any Co-Lender during normal business hours upon reasonable prior notice to the Agent. A Co-Lender may change its address and its agent for service of process upon written notice to Lender, as Agent and to Borrower which notice shall only be effective upon actual receipt by CF, as Agent and Borrower, which receipt will be acknowledged by CF, as Agent and Borrower upon request.

 

(ix)        Notwithstanding anything herein to the contrary, any financial institution or other entity may be sold a participation interest in the Loan by Lender or any Co-Lender without Borrower’s consent (such financial institution or entity, a “Participant”). No Participant shall have any rights under this Agreement, the Note or any of the Loan Documents and the Participant’s rights in respect of such participation shall be solely against Lender or Co-Lender, as the case may be, as set forth in the participation agreement executed by and between Lender or Co-Lender, as the case may be, and such Participant. Borrower may rely conclusively on the actions of Lender as Agent to bind Lender and any Participant, notwithstanding that the particular action in question may, pursuant to this Agreement or any participation agreement be subject to the consent or direction of some or all of the Participants. No participation shall relieve Lender or Co-Lender, as the case may be, from its obligations hereunder or under the Note or the Loan Documents and Lender or Co-Lender, as the case may be, shall remain solely responsible for the performance of its obligations hereunder.

 

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(x)         Notwithstanding any other provision set forth in this Agreement, Lender or any Co-Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, amounts owing to it in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System).

 

(b)               Cooperation in Syndication.

 

(i)          Each of Borrower and Guarantor shall reasonably cooperate with Lender in completing a Syndication. Such assistance shall include (i) direct contact between senior management and advisors of Borrower and Guarantor and the proposed Co-Lenders, (ii) assistance in the preparation of a confidential information memorandum and other marketing materials to be used in connection with the Syndication, (iii) the hosting, with Lender, of one or more meetings of prospective Co-Lenders or with the Rating Agencies, and (iv) assisting Lender in Lender’s attempt to procure a rating for the Loan by the Rating Agencies.

 

(ii)         Lender shall manage all aspects of the Syndication of the Loan, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of the commitments among the Co-Lenders and the amount and distribution of fees among the Co-Lenders. To assist Lender in its Syndication efforts, Borrower agrees promptly to prepare and provide to Lender all information with respect to Borrower, Affiliated Manager, Guarantor, any SPE Component Entity (if any) and the Properties contemplated hereby, including all financial information and projections (the “Projections”), as Lender may reasonably request in connection with the Syndication of the Loan. Borrower hereby represents and covenants that (i) all information other than the Projections (the “Information”) that has been or will be made available to Lender by Borrower or any of their representatives is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (ii) the Projections that have been or will be made available to Lender by Borrower or any of their representatives have been or will be prepared in good faith based upon reasonable assumptions. Borrower understands that in arranging and syndicating the Loan, Lender, the Co-Lenders and, if applicable, the Rating Agencies, may use and rely on the Information and Projections without independent verification thereof.

 

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(iii)        If required in connection with the Syndication, Borrower hereby agrees that, in addition to complying with the other provisions of this Section 11.9, it shall use commercially reasonable efforts to obtain and deliver reliance letters reasonably satisfactory to Lender with respect to the environmental assessments and reports delivered to Lender prior to the Closing Date, which will run to Lender, any Co-Lender and their respective successors and assigns.

 

(c)               Limitation of Liability. No claim may be made by Borrower, or any other Person against Agent, Lender or any Co-Lenders or the Affiliates, directors, officers, employees, attorneys or agent of any of such Persons for any special, indirect, consequential, incidental, exemplary or punitive damages or lost profits in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any act, omission or event occurring in connection therewith; and Borrower hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

(d)               No Joint Venture. Notwithstanding anything to the contrary herein contained, neither Agent, Lender nor any Co-Lender by entering into this Agreement or by taking any action pursuant hereto, will be deemed a partner or joint venturer with Borrower.

 

ARTICLE 12.

 

INDEMNIFICATIONS

 

Section 12.1.     General Indemnification. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Persons from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Persons and arising out of or in any way relating to any one or more of the following: (a) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about any Individual Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (b) any use, nonuse or condition in, on or about any Individual Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (c) performance of any labor or services or the furnishing of any materials or other property in respect of any Individual Property or any part thereof; (d) any failure of any Individual Property (or any portion thereof) to be in compliance with any applicable Legal Requirements; (e) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease, management agreement, any Ground Lease or any Property Documents; (f) the payment of any brokerage commission, charge or fee to anyone (other than a broker or other agent retained by Lender) which may be payable in connection with the funding of the Loan evidenced by the Note and secured by the Security Instruments; and/or (g) the holding or investing of the funds on deposit in the Accounts or the performance of any work or the disbursement of funds in each case in connection with the Accounts; provided, however, that the foregoing covenant shall not apply to any matter to the extent arising from (x) the gross negligence, fraud, illegal acts or willful misconduct of an Indemnified Person or (y) any Losses first arising after foreclosure of the lien of the Loan Documents or deed-in-lieu of such foreclosure, or Lender exercising any remedy which results in Lender or its successors or assigns or their respective agents or appointees controlling the Properties (or any Individual Property, if applicable) solely with respect to those Properties which are no longer controlled by Borrower and solely with respect to actions, events or conditions which are not caused by Borrower or any of its Affiliates. Any amounts payable to Lender by reason of the application of this Section 12.1 shall become due and payable immediately after demand therefor by Lender and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid.

 

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Section 12.2.     Mortgage and Intangible Tax Indemnification. Subject to Article 13, Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Persons from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Persons and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of the Security Instruments, the Note or any of the other Loan Documents.

 

Section 12.3.     ERISA Indemnification. Subject to Article 13, Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Persons from and against any and all Losses (including, without limitation, reasonable attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Sections 3.7 or 4.19 of this Agreement.

 

Section 12.4.     Duty to Defend, Legal Fees and Other Fees and Expenses. Upon written request by any Indemnified Person, Borrower shall defend such Indemnified Person (if requested by any Indemnified Person, in the name of the Indemnified Person) by attorneys and other professionals selected by Borrower and reasonably approved by the Indemnified Persons. Notwithstanding the foregoing, any Indemnified Persons may, in their sole discretion and at the Indemnified Persons’ sole cost and expense, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Persons, their attorneys shall control the resolution of any claim or proceeding, provided, however, that Borrower shall have the right to reasonably approve any settlement such Indemnified Persons desire to enter into with respect to such matter and any such settlement shall provide a full release of Borrower with respect to such matter. Upon demand if Borrower is not defending the Indemnified Persons in accordance with this Section 12.4, Borrower shall pay or, in the sole discretion of the Indemnified Persons, reimburse, the Indemnified Persons for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

 

Section 12.5.     Survival. The obligations and liabilities of Borrower under this Article 12 (in each case, subject to Article 13) shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instrument.

 

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Section 12.6.     Environmental Indemnity. Simultaneously herewith, Borrower and Guarantor have executed and delivered the Environmental Indemnity to Lender, which Environmental Indemnity is not secured by the Security Instrument.

 

ARTICLE 13.

 

EXCULPATION

 

Section 13.1.     Exculpation.

 

(a)               Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Security Instruments or the other Loan Documents by any action or proceeding wherein a money judgment or any deficiency judgment or other judgment establishing personal liability shall be sought against Borrower or any principal, director, officer, employee, beneficiary, shareholder, partner, member, trustee, agent, or affiliate of Borrower or any legal representatives, successors or assigns of any of the foregoing (collectively, the “Exculpated Parties”), except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Security Instruments and the other Loan Documents, or in the Properties (or any portion thereof), the Rents, or any other collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Security Instruments and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against Borrower or any of the Exculpated Parties in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Security Instruments or the other Loan Documents. The provisions of this Section shall not, however, (1) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (2) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Security Instruments; (3) affect the validity or enforceability of the Guaranty, the Environmental Indemnity and/or any guaranty set forth in Section 11.2 hereof or any of the rights and remedies of Lender thereunder (including, without limitation, Lender’s right to enforce said rights and remedies against Borrower and/or Guarantor (as applicable) personally and without the effect of the exculpatory provisions of this Article 13); (4) impair the rights of Lender to (A) obtain the appointment of a receiver and/or (B) enforce its security interest in the Accounts as provided in Articles 8 and 9 hereof; (5) impair the enforcement of the assignment of leases and rents contained in the Security Instruments and in any other Loan Documents; (6) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Security Instruments or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Properties (or any portion thereof); or (7) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any Loss incurred by Lender (including reasonable attorneys’ fees and costs reasonably incurred) arising out of or in connection with the following:

 

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(i)           fraud or intentional material misrepresentation by any Borrower Party in connection with the Loan;

 

(ii)         the gross negligence or willful misconduct of any Borrower Party;

 

(iii)        the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity Agreement concerning environmental laws, hazardous substances and asbestos and any indemnification of Lender with respect thereto;

 

(iv)        material physical waste to the Properties caused by the intentional acts or intentional omissions of any Borrower Party (it being agreed that is shall not be waste for purposes of this clause (iv)(A) if Borrower fails to maintain the Properties because (1) the revenue generated by the Properties (on an aggregate basis) on a current basis (after payment of the applicable Priority Payments) is insufficient to do so or (2) the Properties (on an aggregate basis) generated sufficient revenue (after payment of the applicable Priority Payments) to maintain the Properties but Borrower lacks access to such revenue as a result of any cash trap by Lender during a Trigger Period or any exercise of Lender’s remedies under the Loan Documents) and/or (B) the removal or disposal of any portion of the Properties after an Event of Default in violation of the terms of the Loan Documents;

 

(v)         the misappropriation, conversion or intentional misapplication by any Borrower Party of (A) any insurance proceeds paid by reason of any Casualty, (B) any Awards received in connection with a Condemnation, (C) any Rents, or (D) any Rents paid more than one (1) month in advance;

 

(vi)        failure to pay charges for labor or materials or other charges or judgments that can create liens on any portion of the Properties except to the extent the same are being contested in good faith in accordance with this Agreement; provided, however, that there shall be no personal liability under this subsection solely for the failure to pay charges for labor or materials or other charges that can create liens on any portion of the Properties if (A) the revenue generated by the Properties (on an aggregate basis) on a current basis (after payment of the applicable Priority Payments) is insufficient to pay such charges, (B) the Properties (on an aggregate basis) generated sufficient revenue (after payment of the applicable Priority Payments) to pay such charges but Borrower lacks access to such revenue as a result of any cash trap by Lender during a Trigger Period or any exercise of Lender’s remedies under the Loan Documents and/or (C) sufficient sums had been reserved with Lender under the Loan Documents for the express purpose of paying the charges for labor or materials or other charges that can create liens on any portion of the Properties in question and Lender failed to pay same or give Borrower access to such sums to pay same (and in each case, Lender’s access to such funds was not restricted or impeded in any way);

 

(vii)       any security deposits, advance deposits or any other deposits collected with respect to the Properties which are not delivered to Lender upon a foreclosure of the Properties or action in lieu thereof, except to the extent any such security deposits were applied in accordance with the terms and conditions of any of the Leases prior to the occurrence of the Event of Default that gave rise to such foreclosure or action-in-lieu thereof or previously delivered to Lender;

 

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(viii)      any zoning matters with respect to the Property, and/or any zoning violations identified in any of the Zoning Reports;

 

(ix)        a breach of Section 4.23(e), Section 11.2 and/or Section 17.17 of this Agreement;

 

(x)         the failure to pay Taxes or Insurance Premiums in accordance with the terms of this Agreement or the failure to maintain the Policies (to the extent such Policies are generally available) required pursuant to the terms of this Agreement in full force and effect; provided, however, that there shall be no personal liability under this subsection solely for the failure to pay Taxes and Insurance Premiums if (A) the revenue generated by the Properties (on an aggregate basis) over the prior twelve (12) month period (after payment of the applicable Priority Payments) is insufficient to pay such Taxes and Insurance Premiums, (B) the Properties (on an aggregate basis) generated sufficient revenue (after payment of the applicable Priority Payments) to pay such Taxes and Insurance Premiums but Borrower lacks access to such revenue as a result of any cash trap by Lender during a Trigger Period or any exercise of Lender’s remedies under the Loan Documents, and/or (C) sufficient sums had been reserved with Lender under Section 8.6 hereof for the express purpose of paying the Taxes and/or Insurance Premiums in question and Lender failed to pay same or give Borrower access to such sums to pay same (and in each case, Lender’s access to such funds was not restricted or impeded in any way);

 

(xi)        if Borrower or any Affiliate of Borrower, in any judicial or quasi-judicial case, action or proceeding relating to the Debt brought by Lender (A) contests the validity or enforceability of the Loan Documents or (B) directly or indirectly contests or intentionally hinders, delays or obstructs the pursuit of any rights or remedies by Lender (including the commencement and/or prosecution of a foreclosure action, judicial or non-judicial, the appointment of a receiver for the Property or any portion thereof or any enforcement of the terms of the Assignment of Leases) after an Event of Default; provided, however, that there shall be no liability to Borrower under this subsection for raising and pursuing actions or defenses to the extent the same are raised and pursued in good faith;

 

(xii)       any termination of a Ground Lease (other than (A) a termination due to the occurrence of a casualty or condemnation which gives the lessor the unilateral right to terminate a Ground Lease and in connection with which the insurance proceeds and condemnation award, as applicable, have been paid to Lender in accordance with this Agreement or (B) a termination in connection with the acquisition of the underlying Fee Estate provided there is no violation of the terms of the Loan Documents and Borrower causes the lien of the Security Instrument to be spread to cover such Fee Estate) or the material modification of a Ground Lease, in each case without Lender’s consent;

 

(xiii)      any material amendment or modification of any Lease affecting any Individual Property in violation of the terms of this Agreement or any cancellation or termination of any Lease (other than a termination of a Lease due to the Tenant’s unilateral right to terminate such Lease as set forth in such Lease at the time of Lender’s approval or deemed approval thereof) in violation of the terms of this Agreement;

 

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(xiv)      the failure by any Individual Borrower or SPE Component Entity to comply with any representation, warranty or covenant set forth in Article 5 of this Agreement; and/or

 

(xv)       Borrower fails to obtain Lender’s prior written consent to any transfer to the extent required pursuant to the terms of this Agreement that is not a Full Recourse Transfer or Borrower fails to obtain Lender’s prior written consent, to the extent required pursuant to the terms of this Agreement, to any Indebtedness or voluntary Lien encumbering the Property that is not a Full Recourse Lien.

 

(b)               Notwithstanding anything to the contrary in this Agreement, the Notes or any of the Loan Documents, (I) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt secured by the Security Instruments or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents and (II) the Debt shall be fully recourse to Borrower in the event of any of the following: (A) Borrower filing a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (B) the filing of an involuntary petition against Borrower under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law in which Borrower or Guarantor colludes with, or otherwise assists such Person, or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower from any Person; (C) Borrower filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law (provided that the foregoing shall not be deemed to require Borrower to file an objection to any such involuntary petition if Borrower determines reasonably and in good faith that it has no reasonable basis for doing so, or if Borrower is otherwise not permitted by law to file such an objection); (D) Borrower consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the Properties other than at Lender’s request (provided that in connection with any acquiescence, Borrower shall not be required to file an objection to any such application if Borrower determines reasonably and in good faith following consultation with legal counsel that it has no reasonable basis for doing so, or if Borrower is otherwise not permitted by law to file such an objection); (E) Borrower making an assignment for the benefit of creditors other than at Lender’s request, or admitting, in writing or in any legal proceeding other than at Lender’s request, its insolvency or inability to pay its debts as they become due; (F) if any Borrower fails to maintain its status as a Single Purpose Entity and such failure is cited in a final non-appealable judgment by a court of competent jurisdiction as a material factor in the substantive consolidation of such Borrower with any other Person in connection with any federal or state bankruptcy proceeding; (G) Borrower fails to obtain Lender’s prior written consent (to the extent such consent is required pursuant to the terms of the Loan Documents) to any transfer (1) that results in a direct or indirect change in Control over Borrower or (2) of any of the Properties by deed, bill of sale, installment sales agreement, ground lease (but excluding any space Lease entered into in the ordinary course of business) or any similar agreement (collectively, a “Full Recourse Transfer”); and/or (H) Borrower fails to obtain Lender’s prior written consent (to the extent such consent is required pursuant to the terms of the Loan Documents) to any voluntary mortgage, deed of trust, collateral assignment or other voluntary lien or interest encumbering all or a substantial portion of the Property (a “Full Recourse Lien”); provided that nothing in clauses (B), (C), (D) and (E) of this paragraph shall impose on Borrower or Guarantor any recourse liability for providing (x) any truthful testimony or (y) truthful responses to duly-served discovery or legal process in the event that Borrower or Guarantor or any of their respective Affiliates, as applicable, is advised by counsel that such Person is required to provide such testimony or response pursuant to applicable law.

 

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(c)               As used in this Section 13.1, “Priority Payments” shall mean: (i) with respect to the applicable recourse carveout liability described in Section 13.1(a)(x) above as it relates to the failure to pay Taxes and Insurance Premiums, no other payments; (ii) with respect to the applicable recourse carveout liability described in Section 13.1(a)(iv) above, the payment of all Taxes and Insurance Premiums, Ground Rent, Debt Service and sums required to be deposited into any Reserve Accounts other than the Excess Cash Flow Account, and (iii) with respect to the applicable recourse carveout liability described in Section 13.1(a)(vi) above as it relates to the failure to pay any charges that create Liens, the payment of all Taxes, Insurance Premiums, Ground Rent, Debt Service and sums required to be deposited into any Reserve Account other than the Excess Cash Flow Account, and all sums necessary to avoid material physical waste to the Property, in each case on a current basis.

 

ARTICLE 14.

 

NOTICES

 

Section 14.1.     Notices. All notices or other written communications hereunder shall be deemed to have been properly given (a) upon delivery, if delivered in person or by facsimile transmission with receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (b) one (1) Business Day after having been deposited for overnight delivery with any reputable overnight courier service, or (c) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

  If to Borrower: c/o American Finance Trust, Inc.
    38 Washington Square
    Newport, RI 02840
    Attention: Asset Management
     
  And to: c/o American Finance Trust, Inc.
    650 Fifth Avenue
    New York, NY 10019
    Attention: Legal Department
     
  With a copy to: Eversheds Sutherland (US) LLP
    The Grace Building
    1114 Avenue of the Americas, 40th Floor
    New York, New York 10036-7703
    Attention: John J. Busillo, Esq.
    Facsimile No.: 212-389-5099
     

 

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  If to Lender: Column Financial, Inc.
    11 Madison Avenue
    New York, New York 10010
    Attention: General Counsel Division
    Facsimile No.: (212) 325-8717
     
  And to: Column Financial, Inc.
    11 Madison Avenue, 11th Floor
    New York, New York 10010
    Attention: N. Dante LaRocca
     
  With a copy to: Dechert LLP
    1095 Avenue of the Americas
    New York, New York 10036-6797
    Attention: Krystyna M. Blakeslee, Esq.
    Facsimile No.: (212) 314-0014

 

 

or addressed as such party may from time to time designate by written notice to the other parties.

 

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

ARTICLE 15.

 

FURTHER ASSURANCES

 

Section 15.1.     Replacement Documents. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note, this Agreement or any of the other Loan Documents which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of the Note, this Agreement or such other Loan Document, Borrower will issue, in lieu thereof, a replacement thereof, dated the date of the Note, this Agreement or such other Loan Document, as applicable, in the same principal amount thereof and otherwise of like tenor.

 

Section 15.2.     Recording of Security Instrument, etc.

 

(a)               Borrower forthwith upon the execution and delivery of the Security Instruments and thereafter, from time to time, will cause the Security Instruments and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Properties and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Properties. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, the Security Instruments, this Agreement, the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Properties and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Security Instruments, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by applicable law so to do. The foregoing taxes, fees, expenses, duties, imposts, assessments and charges, as applicable, are herein referred to as the “Security Instrument Taxes”.

 

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(b)               Borrower represents that it has paid all Security Instrument Taxes imposed upon the execution and recordation of each Security Instrument.

 

Section 15.3.     Further Acts, etc. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Agreement or for filing, registering or recording the Security Instruments, or for complying in all material respects with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender pursuant to this Section 15.3, exercisable, in each case, to the extent that Borrower fails to take the necessary actions within ten (10) days after Borrower’s receipt of written request therefor from Lender.

 

Section 15.4.     Changes in Tax, Debt, Credit and Documentary Stamp Laws.

 

(a)               If any law is enacted or adopted or amended after the date of this Agreement which deducts the Debt from the value of the Properties (or any portion thereof) for the purpose of taxation and which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Properties (or any portion thereof) (other than an Excluded Tax), Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury then Lender shall have the option by written notice of not less than one hundred eighty (180) days to declare the Debt immediately due and payable (without payment of any Yield Maintenance Premium or other fee, payment or penalty).

 

(b)               Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Properties, or any part thereof, for real estate tax purposes by reason of the Security Instruments or the Debt. If such claim, credit or deduction shall be required by applicable law, Lender shall have the option, by written notice of not less than one hundred eighty (180) days, to declare the Debt immediately due and payable (without payment of any Yield Maintenance Premium or other fee, payment or penalty).

 

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(c)               If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, the Security Instruments, or any of the other Loan Documents or impose any other tax or charge on the same (other than an Excluded Tax or income tax of Lender), Borrower will pay for the same, with interest and penalties thereon, if any.

 

ARTICLE 16.

 

WAIVERS

 

Section 16.1.     Remedies Cumulative; Waivers.

 

The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement, the Security Instruments, the Note or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

 

Section 16.2.     Modification, Waiver in Writing.

 

No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Security Instrument, the Note and the other Loan Documents, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

 

Section 16.3.     Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege under this Agreement, the Security Instruments, the Note or the other Loan Documents, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Security Instruments, the Note or the other Loan Documents, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Security Instruments, the Note and the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

 

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Section 16.4.     Waiver of Trial by Jury.

 

BORROWER AND LENDER, BY ACCEPTANCE OF THIS AGREEMENT, HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS AGREEMENT, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER OR BORROWER.

 

Section 16.5.     Waiver of Notice.

 

Borrower shall not be entitled to any notices of any nature whatsoever from Lender except (a) with respect to matters for which this Agreement specifically and expressly provides for the giving of notice by Lender to Borrower and (b) with respect to matters for which Lender is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement does not specifically and expressly provide for the giving of notice by Lender to Borrower.

 

Section 16.6.     Remedies of Borrower.

 

In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where by applicable law or under this Agreement, the Security Instruments, the Note and the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment. Lender agrees that, in such event, it shall cooperate in expediting any action seeking injunctive relief or declaratory judgment.

 

Section 16.7.     Marshalling and Other Matters.

 

Borrower hereby waives, to the extent permitted by applicable Legal Requirements, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale under the Security Instrument of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of the Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of the Security Instruments and on behalf of all persons to the extent permitted by applicable Legal Requirements.

 

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Section 16.8.     Intentionally Omitted.

 

Section 16.9.    Waiver of Counterclaim. Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents.

 

Section 16.10. Sole Discretion of Lender. Wherever pursuant to this Agreement (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision to approve or disapprove all decisions that arrangements or terms are satisfactory or not satisfactory, and all other decisions and determinations made by Lender, shall be in the sole discretion of Lender, except as may be otherwise expressly and specifically provided herein.

 

ARTICLE 17.

 

MISCELLANEOUS

 

Section 17.1.     Survival. This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Debt is outstanding and unpaid unless a longer period is expressly set forth in this Agreement, the Security Instruments, the Note or the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.

 

Section 17.2.     Governing Law. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT AS PROVIDED IN THE PREVIOUS SENTENCE WITH RESPECT TO THE SECURITY INSTRUMENTS, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

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ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS WILL BE INSTITUTED IN (OR, IF PREVIOUSLY INSTITUTED, MOVED TO) ANY FEDERAL OR STATE COURT DESIGNATED BY LENDER IN THE CITY OF NEW YORK, COUNTY OF NEW YORK. BORROWER HEREBY (I) WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING AND (II) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER AND LENDER HEREBY ACKNOWLEDGE AND AGREE THAT THE FOREGOING AGREEMENT, WAIVER AND SUBMISSION ARE MADE PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

CORPORATION SERVICE COMPANY
80 STATE STREET
ALBANY, NEW YORK 12207

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

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Section 17.3.     Headings. The Article and/or Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

Section 17.4.     Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Legal Requirements, but if any provision of this Agreement shall be prohibited by or invalid under applicable Legal Requirements, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

Section 17.5.     Preferences. After the occurrence and during the continuance of an Event of Default or in connection with any proceedings under the Bankruptcy Code and/or any other Creditors Rights Laws, Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any Creditors Rights Laws, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

 

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Section 17.6.     Expenses. Except as otherwise provided herein, Borrower covenants and agrees to pay its own costs and expenses in connection with the Loan and pay, or, if Borrower fails to pay, to reimburse, Lender, upon receipt of written notice from Lender, for Lender’s reasonable costs and expenses (including reasonable, actual attorneys’ fees and disbursements) in each case, incurred by Lender in accordance with this Agreement in connection with (i) the preparation, negotiation, execution and delivery of this Agreement, the Security Instruments, the Note and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without limitation any opinions requested by Lender as to any legal matters arising under this Agreement, the Security Instruments, the Note and the other Loan Documents with respect to the Properties); (ii) Borrower’s ongoing performance of and compliance with Borrower’s respective agreements and covenants contained in this Agreement, the Security Instruments, the Note and the other Loan Documents on its part to be performed or complied with after the Closing Date, including, without limitation, confirming compliance with environmental and insurance requirements; (iii) Lender’s ongoing performance and compliance with all Borrower requests pursuant to this Agreement, the Security Instruments, the Note and the other Loan Documents; (iv) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement, the Security Instruments, the Note and the other Loan Documents and any other documents or matters requested by Borrower; (v) securing Borrower’s compliance with any requests made pursuant to the provisions of this Agreement; (vi) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the lien in favor of Lender pursuant to this Agreement, the Security Instruments, the Note and the other Loan Documents; (vii) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the Security Instruments, the Note, the other Loan Documents, the Property, or any other security given for the Loan; (viii) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the Security Instruments, the Note and the other Loan Documents or with respect to the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy proceedings (with respect to Borrower, any SPE Component Entity or Guarantor); and (ix) the preparation, negotiation, execution, delivery, review, filing, recording or administration of any documentation associated with the exercise of any of Borrower’s rights hereunder and/or under the other Loan Documents regardless of whether or not any such right is consummated (including, without limitation, Borrower’s rights hereunder to Release an Individual Property and/or permit or undertake transfers (including under Sections 2.9, 6.3 and 6.4 hereof), in each case, in accordance with the applicable terms and conditions hereof); provided, however, that, with respect to each of subsections (i) though (ix) above, (A) none of the foregoing subsections shall be deemed to be mutually exclusive or limit any other subsection, (B) the same shall be deemed to (I) include the following fees and expenses: any related appraisal costs if the Loan is a specially serviced loan, special servicing fees if the Loan is a specially serviced loan, liquidation fees, modification fees, work-out fees, special servicer inspection costs if the Loan is a specially serviced loan, operating advisor consulting fees and other similar costs or expenses payable to any Servicer, trustee, operating advisor and/or special servicer (if the Loan is a specially serviced loan) (or any portion thereof and/or interest therein) and interest payable on advances made by the Servicer with respect to delinquent debt service payments or expenses of curing Borrower’s and/or any other Borrower Party’s defaults under the Loan Documents  and (II) exclude any requirement that Borrower pay the servicing fees due to any master servicer on account of the day to day, routine servicing of the Loan (provided, further, that the foregoing subsection (II) shall not be deemed to otherwise limit any fees, costs, expenses or other sums required to be paid to Lender under this Section, the other terms and conditions hereof and/or of the other Loan Documents) and (C) Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender or its agents, employees, trustees or any Servicer or special servicer.

 

Section 17.7.     Cost of Enforcement. In the event (a) that any Security Instrument is foreclosed in whole or in part, (b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors, or (c) Lender exercises any of its other remedies under this Agreement, the Security Instruments, the Note and the other Loan Documents, Borrower shall be chargeable with and agrees to pay all costs of collection and defense, including attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post judgment action involved therein, together with all required service or use taxes.

 

Section 17.8.     Schedules Incorporated. The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

 

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Section 17.9.     Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest in and to this Agreement, the Security Instruments, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 17.10. No Joint Venture or Partnership; No Third Party Beneficiaries.

 

(a)               Borrower and Lender intend that the relationships created under this Agreement, the Security Instruments, the Note and the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.

 

(b)               This Agreement, the Security Instruments, the Note and the other Loan Documents are solely for the benefit of Lender and Borrower and Guarantor (as applicable) and nothing contained in this Agreement, the Security Instruments, the Note or the other Loan Documents shall be deemed to confer upon anyone other than Lender and Borrower and Guarantor, as applicable, any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.

 

(c)               The general partners, members, principals and (if Borrower is a trust) beneficial owners of Borrower are experienced in the ownership and operation of properties similar to the Properties, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Properties. Borrower is not relying on Lender’s expertise, business acumen or advice in connection with the Properties (or any portion thereof).

 

(d)               Notwithstanding anything to the contrary contained herein, Lender is not undertaking the performance of (i) any obligations related to the Properties (or any portion thereof) (including, without limitation, under the Leases); or (ii) any obligations with respect to any agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents (other than the Loan Documents) to which any Borrower Party and/or the Properties (or any portion thereof) is subject.

 

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(e)               By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Agreement, the Security Instruments, the Note or the other Loan Documents, including, without limitation, any officer’s certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

 

(f)                Borrower recognizes and acknowledges that in accepting this Agreement, the Note, the Security Instruments and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the representations and warranties set forth in Article 3 of this Agreement without any obligation to investigate the Properties (or any portion thereof) and notwithstanding any investigation of the Properties (or any portion thereof) by Lender; that such reliance existed on the part of Lender prior to the date hereof, that the warranties and representations are a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Agreement, the Note, the Security Instruments and the other Loan Documents in the absence of the warranties and representations as set forth in Article 3 of this Agreement

 

Section 17.11. Publicity.

 

(a)               All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to this Agreement, the Note, the Security Instruments or the other Loan Documents, the financing evidenced by this Agreement, the Note, the Security Instrument or the other Loan Documents, Lender or any of its Affiliates shall be subject to the prior written approval of Lender, not to be unreasonably withheld. Nothing in this Section 17.11 shall prevent Borrower or any of its Affiliates from disclosing any information in connection with any statutory reporting requirement or other reporting requirements required by any governmental agency or other Legal Requirements applicable to Borrower or any of its Affiliates.

 

(b)               Except in connection with an actual or a potential Secondary Market Transaction or other sale, or syndication of the Loan or any mezzanine loan entered into after the Closing Date and except for any “tombstone” in a format typically used by Lender (in any one or more such instances, Lender’s and/or Lender’s Affiliate’s rights shall not be limited by the terms of this Section 17.11), all news releases, publicity or advertising by Lender or its Affiliates through any media intended to reach the general public which refers to this Agreement, the Note, the Security Instruments or the other Loan Documents, the financing evidenced by this Agreement, the Note, the Security Instruments or the other Loan Documents, Borrower or any of its Affiliates shall be subject to the prior written approval of Borrower, not to be unreasonably withheld.

 

Section 17.12. Limitation of Liability. No claim may be made by Borrower, or any other Person against Lender or its Affiliates, directors, officers, employees, attorneys or agents of any of such Persons for any special, indirect, consequential, incidental, exemplary or punitive damages or lost profits in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any act, omission or event occurring in connection therewith; and Borrower hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

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No claim may be made by Lender, or any other Person against Borrower, any of its Affiliates or any directors, officers, employees, attorneys or agents of any of Borrower or any of its Affiliates for any special, indirect, consequential, incidental, exemplary or punitive damages or lost profits in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any act, omission or event occurring in connection therewith (except, in the case of Borrower or Guarantor only, to the extent Lender or its Affiliates are responsible therefor to third parties); and Lender hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

Section 17.13. Conflict; Construction of Documents; Reliance. In the event of any conflict between the provisions of this Agreement and the Security Instruments, the Note or any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of this Agreement, the Note, the Security Instruments and the other Loan Documents and this Agreement, the Note, the Security Instruments and the other Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under this Agreement, the Note, the Security Instruments and the other Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse-to or competitive with the business of Borrower or its Affiliates.

 

Section 17.14. Entire Agreement. This Agreement, the Note, the Security Instrument the other Loan Documents and that certain side letter agreement, dated as of the date hereof, among Lender, Borrower and American Finance Operating Partnership, L.P. (the “Side Letter”) contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written between Borrower and Lender are superseded by the terms of this Agreement, the Note, the Security Instruments, the other Loan Documents and the Side Letter.

 

Section 17.15. Liability. If Borrower consists of more than one Person, the obligations and liabilities of each such Person hereunder shall be joint and several. This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

 

Section 17.16. Duplicate Originals; Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

 

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Section 17.17. Brokers. Borrower agrees (i) to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Borrower Party or their Affiliates in connection with the transactions contemplated by this Agreement and (ii) to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Agreement or the making of the Loan which may be asserted against Lender by any Person except any Persons claiming to be retained by or on behalf of Lender. The foregoing indemnity shall survive the termination of this Agreement and the payment of the Debt. Borrower hereby represents and warrants that no Broker was engaged by any Borrower Party in connection with the transactions contemplated by this Agreement. Lender hereby agrees to pay any and all fees imposed or charged by any Broker hired solely by Lender and agrees to indemnify and hold Borrower harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Agreement or the making of the Loan which may be asserted against Borrower by any Person except any Persons claiming to be retained by or on behalf of Borrower. Borrower acknowledges and agrees that (a) any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) Lender is not responsible for any recommendations or advice given to any Borrower Party by any Broker, (c) Lender and the Borrower Parties have dealt at arms-length with each other in connection with the Loan, (d) no fiduciary or other special relationship exists or shall be deemed or construed to exist among Lender and the Borrower Parties and (e) none of the Borrower Parties shall be entitled to rely on any assurances or waivers given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Agreement or the Loan, unless Lender has, in its sole discretion, agreed in writing with any such Borrower Party to such assurances, waivers, statements, actions or modifications. Borrower acknowledges and agrees that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan. Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Borrower Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Borrower Parties. Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.

 

Section 17.18. Set-Off. In addition to any rights and remedies of Lender provided by this Agreement and by law, Lender shall have the right in its sole discretion, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the account of Borrower; provided however, Lender may only exercise such right during the continuance of an Event of Default. Lender agrees promptly to notify Borrower after any such set-off and application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

 

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Section 17.19. Contributions and Waivers.

 

(a)               In the event of (a) any payment by any one or more of Borrowers of any amount in excess of the principal amount set forth for each Borrower in Schedule XII attached hereto (each such amount, an “Allocable Principal Balance”) together with interest thereon and its proportionate share (based on its Allocable Principal Balance) of any other amounts payable with respect thereto (the “Overpayment Amount”), or (b) the foreclosure of, or the delivery of deeds in lieu of foreclosure, or private sale or other means by which Lender realizes on any collateral for the Loan relating to any of the Individual Properties owned by one or more Borrowers, (the “Overpaying Borrower”) whose Individual Property or Individual Properties or assets have been utilized to satisfy obligations under the Loan or otherwise for the benefit of one or more other Borrowers (each a “Benefitted Borrower”) and such Overpaying Borrower shall be entitled to contribution from each of the Benefitted Borrowers in an amount equal to each such Benefitted Borrower’s allocable portion of the Overpayment Amount paid by such Overpaying Borrower (“Contribution Payment”). In no event shall a Benefitted Borrower be required to make a Contribution Payment that would cause the Benefitted Borrower to become an Overpaying Borrower. Any such contribution payments shall be made within ten (10) days after demand therefor.

 

(b)               If a Benefitted Borrower (a “Defaulting Borrower”) shall have failed to make a Contribution Payment as hereinabove provided, the Overpaying Borrower shall be subrogated to the rights of Lender against such Defaulting Borrower, including the right to receive a portion of such Defaulting Borrower’s Individual Property or Properties in an amount equal to the Contribution Payment required hereunder that such Defaulting Borrower failed to make; provided, however, if Lender returns any payments in connection with a bankruptcy of a Borrower, or amounts are otherwise disgorged from Lender, all subrogated Overpaying Borrowers shall jointly and severally repay Lender all such amounts returned or disgorged until Lender shall have been paid in full thereof.

 

(c)               At the request of any Borrower or Borrowers, upon full payment and satisfaction of the Loan, Lender shall, at Borrowers’ expense, assign the Individual Property or Individual Properties it then holds title to, without recourse, to such Borrower or Borrowers; provided, that, if Lender shall have received conflicting requests from more than one Borrower to receive or release its security interest in such Individual Property or Individual Properties and such requesting Borrowers cannot agree as to the disposition of such Individual Property or Individual Properties, Lender shall have no obligation to deliver such Individual Property or Individual Properties to such requesting Borrowers unless and until such requesting Borrowers shall have agreed as to the disposition of such Individual Property or Individual Properties and so authorized Lender. Provided Lender shall have received such authorization, Lender shall assign the Individual Property or Individual Properties in question, without recourse, to the Borrower entitled to receive such Individual Property or Individual Properties within seven (7) Business Days thereafter. Prior to delivering such Individual Property or Individual Properties, Lender shall be entitled to receive from the requesting Borrower or Borrowers such other assurances and agreements as may be reasonably requested by Lender.

 

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Section 17.20. Cross-Default; Cross-Collateralization.

 

(a)               Borrower acknowledges that Lender has made the Loan to Borrower upon the security of its collective interest in the Properties and in reliance upon the aggregate of the Properties taken together being of greater value as collateral security than the sum of each Individual Property taken separately. Borrower agrees that each of the Loan Documents (including, without limitation, the Security Instruments) are and will be cross collateralized and cross defaulted with each other so that (i) an Event of Default under any of Loan Documents shall constitute an Event of Default under each of the other Loan Documents; (ii) an Event of Default hereunder shall constitute an Event of Default under each Security Instrument; (iii) each Security Instrument shall constitute security for the Note as if a single blanket lien were placed on all of the Properties as security for the Note; and (iv) such cross collateralization shall in no event be deemed to constitute a fraudulent conveyance and Borrower waives any claims related thereto.

 

(b)               To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Properties, or to a sale in inverse order of alienation in the event of foreclosure of all or any of the Security Instruments, and agrees not to assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Properties for the collection of the Debt without any prior or different resort for collection or of the right of Lender to the payment of the Debt out of the net proceeds of the Properties in preference to every other claimant whatsoever. In addition, Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any or all of the Security Instruments, any equitable right otherwise available to Borrower which would require the separate sale of the Properties or require Lender to exhaust its remedies against any Individual Property or any combination of the Properties before proceeding against any other Individual Property or combination of Properties; and further in the event of such foreclosure Borrower does hereby expressly consent to and authorize, at the option of Lender, the foreclosure and sale either separately or together of any combination of the Properties.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

 

  BORROWER:
   
  ARC AAANGIN001, LLC
  ARC AABNLFL001, LLC
  ARC AATNTMA001, LLC
  ARC AAWSNGA001, LLC
  ARC ABHNDMS001, LLC
  ARC AMWNRKY001, LLC
  ARC ARERIPA001, LLC
  ARC ARVIRMN001, LLC
  ARC AZCROMI001, LLC
  ARC AZCTOLA001, LLC
  ARC AZTMPGA001, LLC
  ARC BFFTMFL001, LLC
  ARC BKMST41001, LLC
  ARC CBDTNPA001, LLC
  ARC CBLDLPA001, LLC
  ARC CBLMAPA001, LLC
  ARC CBPHLPA001, LLC
  ARC CBPHLPA002, LLC
  ARC CBPHLPA003, LLC
  ARC CBPHLPA004, LLC
  ARC CBRBRPA001, LLC
  ARC CBWNEPA001, LLC
  ARC CHLKJTX001, LLC
  ARC CHVCTTX001, LLC
  ARC CKMST19001, LLC
  ARC CVANSAL001, LLC
  ARC CVHYKMA001, LLC, each a Delaware limited liability company
   
  By: /s/ Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

  ARC DGATHMI001, LLC
  ARC DGBGLLA001, LLC
  ARC DGBKHMS001, LLC
  ARC DGBNBGA001, LLC
  ARC DGCHEOK001, LLC
  ARC DGCMBMS001, LLC
  ARC DGDNDLA001, LLC
  ARC DGDVLLA001, LLC
  ARC DGFHLLA001, LLC
  ARC DGFLRMI001, LLC
  ARC DGFRTMS001, LLC
  ARC DGFTSAR001, LLC
  ARC DGGNWLA001, LLC
  ARC DGGSBVA001, LLC
  ARC DGGVLMS002, LLC
  ARC DGHBKLA001, LLC
  ARC DGHDNMI001, LLC
  ARC DGHTGWV001, LLC
  ARC DGHTSAR001, LLC
  ARC DGLAFTN001, LLC
  ARC DGLCRMN002, LLC
  ARC DGMBLAR001, LLC
  ARC DGMKNMI001, LLC
  ARC DGMRALA001, LLC
  ARC DGMSNTX002, LLC
  ARC DGNTALA001, LLC
  ARC DGRLFMS001, LLC
  ARC DGRSEMI001, LLC
  ARC DGRYLAR001, LLC
  ARC DGSRBMO001, LLC
  ARC DGSTNVA001, LLC
  ARC DGSVNMO001, LLC
  ARC DGTLSLA001, LLC
  ARC DGVDRTX001, LLC
  ARC DGVNLTN001, LLC
  ARC DGWPTMS001, LLC
  ARC DGWRNIN001, LLC
  ARC DGWSNNY001, LLC, each a Delaware limited liability company
   
  By: /s/ Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

  ARC FDBRNLA001, LLC
  ARC FDBTLKY001, LLC
  ARC FDCHLID001, LLC
  ARC FDCRLMO001, LLC
  ARC FDDNVAR001, LLC
  ARC FDDXRNM001, LLC
  ARC FDFNTPA001, LLC
  ARC FDHCRTX001, LLC
  ARC FDKRMCO001, LLC
  ARC FDOCYLA001, LLC
  ARC FDPLSTX001, LLC
  ARC FDWLDCO001, LLC
  ARC FEBSMND001, LLC
  ARC FECNBIA001, LLC
  ARC FEEGLWI001, LLC
  ARC FEGRFND001, LLC
  ARC FELELMS001, LLC
  ARC FESOUIA001, LLC
  ARC FEWAUWI001, LLC
  ARC FEWTNSD001, LLC
  ARC FLCLTNC001, LLC
  ARC FMMTCNJ001, LLC
  ARC FMMTVAL001, LLC
  ARC FMSNHPA001, LLC
  ARC HR5BEIL001, LLC
  ARC HR5BIAL001, LLC
  ARC HR5BPMN001, LLC
  ARC HR5CURI001, LLC
  ARC HR5CVGA001, LLC
  ARC HR5DOGA001, LLC
  ARC HR5GAGA001, LLC
  ARC HR5GASC001, LLC
  ARC HR5HASC001, LLC
  ARC HR5MSSE001, LLC
  ARC HR5PEGA001, LLC
  ARC HR5PISC001, LLC
  ARC HR5SINJ001, LLC
  ARC HR5SOCT001, LLC
  ARC HR5VAGA001, LLC
  ARC HR5ZUMN001, LLC, each a Delaware limited liability company
   
  By: /s/ Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

  ARC LWAKNSC001, LLC
  ARC LWFYTNC001, LLC
  ARC LWMCNGA001, LLC
  ARC LWNBNNC001, LLC
  ARC LWRMTNC001, LLC
  ARC MFKXVTN002, LLC
  ARC ORMNTWI001, LLC
  ARC TKLWSFL001, LLC
  ARC TPEGPTX001, LLC
  ARC TSHRLKY001, LLC
  ARC TSHTNMI001, LLC
  ARC TSVRNCT001, LLC
  ARC WGBEATX001, LLC
  ARC WGGLTWY001, LLC
  ARC WGLNSMI001, LLC
  ARC WGOKCOK001, LLC
  ARC WGTKRGA001, LLC
  ARG AA12PCK001, LLC
  ARG AA14PCK001, LLC
  ARG CCFAYNC001, LLC
  ARG CCLTZFL001, LLC
  ARG CCNLVTX001, LLC
  ARG CCPBLCO01, LLC
  ARG CHDUBGA001, LLC
  ARG DDEPOTX001, LLC
  ARG DGBRWKY001, LLC
  ARG DGCLKIA001, LLC
  ARG DGCSTKY001, LLC
  ARG DGCTSMI001, LLC
  ARG DGELKKY001, LLC
  ARG DGFLSKY001, LLC
  ARG DGLCNMI001, LLC
  ARG DGSDLKY001, LLC
  ARG DI51PCK001, LLC
  ARG DNMGCIN001, LLC, each a Delaware limited liability company
   
  By: /s/ Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

  ARG FMATHTX001, LLC
  ARG FMBKHMS001, LLC
  ARG FMCHIIL001, LLC
  ARG FMCTVMS001, LLC
  ARG FMIDBOK001, LLC
  ARG FMTYLTX001, LLC
  ARG IM12PKSLB001, LLC
  ARG ME19PCK001, LLC
  ARG MESMOAR001, LLC
  ARG PH14SLB001, LLC
  ARG ATCHTTN001, LLC
  ARG 1CBHGNJ001, LLC
  ARG OCPOOL2001, LLC
  ARG OCPOOL4001, LLC
  ARG WLGREFI001, LLC, each a Delaware limited liability company
   
  By: /s/ Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

  LENDER:
   
  COLUMN FINANCIAL, a Delaware limited liability corporation
   
  By: /s/ David Tlusty
    Name: David Tlusty
    Title: Authorized Signatory

 

 

 

SCHEDULE I

BORROWER/FEDERAL TAX IDENTIFICATION NUMBER/ORGANIZATIONAL
IDENTIFICATION NUMBER

 

 

 

SCHEDULE II

IMMEDIATE REPAIRS

 

 

 

SCHEDULE III

ORGANIZATIONAL CHART

 

 

 

SCHEDULE IV

DESCRIPTION OF REA’S

 

 

 

SCHEDULE V

ALLOCATED LOAN AMOUNTS

 

 

 

SCHEDULE VI

ENVIRONMENTAL REMEDIATION

 

 

 

SCHEDULE VII

UNFUNDED OBLIGATIONS

 

 

 

SCHEDULE VIII

WAIVED TAX DEPOSIT PROPERTY

 

 

 

SCHEDULE IX

RENT ROLL

 

 

 

SCHEDULE X

MASTER LEASE

 

 

 

SCHEDULE XI

GROUND LEASE ESTOPPELS

 

 

 

SCHEDULE XII

 

ALLOCATED LOAN AMOUNTS PER BORROWER

 

 

 

SCHEDULE XIII-A

 

DAVITA BALTIMORE PROPERTY CONDOMINIUM DOCUMENTS

 

 

 

SCHEDULE XIII-B

 

CONWAY NH PROPERTY CONDOMINIUM DOCUMENTS

 

 

 

SCHEDULE XIV

 

PROPERTIES NOT ELIGIBLE FOR SUBSTITUTION

 

 

 

SCHEDULE XV

 

SECTION 3.18 EXCEPTIONS

 

 

 

SCHEDULE XVI

 

PLL POLICY PROPERTIES

 

 

 

SCHEDULE XVII

 

DEFERRED RENTAL AGREEMENTS

 

 

 

SCHEDULE XVIII

 

NON-DISCRETIONARY SUBSTITUTION PROPERTIES

 

 

 

SCHEDULE XIX

 

FORM OF DEBT YIELD CALCULATION

 

 

 

EXHIBIT A

[Form of Notice Letter - Tenants]

 

___________, 20[__]

 

[TENANT]

 

Re:         [Describe Lease] (the “Lease”)

 

To Whom it May Concern:

 

A new cash management system has been adopted in connection with our loan from [_________________], its successors and/or assigns (“Lender”). Consequently, from and after the date of this letter, all payments due under the Lease should be delivered as follows:

 

(i)       If by check, money order, or its equivalent, please mail such items to:

 

  [INSERT RESTRICTED ACCT. INFO]
   
   
Attention:  
Facsimile No.:  
   

(c)               If by wire transfer to:

 

[INSERT RESTRICTED ACCT. INFO]

 

Payee:  
ABA Routing #:  
For Account:  
Account #:  
Bank Contact:  
   

This payment direction may not be rescinded or altered, except by a written direction signed by the Lender or its agent.

 

We appreciate your cooperation.

 

  Very truly yours,
   
  [BORROWER]

 

 

 

Exhibit B-1

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Loan Agreement dated as of [_____________], 2020 (as amended, supplemented or otherwise modified from time to time, the “Agreement”), among COLUMN FINANCIAL, INC. and BARCLAYS CAPITAL REAL ESTATE INC., collectively as Lender and each of the entities listed on Schedule I attached hereto, collectively as Borrower.

 

Pursuant to the provisions of Section 2.10 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan (as well as any Note(s) evidencing such Loan) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the IRS Code, (iii) it is not a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the IRS Code and (iv) it is not a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the IRS Code.

 

The undersigned has furnished Agent and Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform Borrower and Agent, and (2) the undersigned shall have at all times furnished Borrower and Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

[NAME OF LENDER]  
   
By:    
  Name:                                
  Title:      

 

Date: ________ __, 20[ ]

 

 

 

Exhibit B-2

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Loan Agreement dated as of [_____________], 2020 (as amended, supplemented or otherwise modified from time to time, the “Agreement”), among COLUMN FINANCIAL, INC. and BARCLAYS CAPITAL REAL ESTATE INC., collectively as Lender and each of the entities listed on Schedule I attached hereto, collectively as Borrower.

 

Pursuant to the provisions of Section 2.10 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the IRS Code, (iii) it is not a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the IRS Code, and (iv) it is not a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the IRS Code.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

[NAME OF PARTICIPANT]  
   
By:    
  Name:                                
  Title:      

 

Date: ________ __, 20[ ]

 

EXHIBIT C-2

 

 

Exhibit B-3

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Loan Agreement dated as of [_____________], 2020 (as amended, supplemented or otherwise modified from time to time, the “Agreement”), among COLUMN FINANCIAL, INC. and BARCLAYS CAPITAL REAL ESTATE INC., collectively as Lender and each of the entities listed on Schedule I attached hereto, collectively as Borrower.

 

Pursuant to the provisions of Section 2.10 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the IRS Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the IRS Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the IRS Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

[NAME OF PARTICIPANT]  
   
By:    
  Name:                                
  Title:      

 

Date: ________ __, 20[ ]

 

EXHIBIT C-3

 

 

Exhibit B-4

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes and Are Providing a U.S. Tax Certificate on Behalf of Their Partners)

 

Reference is hereby made to the Loan Agreement dated as of [_____], 2020 (as amended, supplemented or otherwise modified from time to time, the “Agreement”), among COLUMN FINANCIAL, INC., as Lender and each of the entities listed on Schedule I attached hereto, collectively as Borrower.

 

Pursuant to the provisions of Section 2.10 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan (as well as any Note(s) evidencing such Loan) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan (as well as any Note(s) evidencing such Loan), (iii) with respect to the extension of credit pursuant to this Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the IRS Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the IRS Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the IRS Code.

 

The undersigned has furnished the Agent and Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform Borrower and Agent, and (2) the undersigned shall have at all times furnished Borrower and Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

 

[NAME OF LENDER]  
   
By:    
  Name:                                
  Title:      

 

Date: ________ __, 20[ ]

 

 

 

Exhibit 10.2

 

LIMITED RECOURSE GUARANTY

 

THIS LIMITED RECOURSE GUARANTY (“Guaranty”) is made as of this 24th day of July, 2020, by American Finance OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, having an address at 650 Fifth Avenue, 30th Floor, New York, New York 10019 (the “Guarantor”), in favor of COLUMN FINANCIAL, INC., a Delaware corporation (“Column”; Column, together with any other Co-Lender under the Loan and each of their respective successors, transferees and/or assigns, collectively, the “Lender”).

 

RECITALS:

 

A.                Lender and each of the entities listed on Schedule I attached hereto (individually or collectively, as the context may require, “Borrower”) have entered into a certain Loan Agreement (as it may hereafter be modified, supplemented, extended, or renewed and in effect from time to time, the “Loan Agreement”), which Loan Agreement sets forth the terms and conditions of a loan (said loan, together with all advances which may hereafter be made pursuant to the Loan Agreement, being referred to herein as the “Loan”) to Borrower secured by certain Properties as defined and more particularly described in the Loan Agreement.

 

B.                 Guarantor is an Affiliate of Borrower and will receive direct or indirect benefit from Lender’s making of the Loan to Borrower.

 

C.                 The Loan is evidenced by those certain promissory notes executed by Borrower and payable to the order of each Lender (collectively, as each may hereafter be renewed, extended, supplemented, increased or modified and in effect from time to time, and all other notes given in substitution therefor, or in modification, renewal, or extension thereof, in whole or in part, the “Note”).

 

D.                Any capitalized term used and not defined in this Guaranty shall have the meaning given to such term in the Loan Agreement. This Guaranty is one of the Loan Documents described in the Loan Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and as a material inducement to Lender to extend credit to Borrower, Guarantor hereby guarantees to Lender the prompt and full payment and performance of the Guaranteed Recourse Obligations of Borrower (defined below), this Guaranty being upon the following terms and conditions:

 

1.                  Guaranteed Recourse Obligations of Borrower. Guarantor hereby unconditionally and irrevocably guarantees to Lender the punctual payment when due, and not merely the collectability, whether by lapse of time, by acceleration of maturity, or otherwise, of the Guaranteed Recourse Obligations of Borrower (hereinafter defined). As used herein, the term “Guaranteed Recourse Obligations of Borrower” shall mean all obligations and liabilities of Borrower for which Borrower shall be personally liable under and pursuant to Article 13 of the Loan Agreement.

 

 

 

2.                  Certain Agreements and Waivers by Guarantor.

 

(a)                Guarantor hereby agrees that each of the following shall constitute Events of Default hereunder (i) the occurrence of a default by Guarantor in payment of the Guaranteed Recourse Obligations of Borrower, or any part thereof, when such indebtedness becomes due, which default continues for five (5) Business Days following notice thereof to Guarantor and (ii) the dissolution, bankruptcy and/or insolvency of any Guarantor.

 

(b)                Upon the occurrence of any Event of Default hereunder, the Guaranteed Recourse Obligations of Borrower, for purposes of this Guaranty, shall be deemed immediately due and payable at the election of Lender, provided the same are due and payable under the Loan Agreement. Guarantor shall, on demand, pay the Guaranteed Recourse Obligations of Borrower to Lender as and when they become due. It shall not be necessary for Lender, in order to enforce such payment, first to (i) institute suit or pursue or exhaust any rights or remedies against Borrower or others liable for the Debt, (ii) enforce any rights against any security that shall ever have been given to secure the Debt, (iii) join Borrower or any others liable for the payment or performance of the Guaranteed Recourse Obligations of Borrower or any part thereof in any action to enforce this Guaranty and/or (iv) resort to any other means of obtaining payment or performance of the Guaranteed Recourse Obligations of Borrower.

 

(c)                Suit may be brought or demand may be made against all parties who have signed this Guaranty or any other guaranty covering all or any part of the Guaranteed Recourse Obligations of Borrower, or against any one or more of them, separately or together, without impairing the rights of Lender against any party hereto.

 

(d)                In the event any payment by Borrower or any other Person on account of the Guaranteed Recourse Obligations of Borrower to Lender is held to constitute a preference, fraudulent transfer or other voidable payment under any bankruptcy, insolvency or similar law, or if for any other reason Lender is required to refund such payment or pay the amount thereof to Borrower or such other party, such payment by Borrower or such other party to Lender shall not constitute a release of Guarantor from any liability hereunder and this Guaranty shall continue to be effective or shall be reinstated (notwithstanding any prior release, surrender or discharge by Lender of this Guaranty or of Guarantor), as the case may be, with respect to, and this Guaranty shall apply to, any and all amounts so refunded by Lender or paid by Lender to Borrower or such other Person (which amounts shall constitute part of the Guaranteed Recourse Obligations of Borrower), and any interest paid by Lender and any reasonable attorneys’ fees, costs and expenses paid or incurred by Lender in connection with any such event. If acceleration of the time for payment of any amount payable by Borrower under any Loan Document is stayed or delayed by any law or tribunal, any amounts due and payable hereunder shall nonetheless be payable by Guarantor on demand by Lender.

 

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3.                  Subordination. If, for any reason whatsoever, Borrower is now or hereafter becomes indebted to Guarantor:

 

(a)                such indebtedness and all interest thereon and all liens, security interests and rights now or hereafter existing with respect to property of Borrower securing same shall, at all times, be subordinate in all respects to the Guaranteed Recourse Obligations of Borrower and to all liens, security interests and rights now or hereafter existing to secure the Guaranteed Recourse Obligations of Borrower;

 

(b)                Guarantor shall not be entitled to enforce or receive payment, directly or indirectly, of any such indebtedness of Borrower to Guarantor until the Guaranteed Recourse Obligations of Borrower have been fully and finally paid and performed;

 

(c)               Guarantor hereby assigns and grants to Lender a security interest in all such indebtedness (not including distributions) and security therefor, if any, of Borrower to Guarantor in violation of the Loan Documents now existing or hereafter arising including any payments pursuant to debtor relief or insolvency proceedings referred to below. In the event of receivership, bankruptcy, reorganization, arrangement or other debtor relief or insolvency proceedings involving Borrower as debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and shall have the right to receive directly from the receiver, trustee or other custodian (whether or not an Event of Default shall have occurred or be continuing under any of the Loan Documents), payments that are payable upon such indebtedness of Borrower to Guarantor now existing or hereafter arising in violation of the Loan Documents, and to have all benefits of any security therefor, until the Guaranteed Recourse Obligations of Borrower have been fully and finally paid and performed. If, notwithstanding the foregoing provisions, Guarantor should receive any payment that is prohibited as provided above in this Section, Guarantor shall pay the same to Lender immediately, Guarantor hereby agreeing that it shall receive the payment in trust for Lender and shall have absolutely no dominion over the same except to pay it immediately to Lender; and

 

(d)               Guarantor shall promptly upon request of Lender from time to time execute such documents and perform such acts as Lender may reasonably require to evidence and perfect its interest and to permit or facilitate exercise of its rights under this Section.

 

4.                  Other Liability of Guarantor or Borrower. If Guarantor is or becomes liable, by endorsement or otherwise, for any indebtedness owing by Borrower to Lender other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may have against Guarantor.

 

5.                  Assignment by Lender. This Guaranty is for the benefit of Lender and Lender’s successors and assigns, and in the event of an assignment by Lender of the Guaranteed Recourse Obligations of Borrower, or any part thereof, the rights and benefits hereunder, to the extent applicable to the Guaranteed Recourse Obligations of Borrower so assigned, may be transferred with such Guaranteed Recourse Obligations of Borrower. Guarantor waives notice of any transfer or assignment of the Guaranteed Recourse Obligations of Borrower, or any part thereof, and agrees that failure to give notice will not affect the liabilities of Guarantor hereunder.

 

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6.                  Binding Effect. This Guaranty is binding not only on Guarantor, but also on Guarantor’s heirs, personal representatives, successors and assigns. Upon the death of Guarantor, if Guarantor is a natural person, this Guaranty shall continue against Guarantor’s estate as to all of the Guaranteed Recourse Obligations of Borrower, including that portion incurred or arising after the death of Guarantor and shall be provable in full against Guarantor’s estate, whether or not the Guaranteed Recourse Obligations of Borrower are then due and payable. If this Guaranty is signed by more than one Person, then all of the obligations of Guarantor arising hereunder shall be jointly and severally binding on each of the undersigned, and their respective heirs, personal representatives, successors and assigns, and the term “Guarantor” shall mean all of such Persons and each of them individually. Without limitation of any other term, provision or waiver contained herein, Guarantor hereby acknowledges and agrees that it has been furnished true, complete and correct copies of the Loan Documents and has reviewed the terms and provisions thereof (including, without limitation, the Guaranteed Recourse Obligations of Borrower).

 

7.                  Nature of Guaranty. Guarantor hereby acknowledges and agrees that this Guaranty (a) is a guaranty of payment and not only of collection and that Guarantor is liable hereunder as a primary obligor, (b) subject to Section 27 hereof, shall only be deemed discharged after the satisfaction in full of the Guaranteed Recourse Obligations of Borrower and the Debt (without limiting the terms of Section 27 hereof, other than any contingent liabilities in respect of which no claim has been made), (c) shall not, except in accordance with Section 27 hereof, be reduced, released, discharged, satisfied or otherwise impacted in connection with (i) any act or occurrence that might, but for the provisions hereof, be deemed a legal or equitable reduction, satisfaction, discharge or release (unless Lender agrees in writing with Borrower and/or Guarantor to any such reduction, satisfaction, discharge or release) and/or (ii) Lender’s enforcement of remedies under the Loan Documents and (d) shall survive the foregoing and shall not merge with any resulting foreclosure deed, deed in lieu or similar instrument (if any) but shall be subject to Section 27 hereof.

 

8.                  Governing Law. The governing law and related provisions set forth in Section 17.2 of the Loan Agreement (including, without limitation, any authorized agent provisions thereof) are hereby incorporated by reference as if fully set forth herein (with Guarantor substituted in all places where Borrower appears thereunder) and shall be deemed fully applicable to Guarantor hereunder. Guarantor hereby certifies that it has received and reviewed the Loan Agreement (including, without limitation, Section 17.2 thereof). In the event of any conflict or inconsistency between the terms and conditions hereof and this Section 8, this Section 8 shall control.

 

9.                  Invalidity of Certain Provisions. If any provision of this Guaranty or the application thereof to any Person or circumstance shall, for any reason and to any extent, be declared to be invalid or unenforceable, neither the remaining provisions of this Guaranty nor the application of such provision to any other Person or circumstance shall be affected thereby, and the remaining provisions of this Guaranty, or the applicability of such provision to other Persons or circumstances, as applicable, shall remain in effect and be enforceable to the maximum extent permitted by applicable Legal Requirements.

 

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10.               Attorneys’ Fees, Costs and Expenses of Collection. Guarantor shall pay on demand all reasonable attorneys’ fees and all other costs and expenses actually incurred by Lender in the enforcement of or preservation of Lender’s rights under this Guaranty including, without limitation, all reasonable attorneys’ fees, actual costs and expenses, investigation costs, and all court costs, whether or not suit is filed herein, or whether at maturity or by acceleration, or whether before or after maturity, or whether in connection with bankruptcy, insolvency or appeal, or whether in connection with the collection and enforcement of this Guaranty against any other Guarantor, if there be more than one. Guarantor agrees to pay interest on any expenses or other sums due to Lender under this Section 10 that are not paid when due, at a rate per annum equal to the interest rate provided for in the Note. Guarantor’s obligations and liabilities under this Section 10 shall survive any payment or discharge in full of the Guaranteed Recourse Obligations of Borrower.

 

11.                Payments. All sums payable under this Guaranty shall be paid in lawful money of the United States of America that at the time of payment is legal tender for the payment of public and private debts.

 

12.               Controlling Agreement. It is not the intention of Lender or Guarantor to obligate Guarantor to pay interest in excess of that lawfully permitted to be paid by Guarantor under applicable Legal Requirements. Should it be determined that any portion of the Guaranteed Recourse Obligations of Borrower or any other amount payable by Guarantor under this Guaranty constitutes interest in excess of the maximum amount of interest that Guarantor, in Guarantor’s capacity as guarantor, may lawfully be required to pay under applicable Legal Requirements, the obligation of Guarantor to pay such interest shall automatically be limited to the payment thereof in the maximum amount so permitted under applicable Legal Requirements. The provisions of this Section shall override and control all other provisions of this Guaranty and of any other agreement between Guarantor and Lender.

 

13.               Notices. Any and all notices, elections, demands, requests and responses thereto permitted or required to be given under this Guaranty shall be given in accordance with the applicable terms and conditions of the Loan Agreement. Notices to Guarantor shall be addressed as follows:

 

If to Guarantor:

American Finance Operating Partnership, L.P.

c/o American Finance Trust, Inc.

650 Fifth Avenue, 30th Floor

New York, New York 10019

   
With a copy to:

Eversheds Sutherland (US) LLP

The Grace Building

1114 Avenue of the Americas, 40th Floor

New York, New York 10036-7703

Attention:  John J. Busillo, Esq.

Facsimile No.: 212-389-5099

 

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If to Lender:

Column Financial, Inc.

11 Madison Avenue
New York, New York 10010
Attention:  General Counsel Division
Facsimile No.:  (212) 325-8717

 

And to:

Column Financial, Inc.
11 Madison Avenue, 11th Floor
New York, New York  10010
Attention:  N.  Dante LaRocca
email: dante.larocca@credit-suisse.com

 

With a copy to:

Dechert LLP

1095 Avenue of the Americas

New York, New York 10036-6797

Attention: Krystyna M. Blakeslee, Esq.

Facsimile No.: (212) 314-0014

 

 

14.                Cumulative Rights. The exercise by Lender of any right or remedy hereunder or under any other Loan Document, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy. Lender shall have all rights, remedies and recourses afforded to Lender by reason of this Guaranty or any other Loan Document or by law or equity or otherwise, and the same (a) shall be cumulative and concurrent, (b) may be pursued separately, successively or concurrently against Guarantor or others obligated for the Guaranteed Recourse Obligations of Borrower, or any part thereof, or against any one or more of them, or against any security or otherwise, at the sole discretion of Lender, (c) may be exercised as often as occasion therefor shall arise, it being agreed by Guarantor that the exercise of, discontinuance of the exercise of or failure to exercise any of such rights, remedies, or recourses shall in no event be construed as a waiver or release thereof or of any other right, remedy, or recourse, and (d) are intended to be, and shall be, nonexclusive. No waiver of any default on the part of Guarantor or of any breach of any of the provisions of this Guaranty or of any other document shall be considered a waiver of any other or subsequent default or breach, and no delay or omission in exercising or enforcing the rights and powers granted herein or in any other document shall be construed as a waiver of such rights and powers, and no exercise or enforcement of any rights or powers hereunder or under any other document shall be held to exhaust such rights and powers, and every such right and power may be exercised from time to time. The granting of any consent, approval or waiver by Lender shall be limited to the specific instance and purpose therefor and shall not constitute consent or approval in any other instance or for any other purpose. No notice to or demand on Guarantor in any case shall of itself entitle Guarantor to any other or further notice or demand in similar or other circumstances. No provision of this Guaranty or any right, remedy or recourse of Lender with respect hereto, or any default or breach, can be waived, nor can this Guaranty or Guarantor be released or discharged in any way or to any extent, except specifically in each case by a writing intended for that purpose (and which refers specifically to this Guaranty) executed, and delivered to Guarantor, by Lender, or where otherwise specifically provided herein.

 

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15.                Subrogation. Notwithstanding anything to the contrary contained herein, (a) Guarantor shall not have any right of subrogation in or under any of the Loan Documents or to participate in any way therein, or in any right, title or interest in and to any security or right of recourse for the Guaranteed Recourse Obligations of Borrower, until the Guaranteed Recourse Obligations of Borrower have been fully and finally paid, and (b) if Guarantor is or becomes an “insider” (as defined in Section 101 of the Bankruptcy Code) with respect to Borrower, then Guarantor hereby irrevocably and absolutely waives any and all rights of contribution, indemnification, reimbursement or any similar rights against Borrower with respect to this Guaranty (including any right of subrogation, except to the extent of collateral held by Lender), whether such rights arise under an express or implied contract or by operation of law, until the Guaranteed Recourse Obligations of Borrower have been fully and finally paid. It is the intention of the parties that Guarantor shall not be deemed to be a “creditor” (as defined in Section 101 of the Bankruptcy Code) of Borrower by reason of the existence of this Guaranty in the event that Borrower or Guarantor becomes a debtor in any proceeding under the Bankruptcy Code. This waiver is given to induce Lender to make the Loan as evidenced by the Note to Borrower.

 

16.               Further Assurances. Guarantor at Guarantor’s expense will promptly execute and deliver to Lender upon Lender’s reasonable request all such other and further documents, agreements, and instruments in accomplishment of the agreements of Guarantor under this Guaranty.

 

17.               No Fiduciary Relationship. The relationship between Lender and Guarantor is solely that of lender and guarantor. Lender has no fiduciary or other special relationship with or duty to Guarantor and none is created hereby or may be inferred from any course of dealing or act or omission of Lender.

 

18.               Interpretation. If this Guaranty is signed by more than one Person as “Guarantor”, then the term “Guarantor” as used in this Guaranty shall refer to all such Persons jointly and severally, and all promises, agreements, covenants, waivers, consents, representations, warranties and other provisions in this Guaranty are made by and shall be binding upon each and every such undersigned Person, jointly and severally and Lender may pursue any Guarantor hereunder without being required (i) to pursue any other Guarantor hereunder or (ii) pursue rights and remedies under any Security Instrument and/or applicable Legal Requirements with respect to any Individual Property or any other Loan Documents.

 

19.               Time of Essence. Time shall be of the essence in this Guaranty with respect to all of Guarantor’s obligations hereunder.

 

7

 

 

20.               Execution. This Guaranty may be executed in multiple counterparts, each of which, for all purposes, shall be deemed an original, and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Guaranty by facsimile or electronic image scan transmission (such as a “.pdf” file) will be effective as delivery of an original manually-executed counterpart of this Guaranty. Guarantor represents and warrants that the intention of the natural Person signing this Guaranty on its behalf is to attribute its respective signature to this Guaranty and that if the party has signed using an E-Signature (defined below), that E-Signature represents the signer’s signature to this Guaranty.  Guarantor understands and agrees that such E-Signature, if applicable, is legally binding.  Guarantor signing this Guaranty using an E-Signature waives all rights to repudiate the authenticity or validity of its E-signature to the extent such repudiation is based in whole or in part on the fact that such signature is not in original handwritten form.  Guarantor agrees that the law governing all applicable E-Signatures will be the federal Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S. Code, Chapter 96) (E-SIGN) and/or the Uniform Electronic Transactions Act of 1999 as promulgated by the U.S. Uniform Law Commission for consideration and enactment by the States (UETA), and that under no circumstances will E-Signatures be governed by the Uniform Computer Information Transactions Act (UCITA).  As used in this Guaranty, “E-Signature” means any form of signature other than an original handwritten signature, including any type of image created in any manner (whether electronically or otherwise) which image could reasonably be interpreted as an indication of the signer’s intent to sign the document.

 

21.                Entire Agreement. This Guaranty embodies the entire agreement between Lender and Guarantor with respect to the guaranty by Guarantor of the Guaranteed Recourse Obligations of Borrower. This Guaranty supersedes all prior agreements and understandings, if any, with respect to guaranty by Guarantor of the Guaranteed Recourse Obligations of Borrower. No condition or conditions precedent to the effectiveness of this Guaranty exist. This Guaranty shall be effective upon execution by Guarantor and delivery to Lender. This Guaranty may not be modified, amended or superseded except in a writing signed by Lender and Guarantor referencing this Guaranty by its date and specifically identifying the portions hereof that are to be modified, amended or superseded. The Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.

 

22.               WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND LENDER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH GUARANTOR AND LENDER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY PERTAINING TO, THIS GUARANTY AND ANY OTHER LOAN DOCUMENT. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS GUARANTY. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR AND LENDER, AND EACH OF GUARANTOR AND LENDER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. EACH OF GUARANTOR AND LENDER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OR ACCEPTANCE, RESPECTIVELY OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT EACH OF GUARANTOR AND LENDER HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

8

 

 

23.               Governing Law. THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT TO THE LOAN AGREEMENT WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

9

 

 

 

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE OTHER LOAN DOCUMENTS WILL BE INSTITUTED IN (OR, IF PREVIOUSLY INSTITUTED, MOVED TO) ANY FEDERAL OR STATE COURT DESIGNATED BY LENDER IN THE CITY OF NEW YORK, COUNTY OF NEW YORK. GUARANTOR HEREBY (I) WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING AND (II) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. GUARANTOR AND LENDER HEREBY ACKNOWLEDGE AND AGREE THAT THE FOREGOING AGREEMENT, WAIVER AND SUBMISSION ARE MADE PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

24.               Waivers.

 

(a)               Guarantor hereby agrees that neither Lender’s rights or remedies nor Guarantor’s obligations under the terms of this Guaranty shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts, or circumstances, and the liability of Guarantor under this Guaranty shall be absolute and unconditional irrespective of (and Guarantor hereby waives any rights or protections related to): (i) any limitation of liability or recourse in any other Loan Document or arising under any law; (ii) any claim or defense that this Guaranty was made without consideration or is not supported by adequate consideration; (iii) the taking or accepting of any other security or guaranty for, or right of recourse with respect to, any or all of the Guaranteed Recourse Obligations of Borrower; (iv) any homestead exemption or any other similar exemption under applicable Legal Requirements and Guarantor hereby waives the benefit of any such exemption as to the Guaranteed Recourse Obligations of Borrower; (v) any release, surrender, abandonment, exchange, alteration, sale or other disposition, subordination, deterioration, waste, failure to protect or preserve, impairment, or loss of, or any failure to create or perfect any lien or security interest with respect to, or any other dealings with, any collateral or security at any time existing or purported, believed or expected to exist in connection with any or all of the Guaranteed Recourse Obligations of Borrower, including any impairment of Guarantor’s recourse against any Person or collateral; (vi) unless agreed to in writing by Lender or as otherwise expressly set forth in the Loan Documents, whether express or by operation of law, any partial release of the liability of Guarantor hereunder, or if one or more other guaranties are now or hereafter obtained by Lender covering all or any part of the Guaranteed Recourse Obligations of Borrower, any complete or partial release of any one or more of such guarantors under any such other guaranty, or any complete or partial release or settlement of Borrower or any other party liable, directly or indirectly, for the payment or performance of any or all of the Guaranteed Recourse Obligations of Borrower; (vii) the death, insolvency, bankruptcy, disability, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership or other power of Borrower or any other party at any time liable for the payment or performance of any or all of the Guaranteed Recourse Obligations of Borrower; (viii) either with or without notice to or consent of Guarantor: any renewal, extension, modification or rearrangement of the terms of any or all of the Guaranteed Recourse Obligations of Borrower and/or any of the Loan Documents; (ix) any neglect, lack of diligence, delay, omission, failure, or refusal of Lender to take or prosecute (or in taking or prosecuting) any action for the collection or enforcement of any of the Guaranteed Recourse Obligations of Borrower, or to foreclose or take or prosecute any action to foreclose (or in foreclosing or taking or prosecuting any action to foreclose) upon any security therefor, or to exercise (or in exercising) any other right or power with respect to any security therefor, or to take or prosecute (or in taking or prosecuting) any action in connection with any Loan Document, or any failure to sell or otherwise dispose of in a commercially reasonable manner any collateral securing any or all of the Guaranteed Recourse Obligations of Borrower; (x) any failure of Lender to notify Guarantor of any creation, renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the Guaranteed Recourse Obligations of Borrower or any part thereof, or of any Loan Document, or of any release of or change in any security, or of any other action taken or refrained from being taken by Lender against Borrower or any security or other recourse, or of any new agreement between Lender and Borrower, it being understood that, except as expressly provided herein, Lender shall not be required to give Guarantor any notice of any kind under any circumstances with respect to or in connection with the Guaranteed Recourse Obligations of Borrower, any and all rights to notice Guarantor may have otherwise had being hereby waived by Guarantor, and Guarantor shall be responsible for obtaining for itself information regarding Borrower, including, but not limited to, any changes in the business or financial condition of Borrower, and Guarantor acknowledges and agrees that Lender shall have no duty to notify Guarantor of any information which Lender may have concerning Borrower; (xi) if for any reason that Lender is required to refund any payment by Borrower to any other party liable for the payment or performance of any or all of the Guaranteed Recourse Obligations of Borrower or pay the amount thereof to someone else; (xii) the making of advances by Lender to protect its interest in any Individual Property or the Properties, preserve the value of any Individual Property or the Properties or for the purpose of performing any term or covenant contained in any of the Loan Documents; (xiii) the existence of any claim, counterclaim, set off, recoupment, reduction or defense based upon any claim or other right that Guarantor may at any time have against Borrower, Lender, or any other Person, whether or not arising in connection with this Guaranty, the Note, the Loan Agreement, or any other Loan Document, other than a claim that the Guaranteed Recourse Obligations of Borrower have been fully paid and performed; (xiv) the unenforceability of all or any part of the Guaranteed Recourse Obligations of Borrower against Borrower, whether because the Guaranteed Recourse Obligations of Borrower exceed the amount permitted by law or violate any usury law, or because the act of creating the Guaranteed Recourse Obligations of Borrower, or any part thereof, is ultra vires, or because the officers or Persons creating same acted in excess of their authority, or because of a lack of validity or enforceability of or defect or deficiency in any of the Loan Documents, or because Borrower has any valid defense, claim or offset with respect thereto, or because Borrower’s obligation ceases to exist by operation of law, or because of any other reason or circumstance, it being agreed that Guarantor shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Recourse Obligations of Borrower, or any part thereof, for any reason (and regardless of any joinder of Borrower or any other party in any action to obtain payment or performance of any or all of the Guaranteed Recourse Obligations of Borrower); (xv) any order, ruling or plan of reorganization emanating from proceedings under any bankruptcy or similar insolvency laws with respect to Borrower or any other Person, including any extension, reduction, composition, or other alteration of the Guaranteed Recourse Obligations of Borrower, whether or not consented to by Lender; and/or (xvi) except as otherwise provided in Section 27 hereof, any partial or total transfer, pledge and/or reconstitution of Borrower and/or any direct or indirect owner of Borrower (regardless of whether the same is permitted under the Loan Documents).

 

10

 

 

(b)               This Guaranty shall be effective as a waiver of, and Guarantor hereby expressly waives

 

(i)                 any and all rights to which Guarantor may otherwise have been entitled under any suretyship laws in effect from time to time, including any right or privilege, whether existing under statute, at law or in equity, to require Lender to take prior recourse or proceedings against any collateral, security or Person whatsoever;

 

(ii)              any rights of sovereign immunity and any other similar and/or related rights;

 

(iii)            any other circumstance that may constitute a defense of Borrower or Guarantor hereunder and/or under the other Loan Documents other than a defense that the Guaranteed Recourse Obligations of Borrower have been fully paid and performed; and

 

(iv)             any right and/or requirement of or related to notice, presentment, protest, notice of protest, further notice of nonpayment, notice of dishonor, default, nonperformance, intent to accelerate, acceleration, existence of the Debt and/or any amendment or modification of the Debt.

 

25.               Representations, Warranties and Covenants of Guarantor.

 

(a)               Guarantor hereby makes the following representations, warranties and covenants (each of which shall remain materially true and correct during the term hereof): (a) Guarantor is duly organized, validly existing and in good standing under the laws of its state of formation, and Guarantor has all requisite right and power to execute and deliver this Guaranty and to perform the Guaranteed Recourse Obligations of Borrower; (b) the execution, delivery and performance of this Guaranty and the incurrence of the Guaranteed Recourse Obligations of Borrower, now or hereafter owing, (i) are within the powers of Guarantor and (ii) do not require any approval or consent of, or filing with, any governmental authority or other Person (or such approvals and consents have been obtained and delivered to the Lender) and are not in contravention of any provision of law applicable to Guarantor; (c) this Guaranty and the other Loan Documents to which Guarantor is a party constitutes when delivered, valid and binding obligations of Guarantor, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights and equitable considerations; (d) Guarantor is not in default under any indenture, loan or credit agreement, or any lease or other agreement or instrument to which it is a party, or in violation of any restriction to which it is subject, as of the date hereof which, to Guarantor’s knowledge, is likely to have a Material Adverse Effect if there were such a default or violation; (e) Guarantor has filed all tax returns which are required to be filed (or obtained proper extensions of time for the filing thereof) and has paid, or made adequate provision for the payment of, all taxes which have or may become due pursuant to said returns or to assessments received; (f) the financial statements and other information pertaining to Guarantor submitted to Lender are true, complete and correct in all material respects and do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading; (g) there is no litigation, at law or in equity, or any proceeding before any federal, state, provincial or municipal board or other governmental or administrative agency pending or, to the knowledge of Guarantor, threatened, or any basis therefor, which involves a risk of any material judgment or liability not fully covered by insurance (other than any deductible) which is likely to be adversely determined and if so, would have a Material Adverse Effect, and no judgment, decree, or order of any federal, state, provincial or municipal court, board or other governmental or administrative agency has been issued against Guarantor which has a Material Adverse Effect; (h) the making of the Loan to Borrower will result in material benefits to Guarantor; (i) Guarantor (i) has not entered into this Guaranty or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (ii) has received reasonably equivalent value in exchange for the Guaranteed Recourse Obligations of Borrower hereunder and under the Loan Documents.; and (j) Guarantor is not a “foreign person” within the meaning of Section 1445(1)(3) of the Internal Revenue Code. Each of the representations and covenants of and/or relating to Guarantor set forth in the other Loan Documents, if any, are hereby re-made by Guarantor and incorporated herein by reference as if fully set forth herein. This Guaranty is not subject to any right of rescission, setoff, counterclaim or defense by Guarantor, nor would the operation of any of the terms of this Guaranty, or the exercise of any right hereunder, render the Loan Documents unenforceable. Guarantor has not asserted any right of rescission, setoff, counterclaim or defense with respect to the Loan Documents.

 

11

 

 

(b)               As of the date hereof, Guarantor is the operating company of American Finance Trust, Inc. and owns, directly or indirectly, substantially all of the assets of American Finance Trust, Inc.

 

26.               Financial Covenants of Guarantor

 

(a)               Guarantor (i) shall keep and maintain complete and accurate books and records and (ii) in the event of the occurrence and continuance of an Event of Default, shall permit Lender and any authorized representatives of Lender to have access to and to inspect, examine and make copies of the books and records, any and all accounts, data and other documents of Guarantor, at all reasonable times, during normal business hours, at Guarantor’s address for notices as set forth herein upon the giving of reasonable notice of such intent. Guarantor shall also provide to Lender, upon Lender’s reasonable request, such proofs of payment, costs, expenses, revenues and earnings, and such other documentation as Lender may reasonably request, from time to time (other than audited financial statements which are provided to Lender pursuant to subsection (c) below), in such detail as may reasonably be required by Lender which (in each case) are available or reasonably obtainable using systems of Guarantor that are currently in place.

 

(b)               Without limiting the provisions of Section 26(a), Lender shall have the right, at any time and from time to time, during reasonable business hours and upon the giving of reasonable notice of such intent, upon the occurrence and continuance of an “Event of Default” hereunder or under the other Loan Documents, to audit the books and records of Guarantor.

 

(c)               During the term hereunder, Guarantor will furnish or cause to be furnished to Lender, as soon as available, and in any event within sixty (60) days after the end of each calendar quarter, the quarterly consolidated financial statements of American Finance Trust, Inc. (“AFIN”), which financial statements shall be prepared on an unaudited basis, in form substantially similar to those previously delivered by AFIN to Lender and which shall include Guarantor’s statement of net worth. Such quarterly financial statements shall be certified by Guarantor or AFIN to Lender as true and correct in all material respects. In addition, during the term hereunder, Guarantor will furnish or cause to be furnished to Lender, as soon as available, and in any event within one hundred and five (105) days after the end of each fiscal year, the annual consolidated financial statements of AFIN, which financial statements shall be prepared on an audited basis, in form substantially similar to those previously delivered by AFIN to Lender and which shall include Guarantor’s balance sheet, statement of net worth and, if available, cash flows for all Individual Properties and entities constituting Borrower. All such annual financial statements shall (A) with respect to AFIN’s annual financial statements, be prepared and audited by AFIN’s independent certified public accountants (which accountants shall be reasonably acceptable to Lender), (B) be certified by Guarantor or AFIN to Lender as true and correct in all material respects and (C) contain such backup and/or supporting information as may be reasonably requested by Lender. In addition, Guarantor shall promptly furnish to Lender any other financial information reasonably requested by Lender from time to time in respect of Guarantor (other than audited financial statements which are provided to Lender pursuant to this subsection).

 

(d)               Guarantor shall, at all times while the Debt remains unsatisfied, maintain a net worth of not less than $1,000,000,000. For the purposes hereof, Guarantor’s net worth shall be determined by Lender in its reasonable discretion, at any time and from time to time, and Guarantor’s net worth shall include any equity attributable to the Properties.

 

12

 

 

27.               Release of Guaranty.

 

(a)               Notwithstanding anything to the contrary contained herein, upon the consummation of any enforcement action by (i) the holder of the Loan resulting in the Guarantor no longer controlling the Borrower or any Individual Property or (ii) the holder of any mezzanine loan (a “Mezzanine Loan”) that exists pursuant to Section 11.6 of the Loan Agreement resulting in the Guarantor no longer controlling the Borrower or any Individual Property, or the assignment to the lender under such Mezzanine Loan (the “Mezzanine Lender”) (or its designee(s) of said interests in lieu thereof in accordance with the loan documents evidencing such Mezzanine Loan) (such date, the “Vesting Date”), Guarantor shall be released with respect to matters arising out of or in connection with actions, events or conditions first taking place following the Vesting Date solely with respect to those Borrowers and/or any Individual Properties which are no longer controlled by Guarantor and solely with respect to actions, events or conditions which are not caused by Guarantor or any of its Affiliates. In addition, after foreclosure of the lien of the Loan Documents or deed-in-lieu of such foreclosure, or Lender exercising any remedy which results in Lender or its successors or assigns or their respective agents or appointees controlling the Individual Properties (or any Individual Property, if applicable), Guarantor shall be released with respect to matters arising out of or in connection with actions, events or conditions first taking place following such foreclosure or deed in lieu thereof or exercise of such remedy solely with respect to those Individual Properties which are no longer controlled by Guarantor and solely with respect to actions, events or conditions which are not caused by Guarantor or any of its Affiliates. In addition, if the Mezzanine Lender exercises its remedies pursuant to any pledge and security agreement in connection with the Mezzanine Loan to exercise the voting rights of Borrower (or any other remedy which gives the Mezzanine Lender the right to control the Borrower), Guarantor shall not have any liability arising from the exercise of such voting rights (or any other remedy which gives the Mezzanine Lender the right to control the Borrower) solely with respect to such Borrowers where Mezzanine Lender has exercised its voting rights (or Mezzanine Lender has otherwise exercised control) and solely with respect to matters not caused by Guarantor or any of its Affiliates (the date of such Mezzanine Lender’s exercise of such voting rights, the “Control Vesting Date”). For the avoidance of doubt, in no event shall Guarantor be released from any obligations or liabilities with respect to any obligations or liabilities that result from facts and circumstances (known or unknown) in existence prior to the Vesting Date or the Control Vesting Date or caused by Guarantor or any of its Affiliates, and such Guaranteed Recourse Obligations of Borrower shall remain in full force and effect in accordance with and subject to the terms and provisions of this Guaranty.

 

(b)               In addition, Lender acknowledges and agrees that in connection with a transfer in accordance with the terms and conditions of Section 6.3(b) of the Loan Agreement and the assumption of all of the obligations and liabilities hereunder by a replacement guarantor in accordance with Section 6.3(b) of the Loan Agreement, Guarantor shall not have any liability with respect to any Guaranteed Recourse Obligations of Borrower arising out of or in connection with actions, events or conditions first taking place following the date that Guarantor’s obligations under this Guaranty are assumed in accordance with Section 6.3(b) of the Loan Agreement, unless such actions, events or conditions were caused by actions or omissions of Guarantor or any of its Affiliates.

 

[NO FURTHER TEXT ON THIS PAGE]

 

13

 

 

IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty under as of the date first written above.

 

  AMERICAN FINANCE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
 
  By:American Finance Trust, Inc., a Maryland corporation, its General Partner
 
  By: /s/Michael Anderson
    Name:    Michael Anderson
    Title:      Authorized Signatory

 

[Signature Page to Limited Recourse Guaranty]

 

 

 

SCHEDULE I

 

Borrower

 

 

1.ARC AAANGIN001, LLC
2.ARC AABNLFL001, LLC
3.ARC AATNTMA001, LLC
4.ARC AAWSNGA001, LLC
5.ARC ABHNDMS001, LLC
6.ARC AMWNRKY001, LLC
7.ARC ARERIPA001, LLC
8.ARC ARVIRMN001, LLC
9.ARC AZCROMI001, LLC
10.ARC AZCTOLA001, LLC
11.ARC AZTMPGA001, LLC
12.ARC BFFTMFL001, LLC
13.ARC BKMST41001, LLC
14.ARC CBDTNPA001, LLC
15.ARC CBLDLPA001, LLC
16.ARC CBLMAPA001, LLC
17.ARC CBPHLPA001, LLC
18.ARC CBPHLPA002, LLC
19.ARC CBPHLPA003, LLC
20.ARC CBPHLPA004, LLC
21.ARC CBRBRPA001, LLC
22.ARC CBWNEPA001, LLC
23.ARC CHLKJTX001, LLC
24.ARC CHVCTTX001, LLC
25.ARC CKMST19001, LLC
26.ARC CVANSAL001, LLC
27.ARC CVHYKMA001, LLC
28.ARC DGATHMI001, LLC
29.ARC DGBGLLA001, LLC
30.ARC DGBKHMS001, LLC
31.ARC DGBNBGA001, LLC
32.ARC DGCHEOK001, LLC
33.ARC DGCMBMS001, LLC
34.ARC DGDNDLA001, LLC
35.ARC DGDVLLA001, LLC
36.ARC DGFHLLA001, LLC
37.ARC DGFLRMI001, LLC
38.ARC DGFRTMS001, LLC
39.ARC DGFTSAR001, LLC
40.ARC DGGNWLA001, LLC
41.ARC DGGSBVA001, LLC
42.ARC DGGVLMS002, LLC
43.ARC DGHBKLA001, LLC

 

44.ARC DGHDNMI001, LLC
45.ARC DGHTGWV001, LLC
46.ARC DGHTSAR001, LLC
47.ARC DGLAFTN001, LLC
48.ARC DGLCRMN002, LLC
49.ARC DGMBLAR001, LLC
50.ARC DGMKNMI001, LLC
51.ARC DGMRALA001, LLC
52.ARC DGMSNTX002, LLC
53.ARC DGNTALA001, LLC
54.ARC DGRLFMS001, LLC
55.ARC DGRSEMI001, LLC
56.ARC DGRYLAR001, LLC
57.ARC DGSRBMO001, LLC
58.ARC DGSTNVA001, LLC
59.ARC DGSVNMO001, LLC
60.ARC DGTLSLA001, LLC
61.ARC DGVDRTX001, LLC
62.ARC DGVNLTN001, LLC
63.ARC DGWPTMS001, LLC
64.ARC DGWRNIN001, LLC
65.ARC DGWSNNY001, LLC
66.ARC FDBRNLA001, LLC
67.ARC FDBTLKY001, LLC
68.ARC FDCHLID001, LLC
69.ARC FDCRLMO001, LLC
70.ARC FDDNVAR001, LLC
71.ARC FDDXRNM001, LLC
72.ARC FDFNTPA001, LLC
73.ARC FDHCRTX001, LLC
74.ARC FDKRMCO001, LLC
75.ARC FDOCYLA001, LLC
76.ARC FDPLSTX001, LLC
77.ARC FDWLDCO001, LLC
78.ARC FEBSMND001, LLC
79.ARC FECNBIA001, LLC
80.ARC FEEGLWI001, LLC
81.ARC FEGRFND001, LLC
82.ARC FELELMS001, LLC
83.ARC FESOUIA001, LLC
84.ARC FEWAUWI001, LLC
85.ARC FEWTNSD001, LLC
86.ARC FLCLTNC001, LLC

 

 

 

 

 

87.ARC FMMTCNJ001, LLC
88.ARC FMMTVAL001, LLC
89.ARC FMSNHPA001, LLC
90.ARC HR5BEIL001, LLC
91.ARC HR5BIAL001, LLC
92.ARC HR5BPMN001, LLC
93.ARC HR5CURI001, LLC
94.ARC HR5CVGA001, LLC
95.ARC HR5DOGA001, LLC
96.ARC HR5GAGA001, LLC
97.ARC HR5GASC001, LLC
98.ARC HR5HASC001, LLC
99.ARC HR5MSSE001, LLC
100.ARC HR5PEGA001, LLC
101.ARC HR5PISC001, LLC
102.ARC HR5SINJ001, LLC
103.ARC HR5SOCT001, LLC
104.ARC HR5VAGA001, LLC
105.ARC HR5ZUMN001, LLC
106.ARC LWAKNSC001, LLC
107.ARC LWFYTNC001, LLC
108.ARC LWMCNGA001, LLC
109.ARC LWNBNNC001, LLC
110.ARC LWRMTNC001, LLC
111.ARC MFKXVTN002, LLC
112.ARC ORMNTWI001, LLC
113.ARC TKLWSFL001, LLC
114.ARC TPEGPTX001, LLC
115.ARC TSHRLKY001, LLC
116.ARC TSHTNMI001, LLC
117.ARC TSVRNCT001, LLC
118.ARC WGBEATX001, LLC
119.ARC WGGLTWY001, LLC
120.ARC WGLNSMI001, LLC
121.ARC WGOKCOK001, LLC

 

122.ARC WGTKRGA001, LLC
123.ARG AA12PCK001, LLC
124.ARG AA14PCK001, LLC
125.ARG CCFAYNC001, LLC
126.ARG CCLTZFL001, LLC
127.ARG CCNLVTX001, LLC
128.ARG CCPBLCO01, LLC
129.ARG CHDUBGA001, LLC
130.ARG DDEPOTX001, LLC
131.ARG DGBRWKY001, LLC
132.ARG DGCLKIA001, LLC
133.ARG DGCSTKY001, LLC
134.ARG DGCTSMI001, LLC
135.ARG DGELKKY001, LLC
136.ARG DGFLSKY001, LLC
137.ARG DGLCNMI001, LLC
138.ARG DGSDLKY001, LLC
139.ARG DI51PCK001, LLC
140.ARG DNMGCIN001, LLC
141.ARG FMATHTX001, LLC
142.ARG FMBKHMS001, LLC
143.ARG FMCHIIL001, LLC
144.ARG FMCTVMS001, LLC
145.ARG FMIDBOK001, LLC
146.ARG FMTYLTX001, LLC
147.ARG IM12PKSLB001, LLC
148.ARG ME19PCK001, LLC
149.ARG MESMOAR001, LLC
150.ARG PH14SLB001, LLC
151.ARG ATCHTTN001, LLC
152.ARG 1CBHGNJ001, LLC
153.ARG OCPOOL2001, LLC
154.ARG OCPOOL4001, LLC
155.ARG WLGREFI001, LLC

 

 

 

 

 

Exhibit 10.3

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”) made as of the 24th day of July, 2020, by EACH OF THE ENTITIES LISTED ON SCHEDULE I ATTACHED HERETO (individually or collectively, as the context may require “Borrower”), each having an address at 38 Washington Square, Newport, Rhode Island 02840 and American Finance OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, having an address at 650 Fifth Avenue, 30th Floor, New York, New York 10019 (“Principal”; Borrower and Principal are collectively herein referred to as “Indemnitor”), in favor of COLUMN FINANCIAL, INC., a Delaware corporation (“Column”; Column, together with any other Co-Lender under the Loan and each of their respective successors, transferees and/or assigns, collectively, “Indemnitee”) and other Indemnified Parties (defined below).

 

RECITALS:

 

A.        Indemnitee is prepared to make a loan (the “Loan”) to Borrower pursuant to a Loan Agreement of even date herewith between Borrower and Indemnitee (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Agreement.

 

B.         Principal is the owner of a direct and/or indirect equity interest in Borrower and will receive substantial benefit from Indemnitee’s making of the Loan to Borrower.

 

C.         Indemnitee is unwilling to make the Loan unless Indemnitor agrees to provide the indemnification, representations, warranties, covenants and other matters described in this Agreement for the benefit of the Indemnified Parties.

 

D.        Indemnitor is entering into this Agreement to induce Indemnitee to make the Loan.

 

 

 

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby represents, warrants, covenants and agrees for the benefit of the Indemnified Parties as follows:

 

1.             ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Except as otherwise disclosed by those certain Phase I environmental reports (and Phase II environmental reports, if one was provided to Indemnitee) in respect of the Properties delivered to Indemnitee (individually and/or collectively referred to below as the context may require as the “Environmental Report”), copies of which have been provided to Indemnitee, and to Indemnitor’s actual knowledge, (a) there are no Hazardous Substances (defined below) or underground storage tanks in, on, or under any Individual Property, except those that are in compliance with all applicable Environmental Laws (defined below) and with any permits issued pursuant thereto, if applicable; (b) there are no past or present Releases (defined below) of Hazardous Substances in, on, under or from any Individual Property which have not been fully remediated or, to the extent disclosed in the Environmental Report, are in the process of being remediated; (c) there is no current threat of any Release of Hazardous Substances migrating to any Individual Property; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with any Individual Property which has not been fully remediated, or is currently being remediated or, to the extent disclosed in the Environmental Report, are in the process of being fully remediated, in accordance with Environmental Law; (e) Indemnitor has not received any written notice or other written communication from any Person (including, but not limited to, any governmental entity) relating to the existence or Release of Hazardous Substances on any Individual Property or Remediation (defined below) thereof, of possible liability of any Person pursuant to any Environmental Law or any administrative or judicial proceedings in connection with any of the foregoing; (f) Indemnitor has truthfully and fully provided to Indemnitee, in writing, all material information relating to Hazardous Substances in, on, under or from each Individual Property that are known to Indemnitor and that is contained in files and records of Indemnitor or that are in Indemnitor’s possession, including but not limited to any written reports relating to Hazardous Substances in, on, under or from any Individual Property, and/or to any environmental condition of any Individual Property; (g) there are no prior or current complaints by tenants at any Individual Property regarding water infiltration or water damage, except as set forth on Schedule II attached hereto, and (h) no Individual Property currently displays conspicuous evidence of the growth of Microbial Matter on any building materials or surfaces.

 

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2.             ENVIRONMENTAL COVENANTS. Indemnitor covenants and agrees that: (a) all uses and operations on or of the Properties, whether by Indemnitor or any other Person, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on, under or from any Individual Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) either has been fully disclosed to Indemnitee in writing (including in any Environmental Reports provided to Indemnitee) prior to the date hereof or are Hazardous Substances used in the ordinary course of operations at any such Properties in customary quantities reasonably necessary for such operations; (c) there shall be no Hazardous Substances in, on, or under any Individual Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) either fully disclosed to Indemnitee in writing (including in any Environmental Reports provided to Indemnitee) prior to the date hereof or are Hazardous Substances used in the ordinary course of operations at any such Properties in customary quantities reasonably necessary for such operations; (d) subject to Indemnitor’s right to contest the imposition of liens in accordance with the Loan Agreement, Indemnitor shall keep each Individual Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Indemnitor or any other Person (the “Environmental Liens”); (e) Indemnitor shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Paragraph 3 of this Agreement, including but not limited to providing all relevant information and making knowledgeable Persons available for interviews; (f) Indemnitor shall, at its reasonable sole cost and expense, if Indemnitee has a reasonable basis to be concerned that there may be Hazardous Substances on an Individual Property in violation of the Environmental Laws or which would result in liability under Environmental Laws, perform such environmental site assessments or other investigations of environmental conditions in connection with such Individual Property, pursuant to any reasonable written request of Indemnitee (including but not limited to sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), and share with Indemnitee the reports and other results thereof, and Indemnitee and the other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (g) Indemnitor shall, at its sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) effectuate Remediation or obtain a no further action letter if available from the applicable governmental authority for any environmental condition (including but not limited to a Release of a Hazardous Substance) in, on, under or from any Individual Property; (ii) subject to Indemnitor’s right to contest legal requirements in accordance with the Loan Agreement, comply with any applicable Environmental Law; (iii) comply with any directive from any governmental authority with respect to Hazardous Substances in, on or under any Individual Property; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment on or at each Individual Property consistent with the practices of prudent commercial property owners; (h) Indemnitor shall not do and shall use reasonable efforts to cause any Tenant of any Individual Property not to do, any act at or on such Individual Property that materially increases the dangers to human health or the environment on or at such Individual Property, poses an unreasonable risk of harm to any Person or results from or otherwise relating to Hazardous Substances on, at or from such Individual Property; (i) Indemnitor shall notify Indemnitee in writing promptly after it has knowledge of (A) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards any Individual Property; (B) any non-compliance with any Environmental Laws related in any way to any Individual Property; (C) any actual or threatened (in writing) Environmental Lien on any Individual Property; (D) any required or proposed Remediation of environmental conditions relating to any Individual Property; and (E) any written notice that Indemnitor receives from a governmental entity or other Person relating in any way to (a) Hazardous Substances in, on, under, from or migrating towards any Individual Property or Remediation thereof, or possible liability of any Person pursuant to any Environmental Law relating to Hazardous Substances in, on, under, to or from any Individual Property, or (b) other environmental conditions in connection with any Individual Property, or (c) any administrative or judicial proceedings actually occurring or threatened in writing in connection with any of the foregoing and Indemnitor shall comply with any and all local, state or federal laws, legislation, or statutes at any time in effect with respect to Microbial Matter applicable to the Properties and (j) Indemnitor shall promptly adopt a remediation plan reasonably acceptable to Indemnitee with respect to any Microbial Matter identified as a result of any environmental assessment and/or investigation in order to comply with any applicable Environmental Law governing said Microbial Matter.

 

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3.             INDEMNIFIED RIGHTS/COOPERATION AND ACCESS. In the event Indemnitee has reason to believe that an environmental hazard exists on an Individual Property that does not, in the reasonable discretion of the Indemnitee, endanger any tenants or other occupants of such Individual Property or their guests or the general public or materially and adversely affects the value of such Individual Property, upon reasonable notice from the Indemnitee, Indemnitor shall, at Indemnitor’s reasonable expense, promptly cause an engineer or consultant satisfactory to the Indemnified Parties to conduct any environmental assessment or audit (the scope of which shall be determined in the reasonable discretion of the Indemnitee) and take any samples of soil, groundwater or other water, air, or building materials or any other invasive testing reasonably requested by Indemnitee and promptly deliver to the Indemnitee the results of any such assessment, audit, sampling or other testing; provided, however, if such results are not delivered to the Indemnitee within a reasonable period or if the Indemnitee has reason to believe that an environmental hazard exists on such Individual Property that, in the reasonable judgment of the Indemnitee, endangers any tenant or other occupant of such Individual Property or their guests or the general public or may materially and adversely affect the value of such Individual Property, upon reasonable notice to Indemnitor, Indemnitee and any other Person designated by the Indemnitee, including but not limited to any receiver, any representative of a governmental entity, and any environmental consultant, shall have the right, but not the obligation, to enter upon such Individual Property at all reasonable times to assess any and all aspects of the environmental condition of such Individual Property and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in the reasonable discretion of the Indemnitee) and taking samples of soil, groundwater or other water, air, or building materials, and reasonably conducting other invasive testing. Indemnitor shall cooperate with and provide the Indemnitee and any such Person designated by the Indemnitee with access to such Individual Property to undertake the foregoing.

 

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4.             INDEMNIFICATION. Indemnitor covenants and agrees, at its sole cost and expense, to protect, defend, indemnify, release and hold Indemnified Parties harmless from and against any and all Losses (defined below) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) any presence of any Hazardous Substances in, on, above, or under any Individual Property; (b) any past, present or threatened Release of Hazardous Substances in, on, above, under or from any Individual Property; (c) any activity by Indemnitor, any Person affiliated with Indemnitor, and any tenant or other user of any Individual Property in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Individual Property of any Hazardous Substances at any time located in, under, on or above such Individual Property in violation of applicable Environmental Laws or as would require investigation, remediation or other response pursuant to applicable Environmental Laws; (d) any activity by Indemnitor, any Person affiliated with Indemnitor, and any tenant or other user of any Individual Property in connection with any actual or proposed Remediation of any Hazardous Substances on any Individual Property in violation of applicable Environmental Laws at any time located in, under, on or above any Individual Property, whether or not such Remediation is voluntary or pursuant to court or administrative order, including but not limited to any removal, remedial or corrective action; (e) any past, present or threatened non-compliance or violation of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with any Individual Property or operations thereon, including but not limited to any failure by Indemnitor, any Person affiliated with Indemnitor, and any tenant or other user of any Individual Property to comply with any order of any governmental authority in connection with any Environmental Laws; (f) the imposition, recording or filing or the threatened imposition, recording or filing of any Environmental Lien encumbering any Individual Property; (g) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement; (h) any past, present or threatened injury to, destruction of or loss of natural resources in any way connected with any Individual Property, arising or resulting from, or otherwise relating to Hazardous Substances or any violation of Environmental Laws, including but not limited to costs to investigate and assess such injury, destruction or loss; (i) any acts of Indemnitor, any Person affiliated with Indemnitor, and any tenant or other user of any Individual Property in arranging for disposal or treatment, or arranging with a transporter for transport for disposal or treatment, of Hazardous Substances at any facility or incineration vessel containing such or similar Hazardous Substances; (j) any acts of Indemnitor, any Person affiliated with any Indemnitor, and any tenant or other user of any Individual Property in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites from which there is a Release, or a threatened Release of any Hazardous Substance which causes the incurrence of costs for Remediation associated with any Individual Property; (k) any personal injury, wrongful death, or property or other damage in any way connected with the presence or Release of Hazardous Substances in, on, under or from any Individual Property arising under any statutory or common law or tort law theory, including but not limited to damages assessed for private or public nuisance or for the conducting of an abnormally dangerous activity on or near any Individual Property; and (l) any material misrepresentation or inaccuracy in any representation or warranty relating to Hazardous Substances or Environmental Laws or material breach or failure to perform any covenants or other obligations relating to Hazardous Substances or Environmental Laws pursuant to this Agreement, the Loan Agreement or any Security Instrument.

 

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5.             DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES. Upon written request by any Indemnified Party, Indemnitor shall defend any Indemnified Parties with respect to the matters covered by Section 4 above (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals reasonably approved by the Indemnified Parties. Notwithstanding the foregoing, in the event that (i) any Indemnified Party determines in its reasonable discretion that the interests of Indemnitor conflict in any material manner with the interests of such Indemnified Party, (ii) any Indemnified Party determines in its reasonable discretion that the attorneys or professionals retained by Indemnitor are not representing the interests of such Indemnified Party in a commercially reasonable manner, or (iii) any Indemnified Party determines in its reasonable discretion that there may be legal defenses available to it that are different from or additional to those available to Indemnitor, then the Indemnified Parties may engage their own attorneys and other professionals to defend or assist them, and, at the option of the Indemnified Parties, their attorneys shall control the resolution of any claim or proceeding, provided that no compromise or settlement shall be entered without Indemnitor’s consent, which consent shall not be unreasonably withheld. Upon demand, Indemnitor shall pay or, in the reasonable discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith. If more than one Indemnified Party is entitled to defend itself or participate in a proceeding hereunder, Indemnitor shall not be obligated to pay for attorneys or other personnel described above for more than one Indemnified Party.

 

6.             DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: The term “Environmental Laws” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. The term “Environmental Laws” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues governing the use, ownership and/or operations of any Individual Property and related to human health and the environment or Hazardous Substances: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term “Environmental Laws” also includes, but is not limited to, any present and future federal, state and local laws, statutes ordinances, rules, regulations and the like, as well as common law that: (a) conditions transfer of property upon the obtaining of any statement, certification, declaration or other confirmation of, by or from a Governmental Authority as to the absence of any Hazardous Substances (or any Release thereof, as applicable) in violation of applicable law or any other approval of a Governmental Authority of the environmental condition of any Individual Property; (b) requires notification or disclosure of Releases of Hazardous Substances or other environmental condition of any Individual Property to any Governmental Authority or other Person, whether or not in connection with any transfer of title to or interest in such Individual Property; (c) imposes conditions or requirements relating to Hazardous Substances or the Remediation thereof, in connection with permits or other authorization for lawful activity; (d) relates to nuisance, trespass or other causes of action related to any Individual Property in connection with any environmental condition or use of Hazardous Substances at any Individual Property or; (e) relates to wrongful death, personal injury, or property or other damage in connection with any Hazardous Substances in, on under or from any Individual Property.

 

The term “Hazardous Substances” includes but is not limited to any and all substances (whether solid, liquid or gas) defined, regulated, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including but not limited to Microbial Matters which pose a threat to human health or the environment or adversely affect any Individual Property, mold, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives, but excluding, for purposes of the representations and warranties in Section 1 hereof and covenants in Section 2 hereof, substances of kinds and in amounts ordinarily and customarily used or stored in properties similar to any Individual Property, as applicable, for the purposes of cleaning or other maintenance or operations and otherwise in compliance with all Environmental Laws.

 

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The term “Indemnified Parties” includes Indemnitee, any Person who is or will have been involved in the origination of the Loan, any Person who is or will have been involved with the servicing of the Loan, any Person in whose name the encumbrance created by the Security Instruments is or will have been recorded, any Person who may hold or acquire or will have held a full or partial direct interest in the Loan as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties as well as the respective directors, officers, shareholders, partners, employees, agents, representatives of any and all of the foregoing (including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Indemnitee’s assets and business) and any receiver or other fiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding.

 

The term “Losses” includes any actual losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including but not limited to strict liabilities), obligations, fines, penalties, charges, costs of Remediation (whether or not performed voluntarily), amounts paid in settlement, litigation costs, attorneys’ fees, engineers’ fees, environmental consultants’ fees, and investigation costs (including but not limited to costs for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), in the case of each of the foregoing, of whatever kind or nature and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards (but excluding lost profits and indirect, consequential, special, incidental, exemplary and/or punitive damages except to the extent the Indemnified Parties are responsible therefore to unrelated third parties).

 

The term “Microbial Matter” means fungi which reproduces through the release of spores or the splitting of cells, including, but not limited to, mold, mildew, fungi, fungal spores, fragments and metabolites such as mycotoxins and microbial organic compounds.

 

The term “Release” with respect to any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.

 

The term “Remediation” includes but is not limited to any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any Release of any Hazardous Substance; any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to herein.

 

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7.             OPERATIONS AND MAINTENANCE PROGRAMS. If recommended by the Environmental Report or any other environmental assessment or audit of any Individual Property (including, without limitation, any assessment or audit performed after the date hereof), Indemnitor shall establish and comply with an operations and maintenance program with respect to such Individual Property, in form and substance reasonably acceptable to Indemnitee, prepared by an environmental consultant reasonably acceptable to Indemnitee (each such program, as applicable, the “O&M Program”), which O&M Program shall address any asbestos-containing material or lead based paint that may now or in the future be detected at or on such Individual Property. Borrower shall not permit any O&M Program to be amended in any material manner, terminated or replaced, in each case, without obtaining Lender’s prior written consent thereto not to be unreasonably withheld. Without limiting the generality of the foregoing, Indemnitee may require (a) periodic notices or reports to Indemnitee in form, substance and at such intervals as Indemnitee may reasonably specify, (b) an amendment to any O&M Program to address changing circumstances, laws or an adverse change in the condition of any existing asbestos-containing materials or lead based paint at such Individual Property, (c) at Indemnitor’s sole expense, supplemental examination of the Properties by consultants reasonably specified by Indemnitee if there is evidence of additional asbestos-containing materials or lead based paint at such Individual Property or an adverse change in the condition of any existing asbestos-containing materials or lead based paint at such Individual Property, and (d) reasonable access to the Properties by Indemnitee, its agents or servicer, to review and assess the environmental condition of any Individual Property with regard to asbestos-containing materials or lead based paint and Indemnitor’s compliance with any O&M Program, subject to the rights of tenants therein. Indemnitor’s failure to comply with the foregoing provisions of this Section within sixty (60) days of written notice from Indemnitee shall, at Indemnitee’s option, constitute an Event of Default. Without limitation of the foregoing, Borrower hereby acknowledges and agrees that (i) as of the date hereof, Borrower has established operation and maintenance programs for the Properties listed on Exhibit A attached hereto (the “Closing Date O&M Programs”) and (ii) the Closing Date O&M Programs shall constitute an “O&M Program” for purposes hereof.

 

8.             UNIMPAIRED LIABILITY. Subject to Section 10 hereof, the liability of Indemnitor under this Agreement shall in no way be limited or impaired by, and Indemnitor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Note, the Loan Agreement, the Security Instruments or any other Loan Document to or with Indemnitee by Indemnitor or any Person who succeeds Indemnitor or any Person as owner of any Individual Property. In addition, the liability of Indemnitor under this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Note, the Loan Agreement, the Security Instruments or any of the other Loan Documents, (ii) any sale or transfer of all or part of the Properties, (iii) except as provided herein, any exculpatory provision in the Note, the Loan Agreement, the Security Instruments or any of the other Loan Documents limiting Indemnitee’s recourse to any Individual Property or to any other security for the Note, or limiting Indemnitee’s rights to a deficiency judgment against Indemnitor, (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor under the Note, the Loan Agreement, the Security Instruments or any of the other Loan Documents or herein, (v) the release of Indemnitor or any other Person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the other Loan Documents by operation of law, Indemnitee’s voluntary act, or otherwise, (vi) the release or substitution in whole or in part of any security for the Note, or (vii) Indemnitee’s failure to record the Security Instruments or file any UCC financing statements (or Indemnitee’s improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Note; and, in any such case, whether with or without notice to Indemnitor and with or without consideration.

 

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9.             ENFORCEMENT. Indemnified Parties may enforce the obligations of Indemnitor without first resorting to or exhausting any security or collateral under, or without first having recourse pursuant to, the Note, the Loan Agreement, the Security Instruments or under any other Loan Documents or any of the Properties, through foreclosure proceedings or otherwise, provided, however, that nothing herein shall inhibit or prevent Indemnitee from suing on the Note, foreclosing, or exercising any power of sale under, the Security Instrument, or exercising any other rights and remedies thereunder. This Agreement is not collateral or security for the obligations of Borrower pursuant to the Loan Agreement, unless Indemnitee expressly elects in writing to make this Agreement additional collateral or security for the debt of Indemnitor pursuant to the Loan Agreement, which Indemnitee is entitled to do in its sole and absolute discretion. It is not necessary for an Event of Default to have occurred pursuant to and as defined in the Security Instruments or the Loan Agreement for Indemnified Parties to exercise their rights pursuant to this Agreement. Notwithstanding any provision of the Loan Agreement, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provision of the Loan Agreement; Indemnitor is fully and personally liable for such obligations, and such liability is not limited to the original or amortized principal balance of the Loan or the value of the Properties.

 

10.          SURVIVAL. The obligations and liabilities of Indemnitor under this Agreement shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instruments. Notwithstanding the provisions of this Agreement to the contrary, the liabilities and obligations of Indemnitor hereunder shall not apply with respect to an Individual Property, to the extent that Indemnitor can prove that such liabilities and obligations arose solely from Hazardous Substances that: (a) were not present on such Individual Property prior to the date that (i) Indemnitee or its nominee acquired title to such Individual Property, whether by foreclosure, exercise of power of sale or otherwise or (ii) the holder of a Mezzanine Loan or any third party (claiming by reason of judicial or non-judicial foreclosure, assignment in lieu of foreclosure or other exercise of remedies by such holder) acquired title to 100% of the direct or indirect ownership interests in Borrower or Principal owning such Individual Property (directly or indirectly), whether by foreclosure, exercise of power of sale, assignment in lieu of foreclosure or otherwise; and (b) were not the result of any act or negligence of Indemnitor or any of Indemnitor’s affiliates, agents or contractors. Notwithstanding the foregoing, the indemnification obligations of Indemnitor hereunder shall terminate (except with respect to any then pending or asserted claims or actions subject to indemnification hereunder) with regard to any Individual Property two (2) years after the full and indefeasible payment by Indemnitor of the Debt, provided that at the time of such payment, Indemnitor furnishes to Indemnitee a Phase I environmental report with respect to such Individual Property, which report is from an environmental consultant reasonably acceptable to Lender, which updated environmental report(s) disclose, as of the date of such repayment, no actual or threatened (other than as disclosed in the Environmental Report delivered to Indemnitee by Indemnitor in connection with the origination of the Loan) (A) non-compliance with or violation in any material respect of applicable Environmental Laws (or permits issued pursuant to Environmental Laws) in connection with such Individual Property, or operations thereon, (B) Environmental Liens encumbering such Individual Property, (C) administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement or (D) presence or Release of Hazardous Substances in, on, under or from such Individual Property, excluding substances of kinds and in amounts ordinarily and customarily used or stored in properties similar to any Individual Property, for the purposes of cleaning or other maintenance or operations and otherwise in compliance with all Environmental Laws, that has not been fully remediated in accordance with all applicable Environmental Laws.

 

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11.          INTEREST. Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on written demand and, if not paid within ten (10) days of such written demand therefor, shall bear interest at the Default Rate.

 

12.           WAIVERS.

 

a.             Indemnitor hereby waives (i) any right or claim of right to cause a marshaling of Indemnitor’s assets or to cause Indemnitee or other Indemnified Parties to proceed against any of the security for the Loan before proceeding under this Agreement against Indemnitor; (ii) and relinquishes all rights and remedies accorded by applicable law to indemnitors or guarantors, except any rights of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including, without limitation, any claim that such subrogation rights were abrogated by any acts of Indemnitee or other Indemnified Parties; (iii) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose. Notwithstanding anything to the contrary contained herein, Indemnitor hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Loan until the Loan shall have been paid in full.

 

b.            It shall not be necessary for Lender, in order to enforce payment under Section 4 hereof against Principal to first (i) institute suit or pursue or exhaust any rights or remedies against Borrower or others liable for the Debt, (ii) enforce any rights against any security that shall ever have been given to secure the Debt, (iii) join Borrower or any others liable for the payment or performance pursuant to Section 4 hereof or any part thereof in any action to enforce this Agreement and/or (iv) resort to any other means of obtaining payment or performance of this Agreement.

 

c.             Suit may be brought or demand may be made against all parties who have signed this Agreement or any other indemnity covering all or any part of the indemnity pursuant to Section 4 hereof, or against any one or more of them, separately or together, without impairing the rights of Lender against any party hereto.

 

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d.            The exercise by Lender of any right or remedy hereunder or under any other Loan Document, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy. Lender shall have all rights, remedies and recourses afforded to Lender by reason of this Agreement or any other Loan Document or by law or equity or otherwise, and the same (a) shall be cumulative and concurrent, (b) may be pursued separately, successively or concurrently against Indemnitor or others obligated for the indemnity pursuant to Section 4 hereof, or any part thereof, or against any one or more of them, or against any security or otherwise, at the sole discretion of Lender, (c) may be exercised as often as occasion therefor shall arise, it being agreed by Indemnitor that the exercise of, discontinuance of the exercise of or failure to exercise any of such rights, remedies, or recourses shall in no event be construed as a waiver or release thereof or of any other right, remedy, or recourse, and (d) are intended to be, and shall be, nonexclusive. No waiver of any default on the part of Indemnitor or of any breach of any of the provisions of this Agreement or of any other document shall be considered a waiver of any other or subsequent default or breach, and no delay or omission in exercising or enforcing the rights and powers granted herein or in any other document shall be construed as a waiver of such rights and powers, and no exercise or enforcement of any rights or powers hereunder or under any other document shall be held to exhaust such rights and powers, and every such right and power may be exercised from time to time. The granting of any consent, approval or waiver by Lender shall be limited to the specific instance and purpose therefor and shall not constitute consent or approval in any other instance or for any other purpose. No notice to or demand on Indemnitor in any case shall of itself entitle Indemnitor to any other or further notice or demand in similar or other circumstances. No provision of this Agreement or any right, remedy or recourse of Lender with respect hereto, or any default or breach, can be waived, nor can this Agreement or Indemnitor be released or discharged in any way or to any extent, except specifically in each case by a writing intended for that purpose (and which refers specifically to this Agreement) executed, and delivered to Indemnitor, by Lender, or where otherwise specifically provided herein.

 

e.             Notwithstanding anything to the contrary contained herein, (a) Principal shall not have any right of subrogation in or under any of the Loan Documents or to participate in any way therein, or in any right, title or interest in and to any security or right of recourse for the indemnity set forth in Section 4 hereof, until any liability with respect to Section 4 hereof has been fully and finally paid, and (b) if Principal is or becomes an “insider” (as defined in Section 101 of the Bankruptcy Code) with respect to Borrower, then Principal hereby irrevocably and absolutely waives any and all rights of contribution, indemnification, reimbursement or any similar rights against Borrower with respect to this Agreement (including any right of subrogation, except to the extent of collateral held by Lender), whether such rights arise under an express or implied contract or by operation of law, until any liability with respect to Section 4 hereof have been fully and finally paid. It is the intention of the parties that Principal shall not be deemed to be a “creditor” (as defined in Section 101 of the Bankruptcy Code) of Borrower by reason of the existence of this Agreement in the event that Borrower or Principal becomes a debtor in any proceeding under the Bankruptcy Code. This waiver is given to induce Lender to make the Loan as evidenced by the Note to Borrower.

 

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f.             Principal hereby agrees that neither Lender’s rights or remedies nor Principal’s obligations under the terms of this Agreement shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts, or circumstances, and the liability of Principal under this Agreement shall be absolute and unconditional irrespective of (and Principal hereby waives any rights or protections related to): (i) any limitation of liability or recourse in any other Loan Document or arising under any law; (ii) any claim or defense that this Agreement was made without consideration or is not supported by adequate consideration; (iii) the taking or accepting of any other security or guaranty for, or right of recourse with respect to, any or all of the liabilities pursuant to Section 4 hereof; (iv) any homestead exemption or any other similar exemption under applicable Legal Requirements and Principal hereby waives the benefit of any such exemption as to the liabilities pursuant to Section 4 hereof; (v) any release, surrender, abandonment, exchange, alteration, sale or other disposition, subordination, deterioration, waste, failure to protect or preserve, impairment, or loss of, or any failure to create or perfect any lien or security interest with respect to, or any other dealings with, any collateral or security at any time existing or purported, believed or expected to exist in connection with any or all of the liabilities pursuant to Section 4 hereof, including any impairment of Principal’s recourse against any Person or collateral; (vi) unless agreed to in writing by Lender or as otherwise expressly set forth in the Loan Documents, whether express or by operation of law, any partial release of the liability of Principal hereunder, or if one or more other guaranties are now or hereafter obtained by Lender covering all or any part of the liabilities pursuant to Section 4 hereof, any complete or partial release of any one or more of such indemnitors under any such other indemnity, or any complete or partial release or settlement of Borrower or any other party liable, directly or indirectly, for the payment or performance of any or all of the liabilities pursuant to Section 4 hereof; (vii) the death, insolvency, bankruptcy, disability, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership or other power of Borrower or any other party at any time liable for the payment or performance of any or all of the liabilities pursuant to Section 4 hereof; (viii) either with or without notice to or consent of Principal: any renewal, extension, modification or rearrangement of the terms of any or all of the liabilities pursuant to Section 4 hereof and/or any of the Loan Documents; (ix) any neglect, lack of diligence, delay, omission, failure, or refusal of Lender to take or prosecute (or in taking or prosecuting) any action for the collection or enforcement of any of the liabilities pursuant to Section 4 hereof, or to foreclose or take or prosecute any action to foreclose (or in foreclosing or taking or prosecuting any action to foreclose) upon any security therefor, or to exercise (or in exercising) any other right or power with respect to any security therefor, or to take or prosecute (or in taking or prosecuting) any action in connection with any Loan Document, or any failure to sell or otherwise dispose of in a commercially reasonable manner any collateral securing any or all of the liabilities pursuant to Section 4 hereof; (x) any failure of Lender to notify Principal of any creation, renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the liabilities pursuant to Section 4 hereof or any part thereof, or of any Loan Document, or of any release of or change in any security, or of any other action taken or refrained from being taken by Lender against Borrower or any security or other recourse, or of any new agreement between Lender and Borrower, it being understood that, except as expressly provided herein, Lender shall not be required to give Principal any notice of any kind under any circumstances with respect to or in connection with the liabilities pursuant to Section 4 hereof, any and all rights to notice Principal may have otherwise had being hereby waived by Principal, and Principal shall be responsible for obtaining for itself information regarding Borrower, including, but not limited to, any changes in the business or financial condition of Borrower, and Principal acknowledges and agrees that Lender shall have no duty to notify Principal of any information which Lender may have concerning Borrower; (xi) if for any reason that Lender is required to refund any payment by Borrower to any other party liable for the payment or performance of any or all of the liabilities pursuant to Section 4 hereof or pay the amount thereof to someone else; (xii) the making of advances by Lender to protect its interest in any Individual Property or the Properties, preserve the value of any Individual Property or the Properties or for the purpose of performing any term or covenant contained in any of the Loan Documents; (xiii) the existence of any claim, counterclaim, set off, recoupment, reduction or defense based upon any claim or other right that Principal may at any time have against Borrower, Lender, or any other Person, whether or not arising in connection with this Agreement, the Note, the Loan Agreement, or any other Loan Document, other than a claim that the liabilities pursuant to Section 4 hereof have been fully paid and performed; (xiv) the unenforceability of all or any part of the liabilities pursuant to Section 4 hereof against Borrower, whether because the liabilities pursuant to Section 4 hereof exceed the amount permitted by law or violate any usury law, or because the act of creating the liabilities pursuant to Section 4 hereof, or any part thereof, is ultra vires, or because the officers or Persons creating same acted in excess of their authority, or because of a lack of validity or enforceability of or defect or deficiency in any of the Loan Documents, or because Borrower has any valid defense, claim or offset with respect thereto, or because Borrower’s obligation ceases to exist by operation of law, or because of any other reason or circumstance, it being agreed that Principal shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the liabilities pursuant to Section 4 hereof, or any part thereof, for any reason (and regardless of any joinder of Borrower or any other party in any action to obtain payment or performance of any or all of the liabilities pursuant to Section 4 hereof); (xv) any order, ruling or plan of reorganization emanating from proceedings under any bankruptcy or similar insolvency laws with respect to Borrower or any other Person, including any extension, reduction, composition, or other alteration of the liabilities pursuant to Section 4 hereof, whether or not consented to by Lender; and/or (xvi) except as otherwise provided in Section 10 hereof or Article 6 of the Loan Agreement, any partial or total transfer, pledge and/or reconstitution of Borrower and/or any direct or indirect owner of Borrower (regardless of whether the same is permitted under the Loan Documents).

 

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g.            EACH OF INDEMNITOR AND INDEMNITEE HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.

 

13.           SUBROGATION. Indemnitor shall take any and all reasonable actions, including institution of legal action against third parties, necessary or appropriate to obtain reimbursement, payment or compensation from such Persons responsible for the presence of any Hazardous Substances at, in, on, or under any Individual Property, or otherwise obligated by law to bear the cost. Indemnified Parties shall be and hereby are subrogated to all of Indemnitor’s rights now or hereafter in such claims.

 

14.           INDEMNITOR’S REPRESENTATIONS AND WARRANTIES. Indemnitor represents and warrants that:

 

a.              it has the full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by Indemnitor has been duly and validly authorized; and all requisite action has been taken by Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;

 

b.              its execution of, and compliance with, this Agreement will not result in the breach of any term or provision of the charter, by-laws, partnership, operating or trust agreement, or other governing instrument of Indemnitor or result in the breach of any term or provision of, or conflict with or constitute a default under, or result in the acceleration of any obligation under, any agreement, indenture or loan or credit agreement or other instrument to which Indemnitor or any Individual Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which Indemnitor or any Individual Property is subject;

 

c.              to the best of Indemnitor’s knowledge, there is no action, suit, proceeding or investigation pending or threatened against it which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of Indemnitor, or in any material impairment of the right or ability of Indemnitor to carry on its business substantially as now conducted, or in any material liability on the part of Indemnitor, or which would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of Indemnitor contemplated herein, or which would be likely to impair materially the ability of Indemnitor to perform under the terms of this Agreement;

 

d.             it does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

 

e.              to the best of Indemnitor’s knowledge, no approval, authorization, order, license or consent of, or registration or filing with, any governmental authority or other Person, and no approval, authorization or consent of any other Person is required in connection with this Agreement; and

 

f.               this Agreement constitutes a valid, legal and binding obligation of Indemnitor, enforceable against it in accordance with the terms hereof, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws or by equitable principles.

 

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15.              NO WAIVER. No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such privilege, power or right.

 

16.              NOTICE OF LEGAL ACTIONS. Each party hereto shall, within five (5) Business Days of receipt thereof, give written notice to the other party hereto of (i) any notice from any governmental entity or any source whatsoever with respect to Hazardous Substances on, being released from or affecting any Individual Property, and (ii) any legal action brought against such party or related to any Individual Property, with respect to which Indemnitor may have liability under this Agreement. Such notice shall comply with the provisions of Section 20 hereof.

 

17.              NOTICES. All notices or other written communications hereunder shall be made in accordance with Article 14 of the Loan Agreement to the addresses noted above (or to such other addresses as may be specified in writing by any party hereto to the other parties hereto).

 

18.              DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic image scan transmission (such as a “.pdf” file) will be effective as delivery of an original manually-executed counterpart of the Agreement. Each of Borrower and Principal represent and warrant that the intention of the natural Person signing this Agreement on its behalf is to attribute its respective signature to the Agreement and that if the party has signed using an E-Signature (defined below), that E-Signature represents the signer’s signature to this Agreement.  Each of Borrower and Principal understand and agree that such E-Signature, if applicable, is legally binding.  Each party signing this Agreement using an E-Signature waives all rights to repudiate the authenticity or validity of its E-signature to the extent such repudiation is based in whole or in part on the fact that such signature is not in original handwritten form.  All parties to this Agreement agree that the law governing all applicable E-Signatures will be the federal Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S. Code, Chapter 96) (E-SIGN) and/or the Uniform Electronic Transactions Act of 1999 as promulgated by the U.S. Uniform Law Commission for consideration and enactment by the States (UETA), and that under no circumstances will E-Signatures be governed by the Uniform Computer Information Transactions Act (UCITA).  As used in this Agreement, “E-Signature” means any form of signature other than an original handwritten signature, including any type of image created in any manner (whether electronically or otherwise) which image could reasonably be interpreted as an indication of the signer’s intent to sign the document.

 

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19.              NO ORAL CHANGE. This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Indemnitor or any Indemnified Party, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

 

20.              HEADINGS, ETC. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

 

21.              NUMBER AND GENDER/SUCCESSORS AND ASSIGNS. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons referred to may require. Without limiting the effect of specific references in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and every Person comprising an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs, executors, administrators, legal representatives, successors and assigns of Indemnitor, all of whom shall be bound by the provisions of this Agreement, provided that no obligation of Indemnitor may be assigned except with the written consent of Indemnitee. Each reference herein to Indemnitee shall be deemed to include its successors and assigns. This Agreement shall inure to the benefit of Indemnified Parties and their respective successors and permitted assigns forever.

 

22.              RELEASE OF LIABILITY. Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability of any party not so released.

 

23.              RIGHTS CUMULATIVE. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Security Instruments, the Loan Agreement or the other Loan Documents or would otherwise have at law or in equity.

 

24.              INAPPLICABLE PROVISIONS. If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

 

25.              GOVERNING LAW. The governing law and related provisions set forth in Section 17.2 of the Loan Agreement (including, without limitation, any authorized agent provisions thereof) are hereby incorporated by reference as if fully set forth herein (with Indemnitor substituted in all places where Borrower appears thereunder) and shall be deemed fully applicable to Indemnitor hereunder. Indemnitor hereby certifies that it has received and reviewed the Loan Agreement (including, without limitation, Section 17.2 thereof). In the event of any conflict or inconsistency between the terms and conditions hereof and this Section 25, this Section 25 shall control.

 

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26.              MISCELLANEOUS.

 

a.                Wherever pursuant to this Agreement (i) Indemnitee (or any other Indemnified Party) exercises any right given to it to approve or disapprove any matter, (ii) any arrangement or term is to be satisfactory to Indemnitee (or any other Indemnified Party), or (iii) any other decision or determination is to be made by Indemnitee (or any other Indemnified Party), the decision of Indemnitee (or such other Indemnified Party) to approve or disapprove such matter, all decisions that arrangements or terms are satisfactory or not satisfactory to Indemnitee (or such other Indemnified Party) and all other decisions and determinations made by Indemnitee (or such other Indemnified Party), shall be in the sole and absolute discretion of Indemnitee (or such other Indemnified Party) and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

 

b.                Wherever pursuant to this Agreement it is provided that Indemnitor pay any costs and expenses, such costs and expenses shall include, but not be limited to, reasonable legal fees and disbursements of Indemnitee, whether retained firms, the reimbursements for the expenses of the in-house staff or otherwise.

 

c.                If Indemnitor consists of more than one person or party, the obligations and liabilities of each such person or party hereunder shall be joint and several.

 

27.              STATE SPECIFIC PROVISIONS. In the event of any inconsistencies between the terms and conditions of this Section 27 and the other terms and conditions of this Agreement, the terms and conditions of Section 27 shall control and be binding.

 

a.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Arkansas:

 

i.              For purposes of any of the Properties in the State of Arkansas, the term “Environmental Law” shall include all applicable Arkansas environmental laws, including but not limited to, Arkansas Solid Waste Management Act, A.C.A. § 8-6-201, et. seq.; Arkansas Hazardous Waste Management Act of 1979, A.C.A. § 8-7-201, et. seq.; Arkansas Water and Air Pollution Control Act, A.C.A. § 8-4-101, et. seq.; and, Arkansas Clean Indoor Act of 2006, A.C.A. § 20-27-1801, et. seq.

 

b.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of California:

 

i.              For purposes of any of the Properties in the State of California, the term “Environmental Law” shall include the Porter-Cologne Water Cleanup Act, the Waste Management Act of 1980, the Toxic Pit Cleanup Act, the Underground Tank Act of 1984, the California Waste Quality Improvement Act and California Health and Safety Code Sections 25117 and 25316.

 

ii.             In accordance with California Code of Civil Procedure Section 736, as such Section may be amended from time to time, Indemnitee may bring an action for breach of contract against Indemnitor for breach of any environmental provisions (as such term is defined in such Section) made by Indemnitor herein or in any other Loan Document for the recovery of damages (other than lost profits and indirect, consequential, special, incidental, exemplary and/or punitive damages except to the extent the Indemnified Parties are responsible therefor to unrelated third parties) and/or for the enforcement of any environmental provision.

 

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iii.            In accordance with California Code of Civil Procedure Section 726.5, as such Section may be amended from time to time, Indemnitee may waive the security of any Security Instrument as to any parcel of the Properties that is environmentally impaired or is an affected parcel (as such terms are defined in such Section), and as to any personal property which is Property attached to such parcel, and thereafter exercise against Borrower, to the extent permitted by such Section 726.5, the rights and remedies of an unsecured creditor, including reduction of Indemnitee’s claim against Borrower to judgment, and any other rights and remedies permitted by law. In the event Indemnitee elects, in accordance with California Code of Civil Procedure Section 726.5, to waive all or part of the security of the Security Instruments and proceed against Borrower on an unsecured basis, the valuation of the real property, the determination of the environmentally impaired status of such security and any cause of action for a money judgment, shall, at the request of Indemnitee, be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq. Such referee shall be an M.A.I. appraiser selected by Indemnitee and approved by Borrower, which approval shall not be unreasonably withheld or delayed. The decision of such referee shall be binding upon both Borrower and Indemnitee, and judgment upon the award rendered by such referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645. Borrower shall pay all reasonable costs and expenses incurred by Indemnitee in connection with any proceeding under California Code of Civil Procedure Section 726.5, as such Section may be amended from time to time.

 

iv.            This Agreement is intended to be cumulative of any rights of Indemnitee under California Code of Civil Procedure Sections 564, 726.5 and 736 and under California Civil Code Section 2929.5. Indemnitor hereby waives any restrictions or limitations which such statutes may impose on Indemnitor’s liability or any Indemnitee’s rights or remedies under this Agreement.

 

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v.             Indemnitor hereby waives: (a) any defense based upon any legal disability or other defense of Borrower, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Note, the Loan Agreement or any of the other Loan Documents; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any defect in the formation of Borrower or any principal of Borrower; (c) any defense based upon the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Indemnitee or intended or understood by Indemnitee or Indemnitor; (d) any rights or defenses that may be available by reason of any election of remedies by Indemnitee (including, without limitation, any such election which in any manner impairs, effects, reduces, releases, destroys or extinguishes Indemnitor’s subrogation rights, rights to proceed against Borrower for reimbursement, or any other rights of Indemnitor to proceed against any other person, entity or security, including but not limited to any defense based upon an election of remedies by Indemnitee under the provisions of Section 580(d) of the California Code of Civil Procedure or any similar law of California or of any other State or of the United States); (e) any defense based upon Indemnitee’s failure to disclose to Indemnitor any information concerning Borrower’s financial condition or any other circumstances bearing on Borrower’s ability to pay all sums payable under the Note, the Loan Agreement or any of the other Loan Documents; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Indemnitee’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Indemnitee may have against Borrower and any right to participate in, or benefit from, any security for the Note, the Loan Agreement or the other Loan Documents now or hereafter held by Indemnitee; (j) other than those expressly provided for in this Agreement and/or the Loan Agreement, presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Indemnitor hereunder or the enforcement hereof. Indemnitor agrees that the payment of all sums payable under the Note, the Loan Agreement or any of the other Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Note, the Loan Agreement or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Indemnitor’s liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Indemnitor expressly waives to the extent permitted by law any and all rights and defenses which might otherwise be available to Indemnitor under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433 and under California Code of Civil Procedure Sections 580a, 580b, 580d and 726, or any of such sections and all other rights and defenses that Indemnitor might have because the Debt is secured by real property. This means, among other things, Indemnitee may collect from Indemnitor without first foreclosing on any real or personal property collateral pledged by Borrower; and if Indemnitee forecloses on any real property collateral pledged by Borrower, the amount of the Debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the same price, and Indemnitee may collect from Indemnitor even if Indemnitee, by foreclosing on the real property collateral, has destroyed any right Indemnitor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Indemnitor may have because Borrower’s Debt evidenced by the Note is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

 

vi.            Indemnitor hereby also waives and agrees not to assert or take advantage of any defense of Indemnitor based upon Indemnitee’s election of any remedy against Indemnitor or Borrower or both, including, without limitation, the defense to enforcement of this Agreement (the “Gradsky” defense based upon Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968) or subsequent cases) which, absent this waiver, Indemnitor would have by virtue of an election by Indemnitee to conduct a non-judicial foreclosure sale of the Properties, it being understood by Indemnitor that any such non-judicial foreclosure sale will destroy, by operation of California Code of Civil Procedure Section 580d, all rights of any party to a deficiency judgment against Borrower, and, as a consequence, will destroy all rights which Indemnitor would otherwise have (including, without limitation, the right of subrogation, the right of reimbursement, and the right of contribution) to proceed against Borrower and to recover any such amount, and that Indemnitee could be otherwise estopped from pursuing Indemnitor for a deficiency judgment after a non-judicial foreclosure sale on the theory that a guarantor should be exonerated if a lender elects a remedy that eliminates the guarantor’s subrogation, reimbursement or contribution rights.

 

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vii.           Indemnitor hereby also waives its right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require Indemnitee to institute suit against, or to exhaust any rights and remedies which Indemnitee has or may have against, Indemnitor or any third party, or against any collateral for the obligations provided by Borrower or any third party.  In this regard, Indemnitor agrees that it is bound to the payment of all obligations hereunder, whether now existing or hereafter accruing as fully as if such obligations were directly owing to Indemnitee by Indemnitor.  Indemnitor further waives any defense arising by reason of any disability or other defense (other than the defense that the obligations are not due and owing or that the obligations shall have been fully and finally performed and indefeasibly paid) of Indemnitor or by reason of the cessation from any cause whatsoever of the liability of Indemnitor in respect thereof.

 

viii.          Indemnitor hereby also waives (i) any rights to assert against Indemnitee any defense (legal or equitable), set off, counterclaim, or claim which Indemnitor may now or at any time hereafter have against Indemnitor or any other party liable to Indemnitee; (ii) any defense, set off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the obligations or any security therefor; (iii) any defense Indemnitor has to performance hereunder, and any right Indemnitor has to be exonerated, provided by Sections 2819, 2822 or 2825 of the California Civil Code, or otherwise, arising by reason of:  any claim or defense based upon an election of remedies by Indemnitee; the impairment or suspension of Indemnitee’s rights or remedies against Indemnitor; the alteration by Indemnitee of its obligations; any discharge of Indemnitor’s obligations to Indemnitee by operation of law as a result of Indemnitee’s intervention or omission; or the acceptance by Indemnitee of anything in partial satisfaction of its obligations; (iv) the benefit of any statute of limitations affecting Indemnitor’s liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of such statute of limitations applicable to Indemnitor’s liability hereunder. Notwithstanding anything to the contrary contained herein, Indemnitor does not waive the defense that any obligation is not due or owing or the defense that the obligations shall have been fully and finally performed and indefeasibly paid.

 

ix.            JUDICIAL REFERENCE AGREEMENT; REFEREE; COSTS.

 

(1)           Controversies Subject to Judicial Reference; Conduct of Reference. In the event that any action, proceeding and/or hearing on any matter whatsoever, including all issues of fact or law arising out of, or in any way connected with, the Properties, the Note, this Agreement or any of the Loan Documents, or the enforcement of any remedy under any law, statute, or regulation (hereinafter, a “Controversy”), is to be tried in a court of Los Angeles County, California and the jury trial waiver provisions set forth above are not permitted or otherwise applicable under then-prevailing law:

 

(a)        each controversy shall be determined by a consensual general judicial reference (the “Reference”) pursuant to the provisions of California Code of Civil Procedure §§ 638 et seq., as such statutes may be amended or modified from time to time.

 

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(b)        upon a written request, or upon an appropriate motion by either Indemnitee or Indemnitor, any pending action relating to any controversy and every controversy shall be heard by a single referee who shall then try all issues (including any and all questions of law and questions of fact relating thereto), and issue findings of fact and conclusions of law and report a statement of decision. The referee’s statement of decision will constitute the conclusive determination of the controversy. Indemnitee and Indemnitor agree that the referee shall have the power to issue all legal and equitable relief appropriate under the circumstances before him/her.

 

(c)        Indemnitee and Indemnitor shall promptly and diligently cooperate with one another and the referee, and shall perform such acts as may be necessary to obtain prompt and expeditious resolution of each controversy in accordance with the terms of this Section 27(b)(ix).

 

(d)        either Indemnitee or Indemnitor may file the referee’s findings, conclusions and statement with the clerk or judge of any appropriate court, file a motion to confirm the referee’s report and have judgment entered thereon. If the report is deemed incomplete by such court, the referee may be required to complete the report and resubmit it.

 

(e)        Indemnitee and Indemnitor will each have such rights to assert such objections as are set forth in California Code of Civil Procedure §§ 638 et seq.

 

(f)         all proceedings shall be closed to the public and confidential, and all records relating to the Reference shall be permanently sealed when the order thereon becomes final.

 

(2)           Selection of Referee; Powers.

 

(a)        Indemnitee and Indemnitor shall select a single neutral referee (the “Referee”), who shall be a retired judge or justice of the courts of the State of California, or a federal court judge, in each case, with at least ten years of judicial experience in civil matters. The Referee shall be appointed in accordance with California Code of Civil Procedure §§ 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts).

 

(b)        If within ten (10) days after the request or motion for the Reference, Indemnitee and Indemnitor cannot agree upon a Referee, either Indemnitee or Indemnitor may request or move that the Referee be appointed by the Presiding Judge of the Los Angeles County Superior Court or of the U.S. District Court for the Central District of California. The Referee shall determine all issues relating to the applicability, interpretation, legality and enforceability of this Section 27(b)(ix).

 

21

 

 

(3)           Provisional Remedies; Self-Help and Foreclosure.

 

(a)        No provision of this Section 27(b)(ix) shall limit the right of either Indemnitee or Indemnitor, as the case may be, to (1) exercise such self-help remedies as might otherwise be available under applicable law, (2) initiate judicial or non-judicial foreclosure against any real or personal property collateral, (3) exercise any judicial or power of sale rights, or (4) obtain or oppose provisional or ancillary remedies, including without limitation, injunctive relief, writs of possession, the appointment of a receiver, and/or additional or supplementary remedies from a court of competent jurisdiction before, after or during the pendency of the Reference.

 

(b)        The exercise of, or opposition to, any such remedy does not waive the right of Indemnitee or Indemnitor to the Reference pursuant to this Section 27(b)(ix).

 

(4)           Costs and Fees.

 

(a)        Promptly following the selection of the Referee, Indemnitee and Indemnitor shall each advance equal portions of the estimated fees and costs of the Referee.

 

(b)        In the statement of decision issued by the Referee, the Referee shall determine that one of the parties is the prevailing party and award costs, including reasonable attorneys’ fees, to the prevailing party, if any, and may order the Referee’s fees to be paid or shared by Indemnitor and/or Indemnitee in such manner as the Referee deems just.

 

c.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Connecticut:

 

i.              INDEMNITORS HEREBY ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY WAIVE THEIR RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

 

ii.             For purposes of any Individual Property located in the State of Connecticut, the term “Environmental Law” shall also include Section 22a-234 et seq. of the Connecticut General Statutes (the so-called “Connecticut Transfer Act”), as the same may have been amended from time to time.

 

22

 

 

d.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Idaho:

 

i.              The representations, warranties and covenants Indemnitor set forth in this Agreement are not secured by any Security Instrument or any other security documents securing the Loan and shall not be discharged or satisfied by foreclosure of the liens created by any Security Instrument or other security documents, except as otherwise provided herein.

 

e.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the Commonwealth of Massachusetts:

 

i.              For purposes of any of the Properties in the Commonwealth of Massachusetts, the term “Environmental Law” shall also include the Massachusetts Oil and Hazardous Materials Release, Prevention and Response Act, M.G.L. c. 21E; the Massachusetts Hazardous Waste Management Act, M.G.L. c. 21C; the Massachusetts Clean Waters Act, M.G.L. c. 21, §§26-53; and the Massachusetts Air Pollution Control Laws, M.G.L. c. 111, §§ 142A-142M, each as amended, any successor thereto, and any regulations promulgated pursuant thereto.

 

f.                 With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Minnesota:

 

i.              For purposes of any of the Properties in the State of Minnesota, the term “Environmental Law” shall also include the Minnesota Environmental Response and Liability Act, Minnesota Statutes Chapter 115B, the Minnesota Petroleum Tank Release and Clean-up Act, Minnesota Statues Chapter 115C; and the Minnesota Environmental Rights Act, Chapter 116B.

 

g.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Mississippi:

 

i.              For purposes of any of the Properties in the State of Mississippi, the term “Environmental Law” shall also include the Mississippi Solid Wastes Disposal Law of 1974, as amended, Miss. Code Ann. § 17-17-1 et seq., the Mississippi Air and Water Pollution Control Law, Miss. Code Ann. § 49-17-1 et seq., and regulations promulgated pursuant thereto.

 

23

 

 

h.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Missouri:

 

i.              TO EFFECTUATE THE FOREGOING, INDEMNIFIED PARTIES ARE HEREBY GRANTED A POWER OF ATTORNEY TO FILE, AS ATTORNEY-IN-FACT FOR INDEMNITOR, A COPY OF THIS AGREEMENT IN ANY COURT WITH JURISDICTION OVER ANY INDIVIDUAL PROPERTY LOCATED IN THE STATE OF MISSOURI. THIS GRANT IS TO ALLOW INDEMNIFIED PARTIES TO RECEIVE THE BENEFIT OF THIS WAIVER OF TRIAL BY JURY PURSUANT TO SECTION 510.190, RSMO, RULE 69.01 V.A.M.R. AND/OR ANY OTHER APPLICABLE LAW. THE COPY OF THIS AGREEMENT SO FILED SHALL CONCLUSIVELY BE DEEMED TO CONSTITUTE THE WAIVER OF TRIAL BY JURY BY INDEMNITOR IN ANY PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR INDEMNIFIED PARTIES’ CONDUCT WITH RESPECT TO ANY OF THE FOREGOING. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE. INDEMNITOR ACKNOWLEDGES THAT THE FOREGOING WAIVER HAS BEEN REVIEWED WITH AN ATTORNEY OF INDEMNITOR’S CHOICE AND THE MEANING AND EFFECT OF THE FOREGOING WAIVER ARE FULLY UNDERSTOOD.

 

ii.             For purposes of any Properties in the State of Missouri, the term “Environmental Law” shall also include, without limitation, the Missouri Solid Waste Management Law (Mo. Rev. Stat. §§ 260.200-260.345); Missouri Hazardous Waste Management Law (Mo. Rev. Stat. §§ 260.350-260.434); Missouri Abandoned or Uncontrolled Sites Law (Mo. Rev. Stat. §§ 260.435-260.482); Mo. Rev. Stat. §§ 260.500-260.609 (hazardous substance cleanup and hazardous waste management); Mo. Rev. Stat. §§ 260.900-260.965 (dry-cleaning facilities); Missouri Air Conservation Law (Mo. Rev. Stat. Chapter 643); Missouri Clean Water Law (Mo. Rev. Stat. Chapter 644); Missouri Underground Storage Tank Regulation (Mo. Rev. Stat. §§ 319.100-319.137) and the amendments, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time; and all other state, county, municipal, local or other laws, ordinances or regulations which relate to protection of human health and the environment, or to management or clean-up of Hazardous Substances or liability for or costs of the same, and the amendments, administrative rules, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

i.                 With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of New Hampshire:

 

i.              For purposes of any of the Properties in the State of New Hampshire, the term “Environmental Law” shall also include New Hampshire RSA Ch. 21-P:16-24 (Transport of Hazardous Materials and Waste); 125-C (Air Pollution Control); 130-A (Lead Paint Poisoning Prevention and Control); 141-E (Asbestos Management and Control); 146-A (Oil Spillage); 146-C (Underground Storage Facilities); 146-D (Oil Discharge and Disposal Cleanup Fund); 147-A (Hazardous Waste Management); 147-B (Hazardous Waste Cleanup Fund); 277-A (Worker’s Right to Know Act); 485 (N.H. Safe Drinking Water Act); and 485-A (Water Pollution and Waste Disposal), each as amended.

 

j.                 With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of New Jersey:

 

i.              For purposes of any of the Properties in the State of New Jersey, the term “Environmental Law” shall also include the Spill Compensation Control Act, N.J.S.A. 58:10-23.11 et seq.; the Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq.; the Solid Waste Management Act, N.J.S.A. 13:1E-1, et seq.; and the Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq. and the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., and their implementing regulations at N.J.A.C. 7:26B-1.1 et seq.;  N.J.A.C. 7:26C-1.1 et seq.; and N.J.A.C. 7:26E-1.1, et seq., each as amended.

 

24

 

 

 

k.                  With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of New Mexico:

 

i.                        For purposes of any of the Properties in the State of New Mexico, the term “Environmental Law” shall also include the Environmental Improvement Act, NMSA 1978, Section 74-1-1 et seq,; the Air Quality Control Act, NMSA 1978, Sections 74-2-1 et seq.; the Hazardous Waste Act, NMSA 1978, Sections 74-4-1 et seq.; the Water Quality Act, NMSA 1978, Sections 74-6-1 et seq.; and the Ground Water Protection Act, NMSA 1978, Sections 74-6B-1, et seq.; each as amended and the rules and regulations promulgated pursuant thereto; and all other state, county, municipal, local or other laws, ordinances or regulations which may relate to or deal with protection of human health or the environment in the State of New Mexico, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment, and the amendments, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

ii.                        To the extent applicable, if at all, the indemnifications set forth in this Agreement and the other agreements related hereto are limited by and subject to the provisions of NMSA 1978, Section 56-7-1 (2005), as amended from time to time.

 

l.                    With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the Commonwealth of Pennsylvania:

 

i.                        For purposes of any of the Properties in the Commonwealth of Pennsylvania, the term “Environmental Law” shall also include, without limitation, the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. 6020.101 et seq.; the Pennsylvania Solid Waste Management Act, 35 P.S. 6018.101 et seq.; the Pennsylvania Clean Streams Law, 35 P.S. 691.1 et seq.; the Pennsylvania Storage Tank and Spill Prevention Act, 35 P.S. 6021.101 et seq.; the Pennsylvania Sewage Facilities Act, 35 P.S. 750.1 et seq.; and the Pennsylvania Dam Safety and Encroachments Act, 32 P.S. 693.1 et seq.

 

m.                With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Rhode Island:

 

i.                        For purposes of any of the Properties in the State of Rhode Island, the term “Environmental Law” shall include, without limitation, any analogs of the aforementioned federal statutes under Rhode Island law, the Hazardous Materials Management Act, R.I.G.L. §23-19.1-1 et seq., the Industrial Property Remediation and Reuse Act, R.I.G.L. §23-19.14-1 et seq., the Air Pollution Act, R.I.G.L. §23-23-1 et seq., the Hazardous Substances Act, R.I.G.L. §23-24-1 et seq., each as amended and any successor thereto, and any regulations or guidance promulgated (pursuant to the aforementioned laws or otherwise) by the Rhode Island Department of Environmental Management.

 

25

 

 

n.                  With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of South Carolina:

 

i.                        For purposes of any of the Properties in the State of South Carolina, the term “Environmental Law” shall also include the South Carolina Pollution Control Act, S.C. Code Ann. Section 48-1-10 et seq.

 

ii.                        INDEMNITOR HEREBY WAIVES AND RELINQUISHES ANY AND ALL STATUTORY APPRAISAL RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUED OF THE INDIVIDUAL PROPERTY AND/OR PROPERTIES.

 

iii.                        INDEMNITOR ACKNOWLEDGES AND AFFIRMS THAT IT RECEIVED WRITTEN NOTIFICATION BEFORE THE TRANSACTION THAT A WAIVER OF STATUTORY APPRAISAL RIGHTS WAS REQUIRED IN ACCORDANCE WITH THE PROVISIONS OF S.C. CODE ANN. SECTION 29-3-680.

 

o.                  With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of South Dakota:

 

i.                        For purposes of any of the Properties in the State of South Dakota, the term “Environmental Law” shall also include SDCL Chapter 34A-1 (Air Pollution Control), SDCL Chapter 34A-2 (Water Pollution Control), SDCL Chapter 34A-6 (Solid Waste Management), the South Dakota Environmental Protection Act of 1973 (SDCL Chapter 34A-10), SDCL Chapter 34A-11 (Hazardous Waste Management), SDCL Chapter 34A-12 (Regulated Substance Discharges) and the Petroleum Inspection and Release Compensation Act (SDCL Chapter 34A-13), together with all applicable rules, regulations and requirements of the South Dakota Codified Laws relating to each statutory authority, and all other state, county, municipal, local or other law, ordinance or regulation which may relate to or deal with protection of human health or the environment in the State of South Dakota, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment, and the amendments, administrative rules, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

p.                  With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Texas:

 

i.                        For purposes of any of the Properties in the State of Texas, the term “Environmental Law” shall include and any corresponding state laws or ordinances including but not limited to the Texas Water Code § 26.001 et seq.; Texas Health & Safety Code § 361.001 et seq.; and Texas Solid Waste Disposal Act, Tex. Rev. Civ. Stat. Ann. art. 4477-7.

 

26

 

 

q.                  With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the Commonwealth of Virginia:

 

i.                        For purposes of any of the Properties situated in whole or in part in the Commonwealth of Virginia, the term “Environmental Law” shall also include without limitation (i) the regulatory requirements of the Virginia Department of Environmental Quality, the Virginia Air Pollution Control Board, the Virginia Resources Authority, and the Virginia Gas and Oil Board; (ii) the provisions of Title 62.1 of the Virginia Code (Waters of the State, Ports and Harbors); (iii) the Virginia Air Pollution Control Board laws (Va. Code § 10.1-1300 to § 10.1-1327); (iv) the Virginia Water Quality Improvement Act of 1997 (Va. Code § 10.1-2117 to § 10.1-2134.1); (v) the Virginia Waste Management Act (Va. Code § 10.1-1400 to § 10.1-1458); and the Virginia Gas and Oil Act (Va. Code § 45.1-361.1 to Va. Code § 45.1-361.44); together with all applicable rules, regulations and requirements of the Virginia Administrative Code relating to each statutory authority, and all other state, county, municipal, local or other law, ordinance or regulation which may relate to or deal with protection of human health or the environment in the Commonwealth of Virginia, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment, and the amendments, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

ii.                        Indemnitor specifically waives the provisions of Section 49-25 and 49-26 of the Code of Virginia, as amended.

 

r.                    With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of West Virginia:

 

i.                        For the purposes of any of the Properties situated in whole or in part in the State of West Virginia, the term “Environmental Law” shall also include without limitation (i) the comprehensive regulatory requirements of the West Virginia Department of Environmental Protection, (ii) the provisions of Chapter 22 of the West Virginia Code, as amended, (iii) The Water Pollution Control Act, W.Va. Code §22-11-1, et seq., (iv) The Ground Water Protection Act, W.Va. Code §22-12-1, et seq.,(v) The Solid Waste Management Act, W.Va. Code §22-15-1, et seq., The Underground Storage Tank Act, W.Va. Code §22-17-1, et seq., (vi) The Hazardous Waste Management Act, W.Va. Code §22-18-1, et seq., (vii) The Water Resources Protection and Management Act, W.Va. Code §22-26-1, et seq., (viii) The Aboveground Storage Tank Act, W.Va. Code §22-30-1, et seq., (ix) Provisions Limiting The Civil Liability of the Possessor of Real Property for Certain Hazards; W.Va. Code §55-7-28, (x) together with all other Statutes governing Hazardous Substances in West Virginia and all applicable rules, regulations and requirement of the West Virginia Code relating to each such statutory authority and the general authority of the West Virginia Department of Environmental Protection, and all other State, county, municipal, local or other laws, ordinances, and regulations which may relate or deal with protection of human health or the environment in the State of West Virginia, relating to Hazardous Substances or relating to liability for or cause of other actual or threatened danger to human health or the environment, and the amendments, regulations, orders, decrees, permits, licenses, guidance documents, provisions in an deeds in the chain of title affecting the Properties or any other such regulations and statutes as hereafter promulgated and applicable to Hazardous Substances as all may be amended from time to time; and

 

27

 

 

ii.                        Indemnitor specifically agrees that this Agreement is not subject to the provisions of the Uniform Environmental Covenants Act, W.Va. Code §22-22B-1, et seq.

 

s.                   With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Wisconsin:

 

i.                        For purposes of any of the Properties in the State of Wisconsin, the term “Environmental Law” shall also include Chapter 23, Chapter 30, Chapter 160, Chapter 168, Chapter 254 and Chapters 280 to 299 of the Wisconsin Statutes, Chapters NR 100 to 800 of the Wisconsin Administrative Code, Chapter ATCP 93 of the Wisconsin Administrative Code, and all other state, county, municipal, local or other law, ordinance or regulation which may relate to or deal with protection of human health or the environment in the State of Wisconsin, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment, and the amendments, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

t.                    With respect to the foregoing provisions contained in this Agreement, the following shall apply with respect to the State of Wyoming:

 

i.                        For purposes of any of the Properties in the State of Wyoming, the term “Environmental Law” shall also include Wyoming Statutes Sections 35-11-101 through 35-11-2001, and all other state, county, municipal, local or other law, ordinance or regulation which may relate to or deal with protection of human health or the environment in the State of Wyoming, relating to Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment, and the amendments, regulations, orders, decrees, permits, licenses, guidance documents or deeds now or hereafter promulgated thereunder, as applicable, all as amended from time to time.

 

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IN WITNESS WHEREOF, this Agreement has been executed by Indemnitor and is effective as of the day and year first above written.

 

   

BORROWER:

 

ARC AAANGIN001, LLC

ARC AABNLFL001, LLC

ARC AATNTMA001, LLC

ARC AAWSNGA001, LLC

ARC ABHNDMS001, LLC

ARC AMWNRKY001, LLC

ARC ARERIPA001, LLC

ARC ARVIRMN001, LLC

ARC AZCROMI001, LLC

ARC AZCTOLA001, LLC

ARC AZTMPGA001, LLC

ARC BFFTMFL001, LLC

ARC BKMST41001, LLC

ARC CBDTNPA001, LLC

ARC CBLDLPA001, LLC

ARC CBLMAPA001, LLC

ARC CBPHLPA001, LLC

ARC CBPHLPA002, LLC

ARC CBPHLPA003, LLC

ARC CBPHLPA004, LLC

ARC CBRBRPA001, LLC

ARC CBWNEPA001, LLC

ARC CHLKJTX001, LLC

ARC CHVCTTX001, LLC

ARC CKMST19001, LLC

ARC CVANSAL001, LLC

ARC CVHYKMA001, LLC, each a Delaware limited liability company

 

  By: /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

   

ARC DGATHMI001, LLC

ARC DGBGLLA001, LLC

ARC DGBKHMS001, LLC

ARC DGBNBGA001, LLC

ARC DGCHEOK001, LLC

ARC DGCMBMS001, LLC

ARC DGDNDLA001, LLC

ARC DGDVLLA001, LLC

ARC DGFHLLA001, LLC

ARC DGFLRMI001, LLC

ARC DGFRTMS001, LLC

ARC DGFTSAR001, LLC

ARC DGGNWLA001, LLC

ARC DGGSBVA001, LLC

ARC DGGVLMS002, LLC

ARC DGHBKLA001, LLC

ARC DGHDNMI001, LLC

ARC DGHTGWV001, LLC

ARC DGHTSAR001, LLC

ARC DGLAFTN001, LLC

ARC DGLCRMN002, LLC

ARC DGMBLAR001, LLC

ARC DGMKNMI001, LLC

ARC DGMRALA001, LLC

ARC DGMSNTX002, LLC

ARC DGNTALA001, LLC

ARC DGRLFMS001, LLC

ARC DGRSEMI001, LLC

ARC DGRYLAR001, LLC

ARC DGSRBMO001, LLC

ARC DGSTNVA001, LLC

ARC DGSVNMO001, LLC

ARC DGTLSLA001, LLC

ARC DGVDRTX001, LLC

ARC DGVNLTN001, LLC

ARC DGWPTMS001, LLC

ARC DGWRNIN001, LLC

ARC DGWSNNY001, LLC, each a Delaware limited liability company

 

  By: /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

   

ARC FDBRNLA001, LLC

ARC FDBTLKY001, LLC

ARC FDCHLID001, LLC

ARC FDCRLMO001, LLC

ARC FDDNVAR001, LLC

ARC FDDXRNM001, LLC

ARC FDFNTPA001, LLC

ARC FDHCRTX001, LLC

ARC FDKRMCO001, LLC

ARC FDOCYLA001, LLC

ARC FDPLSTX001, LLC

ARC FDWLDCO001, LLC

ARC FEBSMND001, LLC

ARC FECNBIA001, LLC

ARC FEEGLWI001, LLC

ARC FEGRFND001, LLC

ARC FELELMS001, LLC

ARC FESOUIA001, LLC

ARC FEWAUWI001, LLC

ARC FEWTNSD001, LLC

ARC FLCLTNC001, LLC

ARC FMMTCNJ001, LLC

ARC FMMTVAL001, LLC

ARC FMSNHPA001, LLC

ARC HR5BEIL001, LLC

ARC HR5BIAL001, LLC

ARC HR5BPMN001, LLC

ARC HR5CURI001, LLC

ARC HR5CVGA001, LLC

ARC HR5DOGA001, LLC

ARC HR5GAGA001, LLC

ARC HR5GASC001, LLC

ARC HR5HASC001, LLC

ARC HR5MSSE001, LLC

ARC HR5PEGA001, LLC

ARC HR5PISC001, LLC

ARC HR5SINJ001, LLC

ARC HR5SOCT001, LLC

ARC HR5VAGA001, LLC

ARC HR5ZUMN001, LLC, each a Delaware limited liability company

  

  By: /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

   

ARC LWAKNSC001, LLC

ARC LWFYTNC001, LLC

ARC LWMCNGA001, LLC

ARC LWNBNNC001, LLC

ARC LWRMTNC001, LLC

ARC MFKXVTN002, LLC

ARC ORMNTWI001, LLC

ARC TKLWSFL001, LLC

ARC TPEGPTX001, LLC

ARC TSHRLKY001, LLC

ARC TSHTNMI001, LLC

ARC TSVRNCT001, LLC

ARC WGBEATX001, LLC

ARC WGGLTWY001, LLC

ARC WGLNSMI001, LLC

ARC WGOKCOK001, LLC

ARC WGTKRGA001, LLC

ARG AA12PCK001, LLC

ARG AA14PCK001, LLC

ARG CCFAYNC001, LLC

ARG CCLTZFL001, LLC

ARG CCNLVTX001, LLC

ARG CCPBLCO01, LLC

ARG CHDUBGA001, LLC

ARG DDEPOTX001, LLC

ARG DGBRWKY001, LLC

ARG DGCLKIA001, LLC

ARG DGCSTKY001, LLC

ARG DGCTSMI001, LLC

ARG DGELKKY001, LLC

ARG DGFLSKY001, LLC

ARG DGLCNMI001, LLC

ARG DGSDLKY001, LLC

ARG DI51PCK001, LLC

ARG DNMGCIN001, LLC, each a Delaware limited liability company

 

  By: /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

   

ARG FMATHTX001, LLC

ARG FMBKHMS001, LLC

ARG FMCHIIL001, LLC

ARG FMCTVMS001, LLC

ARG FMIDBOK001, LLC

ARG FMTYLTX001, LLC

ARG IM12PKSLB001, LLC

ARG ME19PCK001, LLC

ARG MESMOAR001, LLC

ARG PH14SLB001, LLC

ARG ATCHTTN001, LLC

ARG 1CBHGNJ001, LLC

ARG OCPOOL2001, LLC

ARG OCPOOL4001, LLC

ARG WLGREFI001, LLC, each a Delaware limited liability company

 

  By: /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

 

 

 

  PRINCIPAL:
   
  AMERICAN FINANCE OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership
   
  By:  American Finance Trust, Inc., a Maryland corporation, its General Partner
   
  By:   /s/Michael Anderson
    Name: Michael Anderson
    Title: Authorized Signatory

 

[Signature Page to Environmental Indemnity Agreement]

 

 

 

 

Exhibit 10.4

 

PROPERTY MANAGEMENT AND LEASING AGREEMENT

 

This Property Management and Leasing Agreement (this “Management Agreement”) is made and entered into as of July 24, 2020 (the “Effective Date”), by and among the parties identified on Exhibit A attached hereto (collectively, “Owner”), and AMERICAN FINANCE PROPERTIES, LLC, a Delaware limited liability company (the “Manager”).

 

WHEREAS, the Owner desires to retain the Manager to manage and coordinate the leasing of the real property owned by the Owner and identified on Exhibit A hereto (collectively, the “Property”), and the Manager desires to be so retained, all under the terms and conditions set forth in this Management Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Except as otherwise specified or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Management Agreement:

 

1.1       “Account” has the meaning set forth in Section 2.3(i) hereof.

 

1.2       “Affiliate” means with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. For purposes of this definition, the terms “controls,” “is controlled by,” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership or voting rights, by contract or otherwise. 

 

1.3       “Budget” has the meaning set forth in Section 2.5(c) hereof.

 

1.4       “Effective Date” has the meaning set forth in the preamble.

 

1.5       Intentionally Omitted.

 

1.6       “Improvements” means buildings, structures, equipment from time to time located on the Property and all parking and common areas located on the Property.

 

1.7       “Independent Manager” has the meaning set forth in the Limited Liability Company Agreement.

 

1.8       “Limited Liability Company Agreement” shall mean, collectively, the limited liability company Agreements of each Owner, as such agreements may be amended, restated or otherwise modified.

 

 

 

 

1.9       “Owner” has the meaning set forth in the preamble.

 

1.10       “Ownership Agreements” has the meaning set forth in Section 2.3(k) hereof.

 

1.11       “Person” means an individual, corporation, partnership, joint venture, association, company (whether of limited liability or otherwise), trust, bank or other entity, or government or any agency or political subdivision of a government.

 

1.12       “Plan” has the meaning set forth in Section 2.5(c) hereof.

 

1.13       “Property” has the meaning set forth in the preamble.

 

1.14       “Term” has the meaning set forth in Section 5.1 hereof.

 

 

ARTICLE II

 

APPOINTMENT OF THE MANAGER; SERVICES TO BE PERFORMED

 

2.1       Appointment of the Manager. The Owner hereby engages and retains the Manager as the sole and exclusive manager and agent of the Property, and the Manager hereby accepts such appointment, all on the terms and conditions hereinafter set forth, it being understood that this Management Agreement shall cause the Manager to be, at law, the Owner’s agent upon the terms contained herein.

 

2.2       General Duties. The Manager shall use commercially reasonable efforts in performing its duties hereunder to manage, operate, maintain and lease the Property in a diligent, careful and vigilant manner. The services of the Manager are to be of scope and quality not less than those generally performed by professional property managers of other similar properties in the area. The Manager shall make available to the Owner the full benefit of the judgment, experience and advice of its members and staff with respect to the policies to be pursued by the Owner relating to the operation and leasing of the Property. 

 

2.3       Specific Duties. The Manager’s duties include the following:

 

  (a) Lease Obligations. The Manager shall perform all duties of the landlord under all leases insofar as such duties relate to the operation, maintenance, and day-to-day management of the Property. The Manager shall also provide or cause to be provided, at the Owner’s expense, all services normally provided to tenants of like premises, including, where applicable and without limitation, gas, electricity or other utilities required to be furnished to tenants under leases, normal repairs and maintenance, and cleaning and janitorial service. The Manager shall arrange for and supervise the performance of all installations and improvements in space leased to any tenant which are either expressly required under the terms of the lease of such space or which are customarily provided to tenants.

 

  (b) Maintenance. The Manager shall cause the Property to be maintained in the same manner as similar properties in the area. The Manager’s duties and supervision in this respect shall include, without limitation, cleaning of the interior and the exterior of the Improvements and the public common areas on the Property and the making and supervision of repair, alterations, and decoration of the Improvements, subject to and in strict compliance with this Management Agreement and any applicable leases. Construction and rehabilitation activities undertaken by the Manager, if any, will be limited to activities related to the management, operation, maintenance, and leasing of the Property (e.g., repairs, renovations, and leasehold improvements).

 

 

 

 

  (c) Leasing Functions. The Manager shall coordinate the leasing of the Property and shall negotiate and use its best efforts to secure executed leases from qualified tenants, and to execute same on behalf of the Owner, if requested, for available space in the Property, such leases to be in form and on terms approved by the Owner and the Manager, and to bring about complete leasing of the Property. The Manager shall be responsible for the hiring of all leasing agents, as necessary for the leasing of the Property, and to otherwise oversee and manage the leasing process on behalf of the Owner.

 

  (d) Notice of Violations. The Manager shall forward to the Owner, promptly upon receipt, all notices of violation or other notices from any governmental authority, and board of fire underwriters or any insurance company, and shall make such recommendations regarding compliance with such notice as shall be appropriate.

 

  (e) Personnel. Any personnel hired by the Manager to maintain, operate and lease the Property shall be the employees or independent contractors of the Manager and not of the Owner. The Manager shall use due care in the selection and supervision of such employees or independent contractors. The Manager shall be responsible for the preparation of and shall timely file all payroll tax reports and timely make payments of all withholding and other payroll taxes with respect to each employee.

 

  (f) Utilities and Supplies. The Manager shall enter into or renew contracts for electricity, gas, steam, landscaping, fuel, oil, maintenance and other services as are customarily furnished or rendered in connection with the operation of similar rental property in the area.

 

  (g) Expenses. The Manager shall analyze all bills received for services, work and supplies in connection with maintaining and operating the Property, pay all such bills, and, if requested by the Owner, pay, when due, utility and water charges, sewer rent and assessments, any applicable taxes, including, without limitation, any real estate taxes, and any other amount payable in respect to the Property. All bills shall be paid by the Manager within the time required to obtain discounts, if any. The Owner may from time to time request that the Manager forward certain bills to the Owner promptly after receipt, and the Manager shall comply with any such request. The payment of all bills, real property taxes, assessments, insurance premiums and any other amounts payable with respect to the Property shall be paid out of the Account by the Manager. All expenses shall be billed at net cost (i.e., less all rebates, commissions, discounts and allowances, however designed).

 

  (h) Monies Collected. The Manager shall collect all rent and other monies from tenants and any sums otherwise due to the Owner with respect to the Property in the ordinary course of business. In collecting such monies, the Manager shall inform tenants of the Property that all remittances are to be in the form of a check or money order. The Owner authorizes the Manager to request, demand, collect and provide receipts for all such rent and other monies and to institute legal proceedings in the name of the Owner for the collection thereof and for the dispossession of any tenant in default under its lease.

 

  (i) Banking Accommodations. The Manager shall establish and maintain a separate checking account (the “Account”) for funds relating to the Property. All monies deposited from time to time in the Account shall be deemed to be trust funds and shall be and remain the property of the Owner and shall be withdrawn and disbursed by the Manager for the account of the Owner only as expressly permitted by this Management Agreement for the purposes of performing the obligations of the Manager hereunder. No monies collected by the Manager on the Owner’s behalf shall be commingled with funds of the Manager. The Account shall be maintained, and monies shall be deposited therein and withdrawn therefrom, in accordance with the following:

 

 

 

 

  (i) All sums received from rents and other income from the Property shall be promptly deposited by the Manager in the Account. The Manager shall have the right to designate two (2) or more persons who shall be authorized to draw against the Account, but only for purposes authorized by this Management Agreement.

 

  (ii) All sums due to the Manager hereunder, whether for compensation, reimbursement for expenditures, or otherwise, as herein provided, shall be a charge against the operating revenues of the Property and shall be paid and/or withdrawn by the Manager from the Account prior to the making of any other disbursements therefrom.

 

  (iii) On or before the 30th day following the end of each calendar quarter during the Term of this Management Agreement, the Manager shall forward to the Owner all net operating proceeds from the preceding quarter, retaining at all times, however, a reserve of $5,000, in addition to any other amounts otherwise provided in the Budget.

 

  (j) Tenant Complaints. The Manager shall maintain business-like relations with the tenants of the Property.

 

  (k) Ownership Agreements. The Manager has received copies of the Limited Liability Company Agreement and the other constitutive documents of the Owner (collectively, the “Ownership Agreements”) and is familiar with the terms thereof. The Manager shall use reasonable care to avoid any act or omission which, in the performance of its duties hereunder, shall in any way conflict with the terms of the Ownership Agreements.

 

  (l) Signs. The Manager shall place and remove, or cause to be placed and removed, such signs upon the Property as the Manager deems appropriate, subject, however, to the terms and conditions of the leases and to any applicable ordinances and regulations.

 

2.4       Approval of Leases, Contracts, Etc. In fulfilling its duties to the Owner, the Manager may and hereby is authorized to enter into any leases, contracts or agreements on behalf of the Owner in the ordinary course of the management, operation, maintenance and leasing of the Property.

 

2.5       Accounting, Records and Reports.

 

  (a) Records. The Manager shall maintain all office records and books of account and shall record therein, and keep copies of, each invoice received from services, work and supplies ordered in connection with the maintenance and operation of the Property. Such records shall be maintained on a double entry basis. The Owner and persons designated by the Owner shall at all reasonable times have access to and the right to audit and make independent examinations of such records, books and accounts and all vouchers, files and all other material pertaining to the Property and this Management Agreement, all of which the Manager agrees to keep safe, available and separate from any records not pertaining to the Property, at a place recommended by the Manager and approved by the Owner.

  

 

 

 

  (b) Quarterly Reports. On or before the 30th day following the end of each calendar quarter during the Term of this Management Agreement, the Manager shall prepare and submit to the Owner the following reports and statements:

 

  (i) Rental collection record;

 

  (ii) Quarterly operating statement;

 

  (iii) Copy of cash disbursements ledger entries for such period, if requested;

 

  (iv) Copy of cash receipts ledger entries for such period, if requested;

 

  (v) The original copies of all contracts entered into by the Manager on behalf of the Owner during such period, if requested; and

 

  (vi) Copy of ledger entries for such period relating to security deposits maintained by the Manager, if requested.

 

  (c) Budgets and Leasing Plans. On or before November 15 of each calendar year, the Manager shall prepare and submit to the Owner for its approval an operating budget (a “Budget”) and a marketing and leasing plan (a “Plan”) on the Property for the calendar year immediately following such submission. Each Budget and Plan shall be in the form approved by the Owner prior to the date thereof. As often as reasonably necessary during the period covered by any Budget or Plan, the Manager may submit to the Owner for its approval an updated Budget or Plan incorporating such changes as shall be necessary to reflect cost overruns and the like during such period. If the Owner does not disapprove a Budget or Plan within thirty (30) days after receipt thereof by the Owner, such Budget or Plan shall be deemed approved. If the Owner shall disapprove any Budget or Plan, it shall so notify the Manager within said thirty (30) day period and explain the reasons therefor. The Manager will not incur any costs other than those estimated in an approved Budget except for:

 

  (i) maintenance or repair costs under $5,000 per Property;

 

  (ii) costs incurred in emergency situations in which action is immediately necessary for the preservation or safety of the Property, or for the safety of occupants or other persons on the Property (or to avoid the suspension of any necessary service of the Property);

 

  (iii) expenditures for real estate taxes and assessments; and

 

  (iv) maintenance supplies calling for an aggregate purchase price of less than $25,000 for all Property.

 

  (d) Returns Required by Law. The Manager shall execute and file when due all forms, reports, and returns required by law relating to the employment of its personnel.

 

  (e) Notices. Promptly after receipt, the Manager shall deliver to the Owner all notices, from any tenant, or any governmental authority, that are not of a routine nature. The Manager shall also report expeditiously to the Owner notice of any extensive damage to any part of the Property.

  

 

 

 

ARTICLE III

 

EXPENSES

 

3.1       Owner’s Expenses. Except as otherwise specifically provided, all costs and expenses incurred hereunder by the Manager in fulfilling its duties to the Owner shall be for the account of and on behalf of the Owner. Such costs and expenses may include, without limitation, reasonable wages and salaries and other employee-related expenses of all on-site and off-site employees of the Manager who are engaged in the operation, management, maintenance and leasing of the Property, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses which are directly related to the operation, management, maintenance and leasing of specific Property. All costs and expenses for which the Owner is responsible under this Management Agreement shall be paid by the Manager out of the Account. In the event the Account does not contain sufficient funds to pay all of the costs and expenses, the Owner shall fund all sums necessary to meet such additional costs and expenses.

 

3.2       Manager’s Expenses. The Manager shall, out of its own funds, pay all of its general overhead and administrative expenses.

 

ARTICLE IV

 

INSURANCE AND INDEMNIFICATION

 

4.1       Insurance to be Carried.

 

  (a) The Manager shall obtain and keep in full force and effect insurance on the Property against such hazards as the Owner and the Manager shall deem appropriate, but in any event, insurance sufficient to comply with the leases and the Ownership Agreements shall be maintained. All liability policies shall provide sufficient insurance satisfactory to both the Owner and the Manager and shall contain waivers of subrogation for the benefit of the Manager.

 

  (b) The Manager shall obtain and keep in full force and effect, in accordance with the laws of the state in which each Property is located, employer’s liability insurance applicable to and covering all employees of the Manager at the Property and all persons engaged in the performance of any work required hereunder, and the Manager shall furnish the Owner certificates of insurers naming the Owner as a co-insured and evidencing that such insurance is in effect.

  

4.2       Cooperation with Insurers. The Manager shall cooperate with and provide reasonable access to the Property to representatives of insurance companies and insurance brokers or agents with respect to insurance which is in effect or for which application has been made. The Manager shall use its best efforts to comply with all requirements of insurers.

 

4.3       Accidents and Claims. The Manager shall promptly investigate and report in detail to the Owner all accidents, claims for damage relating to the ownership, operation or maintenance of the Property, and any damage or destruction to the Property and the estimated costs of repair thereof, and shall prepare for approval by the Owner all reports required by an insurance company in connection with any such accident, claim, damage, or destruction. Such reports shall be given to the Owner promptly and any report not so given within ten (10) days after the occurrence of any such accident, claim, damage or destruction shall be noted in the report delivered to the Owner pursuant to Section 2.5(b). The Manager is authorized to settle any claim against an insurance company arising out of any policy and, in connection with such claim, to execute proofs of loss and adjustments of loss and to collect and provide receipts for loss proceeds.

 

 

 

 

4.4       Indemnification. The Manager shall hold the Owner harmless from and indemnify and defend the Owner against any and all claims or liability for any injury or damage to any person or property whatsoever for which the Manager is responsible occurring in, on, or about the Property, including, without limitation, the Improvements when such injury or damage is caused by the negligence or misconduct of the Manager, its agents, servants, or employees, except to the extent that the Owner recovers insurance proceeds with respect to such matter. The Owner will indemnify and hold the Manager harmless against all liability for injury to persons and damage to property caused by the Owner’s negligence and which did not result from the negligence or misconduct of the Manager, except to the extent the Manager recovers insurance proceeds with respect to such matter.

 

ARTICLE V

 

TERM; TERMINATION

 

5.1       Term. This Management Agreement shall commence on the Effective Date and shall continue until terminated in accordance with the earliest to occur of the following (such period, inclusive of any extensions thereof, the “Term”):

 

(a) July 24, 2022. However, the Term of this Management Agreement will be automatically renewed for an unlimited number of successive one (1) year periods thereafter, subject to earlier termination as hereinafter provided;

 

  (b) Immediately upon the occurrence of any of the following:

  

 

(i)

Either the Owner or the Manager delivers written notice to the other party at least sixty (60) days prior to the end of any Term; for the avoidance of doubt, the effective date of any such termination shall be the last day of the Term in which such notice is given;

 

 

(ii)

A decree or order is rendered by a court having jurisdiction (A) adjudging the Manager as bankrupt or insolvent, (B) approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition or similar relief for the Manager under the federal bankruptcy laws or any similar applicable law or practice, or (C) appointing a receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the Manager or a substantial part of the Manager’s assets, or for the winding up or liquidation of its affairs, or

 

  (iii) The Manager (A) voluntarily institutes proceedings to be adjudicated bankrupt or insolvent, (B) consents to the filing of a bankruptcy proceeding against it, (C) files a petition, answer or consent seeking reorganization, readjustment, arrangement, composition or relief under any similar applicable law or practice, (D) consents to the filing of any such petition, or to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency for it or for a substantial part of its assets, (E) makes an assignment for the benefit of creditors, (F) is unable to or admits in writing its inability to pay its debts generally as they become due, unless such inability shall be the fault of the Owner, or (G) takes corporate or other action in furtherance of any of the aforesaid purposes; and

  

 

 

 

  (c) Upon written notice from the Owner in the event that the Manager commits an act of gross negligence or willful misconduct in the performance of its duties hereunder.

 

The Term of this Management Agreement may be extended for such additional periods of time as the parties agree to in writing. Upon termination, the obligations of the parties hereto shall cease; provided, however; that the Manager shall comply with the provisions hereof applicable in the event of termination and shall be entitled to receive all compensation which may be due to the Manager hereunder up to the date of such termination; provided, further, however; that if this Management Agreement terminates pursuant to clauses (b) or (c) of this Section 5.1, the Owner shall have other remedies as may be available at law or in equity.

 

5.2       Manager’s Obligations after Termination. Upon the termination of this Management Agreement, the Manager shall have the following duties:

 

  (a) The Manager shall deliver to the Owner, or its designee, all books and records with respect to the Property.

 

  (b) The Manager shall transfer and assign to the Owner, or its designee, all service contracts and personal property relating to or used in the operation and maintenance of the Property, except personal property paid for and owned by the Manager. Manager shall also, for a period of sixty (60) days immediately following the date of such termination, make itself available to consult with and advise the Owner, or its designee, regarding the operation, maintenance and leasing of the Property.

 

  (c) The Manager shall render to the Owner an accounting of all funds of the Owner in its possession and shall cause funds of the Owner held by the Manager relating to the Property to be paid to the Owner or its designee.

 

  (d) The Manager shall cooperate with the Owner to provide an orderly transition of the Manager’s duties hereunder.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.1       Notices. All notices, approvals, consents and other communications hereunder shall be in writing, and, except when receipt is required to start the running of a period of time, shall be deemed given when delivered in person or on the fifth day after its mailing by either party by registered or certified United States mail, postage prepaid and return receipt requested, to the other party, at the addresses set forth after their respect name below or at such different addresses as either party shall have theretofore advised the other party in writing in accordance with this Section 6.1.

 

To the Owner:

[Applicable Owner Name]

c/o American Finance Trust, Inc.
38 Washington Square

Newport, RI 02840
Attention: Asset Management

 

 

 

 

 

 

with a copy to:

 

[Applicable Owner Name]

c/o American Finance Trust, Inc.
650 Fifth Avenue
New York, NY 10019
Attention: Legal Department

 

 
To the Manager:

American Finance Properties, LLC
650 Fifth Avenue
New York, NY 10019
Attention: Property Management

 

6.2       Governing Law. This Management Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of law thereof.

 

6.3       Assignment. This Management Agreement may not be assigned by the Manager, except to an Affiliate of the Manager, and then only upon the consent of the Owner and the approval of the Independent Manager. Any assignee of the Manager shall be bound hereunder to the same extent as the Manager. This Agreement shall not be assigned by the Owner without the written consent of the Manager, except to a Person which is a successor to such Owner. Such successor shall be bound hereunder to the same extent as such Owner. Notwithstanding anything to the contrary contained herein, the economic rights of the Manager hereunder, including the right to receive all compensation hereunder, may be sold, transferred or assigned by the Manager without the consent of the Owner.

 

6.4       No Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Management Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrences. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

6.5       Amendments. This Management Agreement may be amended only by an instrument in writing signed by the party against whom enforcement of the amendment is sought. 

 

6.6       Headings. The headings of the various subdivisions of this Management Agreement are for reference only and shall not define or limit any of the terms or provisions hereof.

 

6.7       Counterparts. This Management Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.

 

6.8       Entire Agreement. This Management Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.

 

 

 

 

6.9       Disputes. If there shall be a dispute between the Owner and the Manager relating to this Management Agreement resulting in litigation, the prevailing party in such litigation shall be entitled to recover from the other party to such litigation such amount as the court shall fix as reasonable attorneys’ fees.

 

6.10       Activities of the Manager. The obligations of the Manager pursuant to the terms and provisions of this Management Agreement shall not be construed to preclude the Manager from engaging in other activities or business ventures, whether or not such other activities or ventures are in competition with the Owner or the business of the Owner.

 

6.11       Independent Contractor. The Manager and the Owner shall not be construed as joint venturers or partners of each other pursuant to this Management Agreement, and neither party shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of the Manager to the Owner under this Management Agreement is that of an independent contractor.

 

6.12       Pronouns and Plurals. Whenever the context may require, any pronoun used in this Management Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

 

 

[Remainder of page intentionally left blank] 

 

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Property Management and Leasing Agreement as of the date first above written. 

 

  OWNER:
   
  

ARC AAANGIN001, LLC, ARC AABNLFL001, LLC,

ARC AATNTMA001, LLC, ARC AAWSNGA001, LLC,

ARC ABHNDMS001, LLC, ARC ARERIPA001, LLC,

ARC ARVIRMN001, LLC, ARC AZCROMI001, LLC,

ARC AZCTOLA001, LLC, ARC AZTMPGA001, LLC,

ARC BFFTMFL001, LLC, ARC BKMST41001, LLC

ARC CBDTNPA001, LLC, ARC CBLDLPA001, LLC,

ARC CBLMAPA001, LLC, ARC CBPHLPA001, LLC,

ARC CBPHLPA002, LLC, ARC CBPHLPA003, LLC

ARC CBPHLPA004, LLC, ARC CBRBRPA001, LLC,

ARC CBWNEPA001, LLC, ARC CHLKJTX001, LLC,

ARC CHVCTTX001, LLC, ARC CKMST19001, LLC,

ARC CVANSAL001, LLC, ARC CVHYKMA001, LLC,

ARC DGATHMI001, LLC, ARC DGBGLLA001, LLC,

ARC DGBKHMS001, LLC, ARC DGBNBGA001, LLC,

ARC DGCHEOK001, LLC, ARC DGCMBMS001, LLC,

ARC DGDNDLA001, LLC, ARC DGDVLLA001, LLC,

ARC DGFHLLA001, LLC, ARC DGFLRMI001, LLC,

ARC DGFRTMS001, LLC, ARC DGFTSAR001, LLC,

ARC DGGNWLA001, LLC, ARC DGGSBVA001, LLC,

ARC DGGVLMS002, LLC, ARC DGHBKLA001, LLC,

ARC DGHDNMI001, LLC, ARC DGHTGWV001, LLC,

ARC DGHTSAR001, LLC, ARC DGLAFTN001, LLC,

ARC DGLCRMN002, LLC, ARC DGMBLAR001, LLC,

ARC DGMKNMI001, LLC, ARC DGMRALA001, LLC,

ARC DGMSNTX002, LLC, ARC DGNTALA001, LLC,

ARC DGRLFMS001, LLC, ARC DGRSEMI001, LLC,

ARC DGRYLAR001, LLC

   
   
 By:/s/ Michael Anderson

Name: Michael Anderson
Title:   Authorized Signatory

 

 

 

[Signatures Continue]

 

 

 

  

  OWNER:
   
  

ARC DGSRBMO001, LLC, ARC DGSTNVA001, LLC,

ARC DGSVNMO001, LLC, ARC DGTLSLA001, LLC,

ARC DGVDRTX001, LLC, ARC DGVNLTN001, LLC,

ARC DGWPTMS001, LLC, ARC DGWRNIN001, LLC,

ARC DGWSNNY001, LLC, ARC FDBRNLA001, LLC,

ARC FDBTLKY001, LLC, ARC FDCHLID001, LLC,

ARC FDCRLMO001, LLC, ARC FDDNVAR001, LLC,

ARC FDDXRNM001, LLC, ARC FDFNTPA001, LLC,

ARC FDHCRTX001, LLC, ARC FDKRMCO001, LLC,

ARC FDOCYLA001, LLC, ARC FDPLSTX001, LLC,

ARC FDWLDCO001, LLC, ARC FEBSMND001, LLC,

ARC FECNBIA001, LLC, ARC FEEGLWI001, LLC,

ARC FEGRFND001, LLC, ARC FELELMS001, LLC,

ARC FESOUIA001, LLC, ARC FEWAUWI001, LLC,

ARC FEWTNSD001, LLC, ARC FLCLTNC001, LLC,

ARC FMMTCNJ001, LLC, ARC FMMTVAL001, LLC,

ARC FMSNHPA001, LLC, ARC HR5BEIL001, LLC,

ARC HR5BIAL001, LLC, ARC HR5BPMN001, LLC,

ARC HR5CURI001, LLC, ARC HR5CVGA001, LLC,

ARC HR5DOGA001, LLC, ARC HR5GAGA001, LLC,

ARC HR5GASC001, LLC, ARC HR5HASC001, LLC,

ARC HR5MSSE001, LLC, ARC HR5PEGA001, LLC,

ARC HR5PISC001, LLC, ARC HR5SINJ001, LLC,

ARC HR5SOCT001, LLC, ARC HR5VAGA001, LLC,

ARC HR5ZUMN001, LLC, ARC LWAKNSC001, LLC,

ARC LWFYTNC001, LLC, ARC LWMCNGA001, LLC,

ARC LWNBNNC001, LLC, ARC LWRMTNC001, LLC

   
 By:/s/ Michael Anderson

Name: Michael Anderson
Title: Authorized Signatory

 

 

 

[Signatures Continue]

 

 

 

 

  OWNER:
   
  

ARC MFKXVTN002, LLC, ARC ORMNTWI001, LLC,

ARC TKLWSFL001, LLC, ARC TPEGPTX001, LLC,

ARC TSHRLKY001, LLC, ARC TSHTNMI001, LLC,

ARC TSVRNCT001, LLC, ARC WGBEATX001, LLC,

ARC WGGLTWY001, LLC, ARC WGLNSMI001, LLC,

ARC WGOKCOK001, LLC, ARC WGTKRGA001, LLC,

ARG AA12PCK001, LLC, ARG AA14PCK001, LLC,

ARG CCFAYNC001, LLC, ARG CCLTZFL001, LLC,

ARG CCNLVTX001, LLC, ARG CCPBLCO01, LLC,

ARG CHDUBGA001, LLC, ARG DDEPOTX001, LLC,

ARG DGBRWKY001, LLC, ARG DGCLKIA001, LLC,

ARG DGCSTKY001, LLC, ARG DGCTSMI001, LLC,

ARG DGELKKY001, LLC, ARG DGFLSKY001, LLC,

ARG DGLCNMI001, LLC, ARG DGSDLKY001, LLC,

ARG DI51PCK001, LLC, ARG DNMGCIN001, LLC,

ARG FMATHTX001, LLC, ARG FMBKHMS001, LLC,

ARG FMCHIIL001, LLC, ARG FMCTVMS001, LLC,

ARG FMIDBOK001, LLC, ARG FMTYLTX001, LLC,

ARG IM12PKSLB001, LLC, ARG ME19PCK001 LLC,

ARG MESMOAR001, LLC, ARG PH14SLB001, LLC,

ARG ATCHTTN001, LLC, ARG 1CBHGNJ001, LLC,

ARG OCPOOL2001, LLC, ARG OCPOOL4001, LLC,

ARG WLGREFI001, LLC,

   
   
 By:/s/ Michael Anderson
Name: Michael Anderson
Title:   Authorized Signatory

 

 

  MANAGER:
   
  AMERICAN FINANCE PROPERTIES, LLC
   
   
 By:/s/ Michael Anderson
Name: Michael Anderson
Title:   Authorized Signatory

 

 

[End of Signatures]

 

 

 

Exhibit 10.5 

 

Third Amendment to Credit Agreement and Consent

 

This Third Amendment to Credit Agreement and Consent (this “Amendment”) is entered into as of July 24, 2020 and effective as of April 1, 2020, among American Finance Operating Partnership, L.P., a Delaware limited partnership (the “Borrower”), Genie Acquisition, LLC, a Delaware limited liability company (“Genie”), as a Guarantor, American Finance Trust, Inc., a Maryland corporation (“AF REIT”), as a Guarantor, the other Guarantors party hereto, the Lenders party hereto, and BMO HARRIS BANK N.A., as administrative agent (in such capacity, the “Administrative Agent”).

 

Preliminary Statements

 

A.            The Borrower, Genie, AF REIT, the other Guarantors party thereto, the Lenders party thereto, and the Administrative Agent have heretofore entered into that certain Credit Agreement dated as of April 26, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement, as amended by the Amendment.

 

B.            The Borrower has requested that the Lenders and the Administrative Agent make certain amendments to the Credit Agreement and consent to certain financial deliveries, and the Lenders and the Administrative Agent are willing to do so under the terms and conditions set forth in this Amendment.

 

C.           This Amendment shall constitute a Loan Document and these Preliminary Statements shall be construed as part of this Amendment.

 

Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1. Amendments to Credit Agreement.

 

Subject to the satisfaction of the conditions precedent set forth in Section 4 below, the Credit Agreement shall be and hereby is amended as follows:

 

The Credit Agreement is hereby amended to delete the struck text (indicated textually in the same manner as the following example:struck text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Annex I hereto, except that any Schedule or Exhibit to the Credit Agreement not amended pursuant to the terms of this Amendment or otherwise included as part of said Annex I shall remain in effect without any amendment or other modification thereof.

 

 

 

 

Section 2. Consent.

 

Subject to the satisfaction of the conditions precedent set forth in Section 4 below, notwithstanding anything to the contrary in the Credit Agreement:

 

(a) any Available Amount Certificate delivered on or after the Third Amendment Closing Date but prior to the delivery of an Available Amount Certificate under Section 8.5(d) for the fiscal quarter ended June 30, 2020 (x) shall state the aggregate principal amount of outstanding Loans and L/C Obligations as of such delivery date, giving pro forma effect to any mandatory or voluntary prepayments of the Obligations made on such delivery date and (y) shall calculate the Available Amount (i) on the terms of the Credit Agreement as amended hereby and (ii) with respect to the calculation of the Implied Unsecured Interest Coverage Ratio, using estimated financial information, as determined by the Borrower in good faith on the basis of information and estimates the Borrower believed to be reasonable on the Third Amendment Closing Date, as of June 30, 2020, and (iii) giving pro forma effect to any permitted Eligible Property additions or deletions made during the period from June 30, 2020 through such delivery date; and

 

(b) the Available Amount Certificate delivered under Section 8.5(d) for the fiscal quarter ended June 30, 2020 (x) shall state the aggregate principal amount of outstanding Loans and L/C Obligations as of the Third Amendment Closing Date (and not, for the sake of clarity, as of June 30, 2020), giving pro forma effect to any mandatory or voluntary prepayments of the Obligations made on the Third Amendment Closing Date and (y) shall calculate the Available Amount using actual financial information as of June 30, 2020 (and not, for the sake of clarity, estimated financial information) giving pro forma effect to any permitted Eligible Property additions or deletions made during the period from June 30, 2020 through the Third Amendment Closing Date.

 

This consent is limited to the matters set forth herein, is a one-time consent, and is not a consent, waiver or amendment of any other provision of the Credit Agreement or any other Loan Document and does not constitute a course of conduct.

 

Section 3. Reaffirmation of Guaranties.

 

Each Guarantor hereby (i) acknowledges and consents to the terms of this Amendment and the Credit Agreement as amended by this Amendment, (ii) confirms that its Guaranty in favor of the Administrative Agent, for the benefit of the Lenders, and all of its obligations thereunder, as amended, remain in full force and effect and (iii) reaffirms all of the terms, provisions, agreements and covenants contained in its Guaranty. Each Guarantor agrees that its consent to any further amendments or modifications to the Credit Agreement and other Loan Documents shall not be required solely as a result of this acknowledgment and consent having been obtained, except to the extent, if any, required by any Guaranty.

 

-2-

 

 

Section 4. Conditions Precedent.

 

The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:

 

4.1.            The Administrative Agent having received this Amendment duly executed by the Borrower, each Guarantor, and the Required Lenders.

 

4.2.            For each Lender who executes this Amendment by 5:00 p.m. (Chicago time) on July 27, 2020, the Borrower shall have paid to the Administrative Agent, for the benefit of such Lender (including BMO Harris Bank N.A., as a Lender), an amendment fee in an amount equal to 0.10% of the aggregate principal amount of such Lender’s Commitment on the date of this Amendment, which amendment fee shall be non-refundable and fully earned, due and payable on the date of this Amendment.

 

4.3.            The Borrower shall have paid to each Joint Lead Arranger, in its capacity as a Joint Lead Arranger, for its own use and benefit, an arrangement fee in an amount equal to 0.05% of the aggregate principal amount of the Commitments of all Lenders on the date of this Amendment, which arrangement fee shall be non-refundable and fully earned, due and payable on the date of this Amendment.

 

4.4.            The Borrower has previously given the Administrative Agent written notice of certain Real Property that it intends to delete from the Unencumbered Pool Property (the “CMBS Property Release”). The CMBS Property Release shall have occurred substantially concurrently herewith and the Administrative Agent shall have received the deliveries required under Section 7.3(d) of the Credit Agreement (as such deliveries may be modified pursuant to Section 2 hereof).

 

Section 5. Representations.

 

In order to induce the Administrative Agent and the Required Lenders to execute and deliver this Amendment, the Borrower, Genie, AF REIT and each other Guarantor hereby represents to the Administrative Agent and the Lenders that (a) after giving effect to this Amendment, the representations and warranties set forth in Section 6 of the Credit Agreement, as amended by this Amendment, are and shall be and remain true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of the date hereof (or, if any such representation and warranty is expressly stated to have been made as of a specific date, as of such specific date) and (b) no Default or Event of Default has occurred and is continuing under the Credit Agreement or shall result after giving effect to this Amendment.

 

-3-

 

 

Section 6. Release.

 

(a)            For value received, including without limitation, the agreements of the Administrative Agent and the Lenders in this Amendment, each Loan Party, on behalf of itself and its successors and assigns, and its current and former shareholders, members, parents, subsidiaries, divisions, affiliates, directors, officers, employees, agents, attorneys, advisors, consultants, and other representatives (collectively, the “Releasing Parties”), hereby absolutely, unconditionally, and irrevocably releases and forever discharges each of the Administrative Agent and the Lenders, and its current and former shareholders, members, parents, subsidiaries, divisions, affiliates, directors, officers, employees, agents, attorneys, advisors, consultants, and other representatives (collectively, the “Released Parties”) of and from any and all claims (including, without limitation, all counterclaims, crossclaims, defenses, rights of set-off and recoupment), actions, causes of action, acts and omissions, controversies, demands, suits, and other liabilities (collectively, the “Claims”) of every kind or nature whatsoever, both in law and in equity, known or unknown, which any Releasing Party has or ever had against the Released Parties prior to, through, and including this date, including, without limitation, Claims arising out of the existing financing arrangements among the Loan Parties, the Administrative Agent, and the Lenders and any Claim of breach of the duty of good faith and fair dealing based on, among other things, the Released Parties’ exercise of discretion under the Loan Documents. Each Loan Party hereby represents and warrants that, on behalf of itself and its successors, assigns and legal representatives, it has not sold, conveyed, assigned, pledged, hypothecated, or otherwise encumbered all or any part of the Claims released in this Section. Each Loan Party hereby acknowledges and agrees that, on behalf of itself and its successors, assigns and legal representatives, the Released Parties have at all times acted in good faith with regard to the consummation and administration of the Loan Documents. Each Loan Party hereby acknowledges and agrees that, as of the date hereof, it does not have any Claim against the Released Parties, each of which such Loan Party, on behalf of itself and its successors, assigns and legal representatives, hereby expressly waives. Each Loan Party hereby confirms that the foregoing waiver and release is an informed waiver and release and is being freely given.

 

(b)            Each Loan Party further agrees, on behalf of itself and its successors, assigns, and legal representatives, not to commence, institute, or prosecute any lawsuit, action or other proceeding, whether judicial, administrative or otherwise, to collect or enforce any Claim. If any Loan Party or any of its successors, assigns, or legal representatives violates the foregoing covenant, the Loan Parties hereby agree, on behalf of themselves and their respective successors and assigns, to pay, in addition to any damages as any Released Party may sustain as a result of such violation, all attorneys fees and costs incurred by any Released party as a result of such violation.

 

-4-

 

 

Section 7. Miscellaneous.

 

7.1.            Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, the other Loan Documents, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

 

7.2.            The Borrower agrees to pay on demand all reasonable costs and out-of-pocket expenses of or incurred by the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment, including the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent.

 

7.3.            This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. This Amendment, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the laws of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations law of the State of New York) without regard to conflicts of law principles that would require application of the laws of another jurisdiction.

 

[Signature Pages Follow]

 

-5-

 

 

This Amendment is entered into as of the date and year first above written.

 

  Borrower:
   
  American Finance Operating
      Partnership
, L.P., a Delaware limited
      partnership

 

By:American Finance Trust, Inc., its general partner
   
By:/s/ Katie P. Kurtz
  Name: Katie P. Kurtz
  Title: Chief Financial Officer, Treasurer and Secretary

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

Guarantors:

 

 American Finance Trust, Inc., a Maryland corporation
   
By:/s/ Katie P. Kurtz
  Name: Katie P. Kurtz
  Title: Chief Financial Officer, Treasurer and Secretary

 

 Genie Acquisition, LLC, a Delaware limited liability company
   
By:/s/ Michael Anderson
  Name: Michael Anderson
  Title: Authorized Signatory

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

  ARC CLORFL001, LLC
   
  ARC NCCHRNC001, LLC
   
  ARC NWNCHSC001, LLC
   
  ARC PSFKFKY001, LLC
   
  ARC SRTULOK001, LLC
   
  ARC SSSDLLA001, LLC
   
  ARC SWHOUTX001, LLC
   
  ARC SWWCHOH001, LLC
   
  ARC SWWMGPA001, LLC
   
  ARC TMMONPA001, LLC
   
  ARC WEMPSMN001, LLC
   
  ARC BHTVCMI001, LLC
   
  ARC FEEGLWI001, LLC
   
  ARC FEGRFND001, LLC
   
  ARC FESOUIA001, LLC
   
  ARC FEWAUWI001, LLC
   
  ARC HR5CSMA002, LLC
   
  ARC LCROWTX001, LLC
   
  ARC PRLAWKS001, LLC
   
  ARC QSOKCOK001, LLC
   
  ARC TCMESTX001, LLC
   
  ARG KGOMHNE001, LLC
   
  ARC TSKCYMO001, LLC
   
  ARG DNMGCIN001, LLC
   
  ARG CCFAYNC001, LLC
   
  ARG CCNLVTX001, LLC
   
  ARG CCLTZFL001, LLC
   
  ARG FMBKHMS001, LLC
   
  ARG FMCTVMS001, LLC
   
  ARG ME19PCK001, LLC
   
  ARG IM12PKSLB001, LLC
   
  ARG PH14SLB001, LLC
   
  ARG FMCHIIL001, LLC
   
  ARG MESMOAR001, LLC
   
  ARG FMIDBOK001, LLC
   
  ARG FMATHTX001, LLC
   
  ARG FMTYLTX001, LLC
   
  ARG CCPBLCO01, LLC
   
  ARC PTSCHIL001, LLC
   
  ARG CHDUBGA001, LLC
   
  ARG DGCSTKY001, LLC
   
  ARG DGFLSKY001, LLC
   
  ARG DGBRWKY001, LLC
   
  ARG DGELKKY001, LLC
   
  ARG DGSDLKY001, LLC
   
  ARG DGLCNMI001, LLC

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

  ARG MCWSLB001, LLC
   
  ARG DGCLKIA001, LLC
   
  ARG DGCTSMI001, LLC
   
  ARG DDEPOTX001, LLC
   
  ARG DI51PCK001, LLC
   
  ARG AA14PCK001, LLC
   
  ARG AA12PCK001, LLC
   
  ARG DDHBLTX001, LLC
   
  ARG PH17SLB001, LLC

 

By:American Finance Operating
Partnership, L.P., its sole member

 

By:American Finance Trust, Inc.,
its general partner

 

By:/s/ Michael Anderson
  Name: Michael Anderson
  Title: Authorized Signatory

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

  Administrative Agent:
   
  BMO Harris Bank N.A.
   

By:/s/ Lloyd Baron
  Name: Lloyd Baron
  Title: Director

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 

  Lenders:
   
  BMO Harris Bank N.A., as a Lender
   
  By: /s/ Lloyd Baron
    Name:   Lloyd Baron
    Title:     Managing Director

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 Citizens Bank, N.A., as a Lender
  
By: /s/ Frank Kaplan
  Name:  Frank Kaplan
  Title:Vice President

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 Truist Bank, as successor by merger to
SunTrust Bank, as a Lender
  
By: /s/ Nick Preston
  Name:  Nick Preston
  Title:Director

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 SOCIÉTÉ GÉNÉRALE, as a Lender
  
By: /s/ John Hogan
  Name:John Hogan
  Title:Director

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 Comerica Bank, as a Lender
  
By: /s/ Charles Weddell
  Name:  Charles Weddell
  Title:Vice President

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

 KeyBank, National Association, as a Lender
  
By: /s/ Sara Jo Smith
  Name:  Sara Jo Smith
  Title:Vice President

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

  BBVA USA, as a Lender
   
  By  /s/ Scott Childs
    Name   Scott Childs
    Title Senior Vice President

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

  Synovus Bank, as a Lender
   
  By /s/ Zachary Braun
    Name   Zachary Braun
    Title Relationship Manager

 

[Signature Page to Third Amendment to Credit Agreement
(American Finance Operating Partnership, L.P.)]

 

 

 

 

Annex I

 

[See attached]

 

 

 

 

 

Annex I to SecondThird Amendment to Credit Agreement

 

 

 

Credit Agreement

 

Dated as of April 26, 2018

 

among

 

American Finance Operating Partnership, L.P.,

as Borrower

 

The Guarantors from Time to Time Party hereto,

 

The Lenders from Time to Time Party Hereto,

 

Citizens Bank, N.A. and, SunTrust Robinson Humphrey, Inc., and BBVA USA

as Syndication Agents

 

and

 

BMO Harris Bank N.A.,
as Administrative Agent

 

 

 

BMO Capital Markets Corp., Citizens Bank, N.A.,
and SunTrust Robinson Humphrey, Inc., and BBVA USA
as Joint Lead Arrangers and Joint Book Runners

 

 

 

 

Table of Contents

 

Section   Heading   Page
         
SECTION 1. The Credit Facility   1
         
Section 1.1. Commitments   1
Section 1.2. Swing Loans   1
Section 1.3. Letters of Credit   3
Section 1.4. Applicable Interest Rates   7
Section 1.5. Minimum Borrowing Amounts; Maximum Eurodollar Loans   9
Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest Rates   9
Section 1.7. Maturity of Loans   11
Section 1.8. Prepayments   11
Section 1.9. Default Rate   12
Section 1.10. Evidence of Indebtedness   13
Section 1.11. Funding Indemnity   13
Section 1.12. Commitment Terminations   14
Section 1.13. Substitution of Lenders   14
Section 1.14. Defaulting Lenders   15
Section 1.15. Increase in Commitments   18
Section 1.16. Extension of Stated Maturity Date   19
       
SECTION 2. Fees   20
         
Section 2.1. Fees   20
       
SECTION 3. Place and Application of Payments   21
         
Section 3.1. Place and Application of Payments   21
Section 3.2. Payments Set Aside   22
Section 3.3. Account Debit   23
       
SECTION 4. Guaranties   23
         
Section 4.1. Guaranties   23
Section 4.2. Further Assurances   23
Section 4.3. Depository Bank   23
       
SECTION 5. Definitions; Interpretation   23
         
Section 5.1. Definitions   23
Section 5.2. Interpretation   52
Section 5.3. Change in Accounting Principles   53
Section 5.4. Non-Wholly Owned Subsidiary Computations   53

  

i

 

 

SECTION 6. Representations and Warranties   53
         
Section 6.1. Organization and Qualification   53
Section 6.2. Subsidiaries   54
Section 6.3. Authority and Validity of Obligations   54
Section 6.4. Use of Proceeds; Margin Stock   55
Section 6.5. Financial Reports   55
Section 6.6. No Material Adverse Change   55
Section 6.7. Full Disclosure   56
Section 6.8. Trademarks, Franchises, and Licenses   56
Section 6.9. Governmental Authority and Licensing   56
Section 6.10. Good Title   56
Section 6.11. Litigation and Other Controversies   57
Section 6.12. Taxes   57
Section 6.13. Approvals   57
Section 6.14. Affiliate Transactions   57
Section 6.15. Investment Company   57
Section 6.16. ERISA   57
Section 6.17. Compliance with Laws   57
Section 6.18. OFAC   58
Section 6.19. Other Agreements   59
Section 6.20. Solvency   59
Section 6.21. No Default   59
Section 6.22. No Broker Fees   59
Section 6.23. Condition of Property; Casualties; Condemnation   59
Section 6.24. Legal Requirements and Zoning   60
Section 6.25. REIT Status   60
       
SECTION 7. Conditions Precedent   60
         
Section 7.1. All Credit Events   60
Section 7.2. Initial Credit Event   61
Section 7.3. Eligible Property Additions and Deletions of Unencumbered Pool Properties   63
Section 7.4. Incentive Listing Note   65
       
SECTION 8. Covenants   65
         
Section 8.1. Maintenance of Existence   65
Section 8.2. Maintenance of Properties   65
Section 8.3. Taxes and Assessments   66
Section 8.4. Insurance   66
Section 8.5. Financial Reports   66
Section 8.6. Inspection   69
Section 8.7. Liens   69
Section 8.8. Investments, Acquisitions, Loans and Advances   69
Section 8.9. Mergers, Consolidations and Sales   71
Section 8.10. Maintenance of Subsidiaries   73
Section 8.11. ERISA   73
Section 8.12. Compliance with Laws   73
Section 8.13. Compliance with OFAC Sanctions Programs and Anti-Corruption Laws   75
Section 8.14. Burdensome Contracts With Affiliates   76
Section 8.15. No Changes in Fiscal Year   76
Section 8.16. Formation of Subsidiaries   76

 

ii

 

 

Section 8.17. Change in the Nature of Business   76
Section 8.18. Use of Proceeds   76
Section 8.19. No Restrictions   76
Section 8.20. Financial Covenants   76
Section 8.21. [Reserved]   77
Section 8.22. Electronic Delivery of Certain Information   77
Section 8.23. REIT Status   78
Section 8.24. Restricted Payments   78
Section 8.25. Management Agreement   80
       
SECTION 9. Events of Default and Remedies   80
         
Section 9.1. Events of Default   80
Section 9.2. Non-Bankruptcy Defaults   83
Section 9.3. Bankruptcy Defaults   83
Section 9.4. Collateral for Undrawn Letters of Credit   83
       
SECTION 10. Change in Circumstances   85
         
Section 10.1. Change of Law   85
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR   85
Section 10.3. Increased Cost and Reduced Return   86
Section 10.4. Lending Offices   88
Section 10.5. Discretion of Lender as to Manner of Funding   88
       
SECTION 11. The Administrative Agent   88
         
Section 11.1. Appointment and Authorization of Administrative Agent   88
Section 11.2. Administrative Agent and its Affiliates   88
Section 11.3. Action by Administrative Agent   89
Section 11.4. Consultation with Experts   89
Section 11.5. Liability of Administrative Agent; Credit Decision   89
Section 11.6. Indemnity   90
Section 11.7. Resignation and Removal of Administrative Agent and Successor Administrative Agent   90
Section 11.8. L/C Issuer and Swing Line Lender   91
Section 11.9. Hedging Liability and Bank Product Obligations   92
Section 11.10. Designation of Additional Agents   92
Section 11.11. Authorization to Enter into Subordination Agreement   92
       
SECTION 12. Miscellaneous   93
         
Section 12.1. Taxes   93
Section 12.2. [Reserved]   97
Section 12.3. No Waiver, Cumulative Remedies   97
Section 12.4. Non-Business Days   97
Section 12.5. Survival of Representations   97
Section 12.6. Survival of Indemnities   97
Section 12.7. Sharing of Set-Off   97
Section 12.8. Notices   98

 

iii

 

 

Section 12.9. Counterparts; Integration; Effectiveness   99
Section 12.10. Successors and Assigns   100
Section 12.11. Participants   100
Section 12.12. Assignments   101
Section 12.13. Amendments   104
Section 12.14. Headings   105
Section 12.15. Costs and Expenses; Indemnification   105
Section 12.16. Set-off   107
Section 12.17. Entire Agreement   108
Section 12.18. Waiver of Jury Trial   108
Section 12.19. Severability of Provisions   108
Section 12.20. Excess Interest   108
Section 12.21. Construction   109
Section 12.22. Lender’s and L/C Issuer’s Obligations Several   109
Section 12.23. Governing Law; Jurisdiction; Consent to Service of Process   109
Section 12.24. USA Patriot Act   110
Section 12.25. Confidentiality   110
Section 12.26. No Advisory or Fiduciary Responsibility   111
Section 12.27. Acknowledgement and Consent to Bail-In of EEA Financial Institutions   112
Section 12.28. Acknowledgement Regarding Any Supported QFCs   112
       
SECTION 13. The Guarantees   113
         
Section 13.1. The Guarantees   113
Section 13.2. Guarantee Unconditional   114
Section 13.3. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances   115
Section 13.4. Subrogation   115
Section 13.5. Waivers   116
Section 13.6. Limit on Recovery   116
Section 13.7. Stay of Acceleration   116
Section 13.8. Benefit to Guarantors   116
Section 13.9. Guarantor Covenants   116
Section 13.10. Subordination   116
Section 13.11. Keepwell   117
       
Signature Page   118

 

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Exhibit A Notice of Payment Request
Exhibit B Notice of Borrowing
Exhibit C Notice of Continuation/Conversion
Exhibit D-1 Revolving Note
Exhibit D-2 Swing Note
Exhibit E Compliance Certificate
Exhibit F Assignment and Acceptance
Exhibit G Additional Guarantor Supplement
Exhibit H Commitment Amount Increase Request
Exhibit I Available Amount Certificate
Exhibit J-1 Form of U.S. Tax Compliance Certificate
Exhibit J-2 Form of U.S. Tax Compliance Certificate
Exhibit J-3 Form of U.S. Tax Compliance Certificate
Exhibit J-4 Form of U.S. Tax Compliance Certificate
     
Schedule 1 Commitments
Schedule 1.1 Initial Unencumbered Pool Properties
Schedule 1.2 Existing Letters of Credit
Schedule 1.3 Permitted Liens
Schedule 6.2 Subsidiaries
Schedule 6.11 Litigation
Schedule 8.8 Investments

 

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Credit Agreement

 

This Credit Agreement (this “Agreement”) is entered into as of April 26, 2018, by and among American Finance Operating Partnership, L.P., a Delaware limited partnership (the “Borrower”), the Guarantors from time to time party to this Agreement, the several financial institutions from time to time party to this Agreement, as Lenders, Citizens Bank, N.A. and, SunTrust Robinson Humphrey, Inc., and BBVA USA, as Syndication Agents, and BMO Harris Bank N.A., as Administrative Agent as provided herein. All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in Section 5.1 hereof.

 

Preliminary Statement

 

The Borrower has requested, and the Lenders have agreed to extend, certain credit facilities on the terms and subject to the conditions set forth in this Agreement.

 

Now, Therefore, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION1.      The Credit Facility.

 

Section 1.1.           Commitments. Subject to the terms and conditions hereof, each Lender, by its acceptance hereof, severally agrees to make a loan or loans (individually a “Revolving Loan” and collectively for all the Lenders the “Revolving Loans”) in U.S. Dollars to the Borrower from time to time on a revolving basis up to the amount of such Lender’s Commitment, subject to any reductions thereof pursuant to the terms hereof, before the Termination Date. The sum of the aggregate principal amount of Revolving Loans, Swing Loans and L/C Obligations at any time outstanding shall not exceed the lesser of (i) the Commitments of all Lenders in effect at such time and (ii) the Available Amount as then determined and computed. Each Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion to their respective Percentages. As provided in Section 1.6(a) hereof, the Borrower may elect that each Borrowing of Revolving Loans be either Base Rate Loans or Eurodollar Loans. Revolving Loans may be repaid and the principal amount thereof reborrowed before the Termination Date, subject to the terms and conditions hereof.

 

Section 1.2.           Swing Loans. (a) Generally. Subject to the terms and conditions hereof, as part of the Revolving Credit, the Swing Line Lender may make loans in U.S. Dollars to the Borrower under the Swing Line (individually a “Swing Loan” and collectively the “Swing Loans”) which shall not in the aggregate at any time outstanding exceed the Swing Line Sublimit. Swing Loans may be availed of from time to time and borrowings thereunder may be repaid and used again during the period ending on the Termination Date. Each Swing Loan shall be in a minimum amount of $250,000 or such greater amount which is an integral multiple of $100,000.

 

(b)               Interest on Swing Loans. Each Swing Loan shall bear interest until maturity (whether by acceleration or otherwise) at a rate per annum equal to (i) the sum of the Base Rate plus the Applicable Margin for Base Rate Loans under the Revolving Credit as from time to time in effect (computed on the basis of a year of 360 days for the actual number of days elapsed) or (ii) the Swing Line Lender’s Quoted Rate (computed on the basis of a year of 360 days for the actual number of days elapsed). Interest on each Swing Loan shall be due and payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

 

 

(c)               Requests for Swing Loans. The Borrower shall give the Administrative Agent prior notice (which may be written or oral) no later than 1:00 p.m. (Chicago time) on the date upon which the Borrower requests that any Swing Loan be made, of the amount and date of such Swing Loan, and, if applicable, the Interest Period requested therefor. The Administrative Agent shall promptly advise the Swing Line Lender of any such notice received from the Borrower. Thereafter, the Swing Line Lender shall notify the Administrative Agent (who shall thereafter promptly notify the Borrower) whether or not it has elected to make such Swing Loan. If the Swing Line Lender agrees to make such Swing Loan, it may in its discretion quote an interest rate to the Borrower at which the Swing Line Lender would be willing to make such Swing Loan available to the Borrower for the Interest Period so requested (the rate so quoted for a given Interest Period being herein referred to as “Swing Line Lender’s Quoted Rate”). The Borrower acknowledges and agrees that the interest rate quote is given for immediate and irrevocable acceptance. If the Borrower does not so immediately accept the Swing Line Lender’s Quoted Rate for the full amount requested by the Borrower for such Swing Loan, the Swing Line Lender’s Quoted Rate shall be deemed immediately withdrawn and such Swing Loan shall bear interest at the rate per annum determined by adding the Applicable Margin for Base Rate Loans under the Revolving Credit to the Base Rate as from time to time in effect. Subject to the terms and conditions hereof, the proceeds of each Swing Loan extended to the Borrower shall be deposited or otherwise wire transferred to an account of the Borrower maintained with the Administrative Agent or its Affiliate or as the Borrower, the Administrative Agent, and the Swing Line Lender may otherwise agree. Anything contained in the foregoing to the contrary notwithstanding, the undertaking of the Swing Line Lender to make Swing Loans shall be subject to all of the terms and conditions of this Agreement (provided that the Swing Line Lender shall be entitled to assume that the conditions precedent to an advance of any Swing Loan have been satisfied unless notified to the contrary by the Administrative Agent or the Required Lenders).

 

(d)               Refunding Loans. In its sole and absolute discretion, the Swing Line Lender may at any time (and shall no later than the tenth Business Day after each Swing Loan is advanced if such Loan has not been sooner repaid), on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to act on its behalf for such purpose) and with notice to the Borrower and the Administrative Agent, request each Lender to make a Revolving Loan in the form of a Base Rate Loan in an amount equal to such Lender’s Percentage of the amount of the Swing Loans outstanding on the date such notice is given (which Loans shall thereafter bear interest as provided for in Section 1.4(a) hereof). Unless an Event of Default described in Section 9.1(j) or 9.1(k) exists with respect to the Borrower, regardless of the existence of any other Event of Default, each Lender shall make the proceeds of its requested Revolving Loan available to the Administrative Agent for the account of the Swing Line Lender, in immediately available funds, at the Administrative Agent’s office in Chicago, Illinois (or such other location designated by the Administrative Agent), before 12:00 Noon (Chicago time) on the Business Day following the day such notice is given. The Administrative Agent shall promptly remit the proceeds of such Borrowing to the Swing Line Lender to repay the outstanding Swing Loans.

 

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(e)               Participations. If any Lender refuses or otherwise fails to make a Revolving Loan when requested by the Swing Line Lender pursuant to Section 1.2(d) above (because an Event of Default described in Section 9.1(j) or 9.1(k) exists with respect to the Borrower or otherwise), such Lender will, by the time and in the manner such Revolving Loan was to have been funded to the Swing Line Lender, purchase from the Swing Line Lender an undivided participating interest in the outstanding Swing Loans in an amount equal to its Percentage of the aggregate principal amount of Swing Loans that were to have been repaid with such Revolving Loans. From and after the date of any such purchase, such Swing Loans shall thereafter bear interest as provided for in Section 1.2(b)(i) above. Each Lender that so purchases a participation in a Swing Loan shall thereafter be entitled to receive its Percentage of each payment of principal received on the Swing Loan and of interest received thereon accruing from the date such Lender funded to the Swing Line Lender its participation in such Loan. The several obligations of the Lenders under this Section shall be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall not be subject to any set off, counterclaim or defense to payment which any Lender may have or have had against the Borrower, any other Lender, or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of the Commitments of any Lender, and each payment made by a Lender under this Section shall be made without any offset, abatement, withholding, or reduction whatsoever.

 

Section 1.3.           Letters of Credit. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and commercial letters of credit (each a “Letter of Credit”) for the account of the Borrower or any one or more of its Subsidiaries in an aggregate undrawn face amount up to the L/C Sublimit. Each Letter of Credit shall be issued by the L/C Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for such Lender’s Percentage of the amount of each drawing thereunder and, accordingly, each Letter of Credit shall constitute usage of the Commitment of each Lender pro rata in an amount equal to its Percentage of the L/C Obligations then outstanding. The Existing Letters of Credit shall be considered “Letters of Credit” for all purposes hereunder and under the Loan Documents, to the same extent, and with the same force and effect as if the Existing Letters of Credit had been issued on the Closing Date under this Agreement at the request of the Borrower.

 

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(b)               Applications. At any time before the Termination Date, the L/C Issuer shall, at the request of the Borrower, issue one or more Letters of Credit in U.S. Dollars, in a form reasonably satisfactory to the L/C Issuer, with expiration dates no later than the earlier of 12 months from the date of issuance (or which are cancelable not later than 12 months from the date of issuance) or thirty (30) days prior to the Termination Date (subject to the sentence below in respect of Letters of Credit with expiration dates that are automatically extended), in an aggregate face amount up to the L/C Sublimit, upon the receipt of an application duly executed by the Borrower for the relevant Letter of Credit in the form then customarily prescribed by the L/C Issuer for the Letter of Credit requested (each an “Application”); provided, however, that the L/C Issuer may issue Letters of Credit with expiration dates later than the date that is thirty (30) days prior to the Termination Date if the Borrower and the L/C Issuer enter into arrangements for the Cash Collateralization or backstop of such Letters of Credit in a manner satisfactory to the L/C Issuer. Notwithstanding anything contained in any Application to the contrary: (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 2.1 hereof, (ii) except as otherwise provided in Section 1.8(b) or Section 1.14 hereof, unless an Event of Default is then continuing, the L/C Issuer will not call for the funding by the Borrower of any amount under a Letter of Credit before being presented with a drawing thereunder, and (iii) if the L/C Issuer is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, unless a Loan shall be made on such date in the amount of the Reimbursement Obligations and the proceeds thereof applied to pay such Reimbursement Obligations as contemplated by the last sentence of Section 1.3(c) hereof, the Borrower’s obligation to reimburse the L/C Issuer for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed). If the L/C Issuer issues any Letter of Credit with an expiration date that is automatically extended unless the L/C Issuer gives notice that the expiration date will not so extend beyond its then scheduled expiration date, then the L/C Issuer will give such notice of non renewal before the time necessary to prevent such automatic extension if before such required notice date: (i) the expiration date of such Letter of Credit if so extended would be after (x) the date that is thirty (30) days prior to the Termination Date or (y) 12 months after the current expiration date, (ii) the Commitments have been terminated, or (iii) a Default or an Event of Default is then continuing and either the Administrative Agent or the Required Lenders (with notice to the Administrative Agent) have given the L/C Issuer instructions not to so permit the extension of the expiration date of such Letter of Credit; provided, however, that, with respect to the foregoing clauses (i) and (ii), the L/C Issuer may extend the expiration date of such Letter of Credit to a date of not more than one year beyond the Termination Date (any such Letter of Credit, an “Extended Letter of Credit”) if the Borrower and the L/C Issuer enter into arrangements for the Cash Collateralization or backstop of such Letter of Credit in a manner satisfactory to the L/C Issuer no later than thirty (30) days prior to the Termination Date (or such shorter period as agreed to by the L/C Issuer and the Administrative Agent in their sole discretion); provided, that the obligations of the Borrower under this Section in respect of such Extended Letters of Credit shall survive the termination of this Agreement and shall remain in effect until no such Extended Letters of Credit remain outstanding. If the Borrower fails to provide Cash Collateral or backstop with respect to any Extended Letter of Credit by the date thirty (30) days prior to the Termination Date (or such shorter period as agreed to by the L/C Issuer and the Administrative Agent in their sole discretion), such failure shall be treated as a drawing under such Extended Letter of Credit (in an amount equal to the maximum stated amount of such Letter of Credit), which shall be reimbursed (or participations therein funded) by the Lenders in accordance with subsection (c) below, with the proceeds being utilized to provide Cash Collateral for such Letter of Credit. The L/C Issuer agrees to issue amendments to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of the Borrower subject to the conditions of Section 7 hereof and the other terms of this Section 1.3.

 

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(c)               The Reimbursement Obligations. Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall promptly notify the Borrower and the Administrative Agent thereof. Subject to Section 1.3(b) hereof, the obligation of the Borrower to reimburse the L/C Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be governed by the Application related to such Letter of Credit, except that, in the event that any amount is drawn under a Letter of Credit by the beneficiary thereof, reimbursement shall be made by no later than 1:00 p.m. (Chicago time) on the date when each drawing is paid if the Borrower has been informed of such drawing by the L/C Issuer on or before 11:00 a.m. (Chicago time) on the date when such drawing is paid or, if notice of such drawing is given to the Borrower after 11:00 a.m. (Chicago time) on the date when such drawing is paid, by no later than 1:00 p.m. (Chicago time) on the following Business Day, in immediately available funds at the Administrative Agent’s principal office in Chicago, Illinois or such other office as the Administrative Agent may designate in writing to the Borrower (who shall thereafter cause to be distributed to the L/C Issuer such amount(s) in like funds). If the Borrower does not make any such reimbursement payment on the date due and the Participating Lenders fund their participations therein in the manner set forth in Section 1.3(e) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 1.3(e) below.

 

(d)               Obligations Absolute. The Borrower’s obligation to reimburse L/C Obligations as provided in subsection (c) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the relevant Application under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the L/C Issuer under a Letter of Credit against presentation of a draft or other document that does not strictly comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 1.3, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder, except, in each case, to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable Legal Requirements) suffered by the Borrower that are caused by the L/C Issuer’s gross negligence, bad faith or willful misconduct on the part of the L/C Issuer (as determined by a court of competent jurisdiction by final and nonappealable judgment). None of the Administrative Agent, the Lenders, or the L/C Issuer shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the L/C Issuer; provided that the foregoing shall not be construed to excuse the L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable Legal Requirements) suffered by the Borrower that are caused by the L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of the L/C Issuer (as determined by a court of competent jurisdiction by final and nonappealable judgment), the L/C Issuer shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the L/C Issuer may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

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(e)               The Participating Interests. Each Lender (other than the Lender acting as L/C Issuer in issuing the relevant Letter of Credit), by its acceptance hereof, severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a “Participating Lender”), an undivided percentage participating interest (a “Participating Interest), to the extent of its Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C Issuer. Upon any failure by the Borrower to pay any Reimbursement Obligation at the time required as set forth in Section 1.3(c) above, or if the L/C Issuer is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it receives a certificate in the form of Exhibit A hereto from the L/C Issuer (with a copy to the Administrative Agent) to such effect, if such certificate is received before 1:00 p.m. (Chicago time), or not later than 1:00 p.m. (Chicago time) the following Business Day, if such certificate is received after such time, pay to the Administrative Agent for the account of the L/C Issuer an amount equal to such Participating Lender’s Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the related payment was made by the L/C Issuer to the date of such payment by such Participating Lender at a rate per annum equal to: (i) from the date the related payment was made by the L/C Issuer to the date two (2) Business Days after payment by such Participating Lender is due hereunder, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Lender to the date such payment is made by such Participating Lender, the Base Rate in effect for each such day. Each such Participating Lender shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the L/C Issuer retaining its Percentage thereof as a Lender hereunder. The several obligations of the Participating Lenders to the L/C Issuer under this Section 1.3 shall be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall not be subject to any set off, counterclaim or defense to payment which any Participating Lender may have or have had against the Borrower, the L/C Issuer, the Administrative Agent, any Lender or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Commitment of any Lender, and each payment by a Participating Lender under this Section 1.3 shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(f)                Indemnification. The Participating Lenders shall, to the extent of their respective Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such L/C Issuer’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment) that the L/C Issuer may suffer or incur in connection with any Letter of Credit issued by it. The obligations of the Participating Lenders under this Section 1.3(f) and all other parts of this Section 1.3 shall survive termination of this Agreement and of all Applications, Letters of Credit, and all drafts and other documents presented in connection with drawings thereunder.

 

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(g)               Manner of Requesting a Letter of Credit. The Borrower shall provide at least five (5) Business Days’ advance written notice to the Administrative Agent of each request for the issuance of a Letter of Credit, such notice in each case to be accompanied by an Application for such Letter of Credit properly completed and executed by the Borrower and, in the case of an extension or amendment or an increase in the amount of a Letter of Credit, a written request therefor, in a form reasonably acceptable to the Administrative Agent and the L/C Issuer, in each case, together with the fees called for by this Agreement. The Administrative Agent shall promptly notify the L/C Issuer of the Administrative Agent’s receipt of each such notice (and the L/C Issuer shall be entitled to assume that the conditions precedent to any such issuance, extension, amendment or increase have been satisfied unless notified to the contrary by the Administrative Agent or the Required Lenders) and the L/C Issuer shall promptly notify the Administrative Agent and the Lenders of the issuance of the Letter of Credit so requested.

 

(h)               Replacement of the L/C Issuer. The L/C Issuer may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced L/C Issuer and the successor L/C Issuer. The Administrative Agent shall notify the Lenders of any such replacement of the L/C Issuer. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced L/C Issuer. From and after the effective date of any such replacement (i) the successor L/C Issuer shall have all the rights and obligations of the L/C Issuer under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “L/C Issuer” shall be deemed to refer to such successor or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the context shall require. After the replacement of a L/C Issuer hereunder, the replaced L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

Section 1.4.           Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate Loan made or maintained by a Lender shall bear interest (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, or created by conversion from a Eurodollar Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

Base Rate” means, for any day, the rate per annum equal to the greatest of: (a) the rate of interest announced or otherwise established by the Administrative Agent from time to time as its prime commercial rate, or its equivalent, for U.S. Dollar loans to borrowers located in the United States as in effect on such day, with any change in the Base Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate (it being acknowledged and agreed that such rate may not be the Administrative Agent’s best or lowest rate), (b) the sum of (i) the rate determined by the Administrative Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to the Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers selected by the Administrative Agent for sale to the Administrative Agent at face value of Federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1%, and (c) the LIBOR Quoted Rate for such day plus 1.00%. As used herein, the term “LIBOR Quoted Rate” means, for any day, the rate per annum equal to the quotient of (i) the rate per annum (rounded upwards, if necessary, to the next higher one hundred thousandth of a percentage point) for deposits in U.S. Dollars for a one month interest period commencing on such day, as reported on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) as of 11:00 a.m. (London, England time) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) divided by (ii) one (1) minus the Eurodollar Reserve Percentage, provided that, in no event shall the “LIBOR Quoted Rate” be less than 0.000.25%.

 

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(b)               Eurodollar Loans. Each Eurodollar Loan made or maintained by a Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced or continued, or created by conversion from a Base Rate Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such Interest Period, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum determined in accordance with the following formula:

 

Adjusted LIBOR  = LIBOR  
    1 - Eurodollar Reserve Percentage  
 

Eurodollar Reserve Percentage” means the maximum reserve percentage, expressed as a decimal, at which reserves (including, without limitation, any emergency, marginal, special, and supplemental reserves) are imposed by the Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”, as defined in such Board’s Regulation D (or any successor thereto), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the relevant Loans shall be deemed to be “eurocurrency liabilities” as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any such reserve percentage.

 

LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by three (3) or more major banks in the interbank eurodollar market selected by the Administrative Agent for delivery on the first day of and for a period equal to such Interest Period and in an amount equal or comparable to the principal amount of the Eurodollar Loan scheduled to be made as part of such Borrowing, subject to Section 10.2 in the event that the Administrative Agent shall conclude that it shall not be possible to determine such interpolated rate (which conclusion shall be conclusive and binding absent manifest error); provided that in no event shall “LIBOR” be less than 0.000.25%.

 

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LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, as reported on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period.

 

(c)               Rate Determinations. The Administrative Agent shall determine each interest rate applicable to the Loans and the Reimbursement Obligations hereunder, and its good faith determination thereof shall be conclusive and binding except in the case of manifest error.

 

Section 1.5.           Minimum Borrowing Amounts; Maximum Eurodollar Loans. Each Borrowing of Base Rate Loans shall be in an amount not less than $100,000. Each Borrowing of Eurodollar Loans advanced, continued or converted to a Eurodollar Loan shall be in an amount equal to $500,000 or such greater amount which is an integral multiple of $100,000. Without the Administrative Agent’s consent, there shall not be more than five (5) Borrowings of Eurodollar Loans outstanding hereunder. Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent, and such Lender.

 

Section 1.6.           Manner of Borrowing Loans and Designating Applicable Interest Rates. (a) Notice to the Administrative Agent. The Borrower shall give notice to the Administrative Agent by no later than 2:00 p.m. (Chicago time): (i) at least three (3) Business Days before the date on which the Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans and (ii) one Business Day before the date the Borrower requests the Lenders to advance a Borrowing of Base Rate Loans. The Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice of a new Borrowing. Thereafter, subject to the terms and conditions hereof, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to the minimum amount requirement for each outstanding Borrowing set forth in Section 1.5 hereof, a portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into Eurodollar Loans for an Interest Period or Interest Periods specified by the Borrower. The Borrower shall give all such notices requesting the advance, continuation or conversion of a Borrowing to the Administrative Agent by telephone, telecopy, or other telecommunication device acceptable to the Administrative Agent (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing), substantially in the form attached hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as applicable, or in such other form acceptable to the Administrative Agent. Notice of the continuation of a Borrowing of Eurodollar Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of Base Rate Loans into Eurodollar Loans must be given by no later than 2:00 p.m. (Chicago time) at least three (3) Business Days before the date of the requested continuation or conversion. All such notices concerning the advance, continuation or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Loans to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the Interest Period applicable thereto. No Borrowing of Eurodollar Loans shall be advanced, continued, or created by conversion if any Default or Event of Default is then continuing. The Borrower agrees that the Administrative Agent may rely on any such telephonic, telecopy or other telecommunication notice given by any person the Administrative Agent in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event any such notice by telephone conflicts with any written confirmation such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon.

 

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(b)               Notice to the Lenders. The Administrative Agent shall give prompt telephonic, telecopy or other telecommunication notice to each Lender of any notice from the Borrower received pursuant to Section 1.6(a) above and, if such notice requests the Lenders to make Eurodollar Loans, the Administrative Agent shall give notice to the Borrower and each Lender by like means of the interest rate applicable thereto promptly after the Administrative Agent has made such determination.

 

(c)                Borrower’s Failure to Notify. If the Borrower fails to give notice pursuant to Section 1.6(a) above of the continuation or conversion of any outstanding principal amount of a Borrowing of Eurodollar Loans before the last day of its then current Interest Period within the period required by Section 1.6(a) and such Borrowing is not prepaid in accordance with Section 1.8(a), such Borrowing shall automatically be continued as a Borrowing of Eurodollar Loans with an Interest Period of one (1) month. In the event the Borrower fails to give notice pursuant to Section 1.6(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 2:00 p.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under the Revolving Credit (or, at the option of the Swing Line Lender, under the Swing Line) on such day in the amount of the Reimbursement Obligation then due, which Borrowing shall be applied to pay the Reimbursement Obligation then due.

 

(d)               Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on the date of any requested advance of a new Borrowing, subject to Section 7 hereof, each Lender shall make available its Loan comprising part of such Borrowing in funds immediately available at the principal office of the Administrative Agent in Chicago, Illinois (or at such other location as the Administrative Agent shall designate). The Administrative Agent shall make the proceeds of each new Borrowing available to the Borrower on the date of such Borrowing as instructed by the Borrower.

 

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(e)               Administrative Agent Reliance on Lender Funding. Unless the Administrative Agent shall have been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate Loans, by 1:00 p.m. (Chicago time) on) the date on which such Lender is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Lender does not intend to make such payment, the Administrative Agent may assume that such Lender has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Lender and, if any Lender has not in fact made such payment to the Administrative Agent, such Lender shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Lender pays such amount to the Administrative Agent at a rate per annum equal to: (i) from the date the related advance was made by the Administrative Agent to the date two (2) Business Days after payment by such Lender is due hereunder, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day. If such amount is not received from such Lender by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Lender with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan under Section 1.11 hereof so that the Borrower will have no liability under such Section with respect to such payment. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

Section 1.7.           Maturity of Loans. Each Loan, including both the outstanding principal balance thereof and any accrued but unpaid interest thereon, shall mature and be due and payable by the Borrower on the Termination Date.

 

Section 1.8.           Prepayments. (a) Optional. The Borrower may prepay in whole or in part (but, if in part, only in an amount not less than $50,000 and, in each case, in an amount such that the minimum amount required for a Borrowing pursuant to Section 1.2 and 1.5 hereof remains outstanding) any Borrowing (i) in the case of a Borrowing of Eurodollar Loans, at any time upon three (3) Business Days prior written notice by the Borrower to the Administrative Agent or (ii) in the case of a Borrowing of Base Rate Loans, upon written notice delivered by the Borrower to the Administrative Agent no later than 12:00 noon (Chicago time) on the date of prepayment (or, in any case, such shorter period of time then agreed to by the Administrative Agent), such prepayment to be made by the payment of the principal amount to be prepaid and, in the case of any Eurodollar Loans or Swing Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under Section 1.11 hereof.

 

(b)               Mandatory. (i) If at any time the sum of the unpaid principal balance of the Revolving Loans, Swing Loans and the L/C Obligations then outstanding shall be in excess of the Available Amount as determined and computed in the most recent Available Amount Certificate delivered in accordance with Section 8.5(d) or Section 8.5(n) hereof, the Borrower shall, within three (3) Business Days and without notice or demand, pay the amount of the excess to the Administrative Agent for the account of the Lenders as a mandatory prepayment on such Obligations, with each such prepayment first to be applied to the Loans until paid in full with any remaining balance to be held by the Administrative Agent in the Collateral Account as security for the L/C Obligations owing with respect to the Letters of Credit.

 

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(ii)              Unless the Borrower otherwise directs, prepayments of Loans under this Section 1.8(b) shall be applied first to Borrowings of Base Rate Loans until payment in full thereof with any balance applied to Borrowings of Eurodollar Loans in the order in which their Interest Periods expire. Each prepayment of Loans under this Section 1.8(b) shall be made by the payment of the principal amount to be prepaid and, in the case of any Eurodollar Loans or Swing Loans, accrued interest thereon to the date of prepayment together with any amounts due the Lenders under Section 1.11 hereof. Each prefunding of L/C Obligations shall be made in accordance with Section 9.4 hereof.

 

(c)               Borrowings. Any amount of Loans paid or prepaid before the Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again.

 

Section 1.9.           Default Rate. Notwithstanding anything to the contrary contained herein, while any Event of Default is continuing (subject to the proviso below) or after acceleration of the Obligations as a result of an Event of Default, the Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all outstanding Loans and Reimbursement Obligations, letter of credit fees and other amounts of outstanding Obligations at a rate per annum equal to:

 

(a)                for any Base Rate Loan or any Swing Loan bearing interest based on the Base Rate, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect;

 

(b)                for any Eurodollar Loan or any Swing Loan bearing interest at the Swing Line Lender’s Quoted Rate, the sum of 2.0% plus, in the case of any Eurodollar Loan, the Applicable Margin applicable thereto plus, in the case of any Eurodollar Loan, the Adjusted LIBOR applicable at the time of such Event of Default, or, in the case of any Swing Loan bearing interest at the Swing Line Lender’s Quoted Rate, the Swing Line Lender’s Quoted Rate applicable to such Swing Loan, in each case, until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans plus the Base Rate from time to time in effect;

 

(c)                for any Reimbursement Obligation, the sum of 2.0% plus the amounts due under Section 1.3(b) with respect to such Reimbursement Obligation;

 

(d)                for any Letter of Credit, the sum of 2.0% plus the L/C Participation Fee (for the avoidance of doubt, this shall not affect the Borrower’s obligation to pay a letter of credit fee due under Section 2.1 with respect to such Letter of Credit); and

 

(e)               for any other amount owing hereunder not covered by clauses (a) through (d) above, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect;

 

provided, however, that in the absence of an acceleration of the Obligations as a result of an Event of Default, any adjustments pursuant to this Section 1.9 shall be made at the election of the Administrative Agent, acting at the request or with the consent of the Required Lenders, with written notice to the Borrower. Interest accruing pursuant to this Section 1.9 shall be paid on the demand of the Administrative Agent at the request or with the consent of the Required Lenders.

 

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Section 1.10.         Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(b)               [Reserved].

 

(c)               The entries maintained in the Register pursuant to Section 12.12(b) shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts pursuant to paragraphs (a) above or Section 12.12(b) or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

 

(d)               Any Lender may request that its Loans be evidenced by a promissory note or notes in the forms of Exhibit D-1 (each a “Revolving Note” and collectively, the “Revolving Notes”) or D 2 (the “Swing Note”), as applicable (the Revolving Notes and Swing Note being hereinafter referred to collectively as the “Notes”). In such event, the Borrower shall prepare, execute and deliver to such Lender a Revolving Note or Swing Note payable to such Lender or its registered assigns in the amount of its Commitment or Swing Line Sublimit, as applicable. Thereafter, the Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 12.12) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.12, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in subsections (a) and (b) above.

 

Section 1.11.       Funding Indemnity. If any Lender shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense reasonably incurred by reason of the liquidation or re employment of deposits or other funds acquired by such Lender to fund or maintain any Eurodollar Loan or Swing Loan bearing interest at the Swing Line Lender’s Quoted Rate or the relending or reinvesting of such deposits or amounts paid or prepaid to such Lender) as a result of:

 

(a)                any payment, prepayment or conversion of a Eurodollar Loan or such Swing Loan on a date other than the last day of its Interest Period,

 

(b)                any failure (because of a failure to meet the conditions of Section 7 or otherwise) by the Borrower to borrow or continue a Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan, on the date specified in a notice given pursuant to Section 1.6(a) hereof,

 

(c)                any failure by the Borrower to make any payment of principal on any Eurodollar Loan or such Swing Loan when due (whether by acceleration or otherwise), or

 

(d)               any acceleration of the maturity of a Eurodollar Loan or such Swing Loan as a result of the occurrence of any Event of Default hereunder, then, upon the demand of such Lender, the Borrower shall pay to such Lender such amount as will reimburse such Lender for such loss, cost or expense. If any Lender makes such a claim for compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a certificate setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate shall be deemed prima facie correct absent manifest error.

 

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Section 1.12.         Commitment Terminations. (a) Optional Terminations. The Borrower shall have the right at any time and from time to time, upon three (3) Business Days prior written notice to the Administrative Agent (or such shorter period of time agreed to by the Administrative Agent), to terminate the Commitments without premium or penalty and in whole or in part, any partial termination to be (i) in an amount not less than $5,000,000 and (ii) allocated ratably among the Lenders in proportion to their respective Percentages, provided that the Commitments may not be reduced to an amount less than the sum of the aggregate principal amount of Revolving Loans, Swing Loans and L/C Obligations then outstanding. Any termination of the Commitments below the L/C Sublimit or the Swing Line Sublimit then in effect shall reduce the L/C Sublimit and the Swing Line Sublimit, as applicable, by a like amount. The Administrative Agent shall give prompt notice to each Lender of any such termination of the Commitments.

 

(b)               Reinstatement. Any termination of the Commitments pursuant to this Section 1.12 may not be reinstated.

 

Section 1.13.          Substitution of Lenders. In the event (a) the Borrower receives a claim from any Lender for compensation under Section 10.3 or 12.1 hereof, (b) the Borrower receives notice from any Lender of any illegality pursuant to Section 10.1 hereof, (c) any Lender is then a Defaulting Lender, or (d) a Lender fails to consent to an amendment or waiver requested under Section 12.13 hereof requiring the consent of all Lenders or all affected Lenders at a time when the Required Lenders have approved such amendment or waiver (any such Lender referred to in clause (a), (b), (c), or (d) above being hereinafter referred to as an “Affected Lender”), the Borrower may, in addition to any other rights the Borrower may have hereunder or under applicable Legal Requirements, require, at the Borrower’s expense, any such Affected Lender to assign, at par, without recourse, all of its interest, rights, and obligations hereunder (including all of its Commitments and the Loans and participation interests in Letters of Credit and Swing Loans and other amounts at any time owing to it hereunder and the other Loan Documents) to an Eligible Assignee specified by the Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other Governmental Authority, (ii) the Borrower shall have paid to the Affected Lender all monies (together with amounts due such Affected Lender under Section 1.11 hereof as if the Loans owing to it were prepaid rather than assigned) other than such principal owing to it hereunder, and (iii) the assignment is entered into in accordance with, and subject to the consents required by, Section 12.12 hereof (provided any assignment fees and reimbursable expenses due thereunder shall be paid by the Borrower). In connection with any such assignment, such Affected Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Acceptance, it being agreed and understood that the relevant Affected Lender will be deemed to have agreed to and entered into such assignment upon the payment of such amounts set forth in the foregoing clauses (ii) and (iii), regardless of whether or not such Affected Lender executes and/or delivers any Assignment and Acceptance, and each Lender, by being party to this Agreement, in the event it is an Affected Lender, hereby agrees to and accepts an assignment of its Loans and Commitments on the terms and conditions set forth in this Section 1.13.

 

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Section 1.14.         Defaulting Lenders. (a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Legal Requirements:

 

(i)               Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 12.13 hereof.

 

(ii)              Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 9 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 12.7 hereto shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any L/C Issuer or the Swing Line Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 9.4; fourth, as the Borrower may request (so long as no Default or Event of Default is then continuing), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 9.4; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or the Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default is then continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Obligations in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 7.1 hereof were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swing Loans are held by the Lenders pro rata in accordance with their Percentages of the relevant Commitments without giving effect to Section 1.14(a)(iv) below. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 1.14(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

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(iii)          Certain Fees.

 

(A)          No Defaulting Lender shall be entitled to receive any commitment fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(B)          Each Defaulting Lender shall be entitled to receive L/C Participation Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 9.4 hereof.

 

(C)          With respect to any L/C Participation Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or Swing Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each L/C Issuer and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s or Swing Line Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

 

(iv)         Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Percentages of the relevant Commitments (calculated without regard to such Defaulting Lender’s Commitments) but only to the extent that (x) the conditions set forth in Section 7.1 hereof are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Loans of any Non-Defaulting Lender, together with the interests in L/C Obligations and Swing Loans of such Non-Defaulting Lender, to exceed such Non-Defaulting Lender’s Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

(v)           Cash Collateral; Repayment of Swing Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to them hereunder or under law, (x) first, prepay Swing Loans in an amount equal to the Swing Line Lender’s Fronting Exposure and (y) second, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with the procedures set forth in Section 9.4.

 

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(b)           Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Swing Line Lender and each L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Loans to be held pro rata by the Lenders in accordance with their respective Percentages of the relevant Commitments (without giving effect to Section 1.14(a)(iv) hereof), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

(c)           New Swing Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swing Line Lender shall not be required to fund any Swing Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swing Loan and (ii) no L/C Issuer shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

 

(d)          Purchase of Defaulting Lender’s Commitment. During any period that a Lender is a Defaulting Lender, the Borrower may, by the Borrower giving written notice thereof to the Administrative Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitment and Loans to an Eligible Assignee subject and in accordance with the provisions of Section 12.12. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. In addition, any Lender who is not a Defaulting Lender may, but shall not be obligated to, in its sole discretion, acquire the face amount of all or a portion of such Defaulting Lender’s Commitment and Loans via an assignment subject to and in accordance with the provisions of Section 12.12. In connection with any such assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Acceptance and shall pay to the Administrative Agent an assignment fee in the amount of $3,500, it being agreed and understood that the relevant Defaulting Lender will be deemed to have agreed to and entered into such Assignment and Acceptance upon the payment of such amounts set forth in this Section 1.14(d), regardless of whether or not such Defaulting Lender executes and/or delivers any Assignment and Acceptance, and each Lender, by being party to this Agreement, in the event it is a Defaulting Lender, hereby agrees to and accepts an assignment of its Loans and Commitments on the terms and conditions set forth in this Section 1.14(d). The exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense and at no cost or expense to the Administrative Agent or any of the Lenders.

 

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Section 1.15.       Increase in Commitments. The Borrower may, from time to time, on any Business Day prior to the Termination Date, increase the aggregate amount of the Commitments by delivering a commitment amount increase request substantially in the form attached hereto as Exhibit H or in such other form acceptable to the Administrative Agent at least five (5) Business Days prior to the desired effective date of such increase (each such increase, a “Commitment Amount Increase”) identifying one or more additional Lenders (or additional Commitments provided by existing Lender(s) or by a combination of existing Lenders and additional Lenders (each such Lender providing (or increasing) its Commitment pursuant to any Commitment Amount Increase, a “Commitment Amount Increase Lender”)) and the amount of its Commitment (or additional amount of its Commitment(s)); provided, however, that (i) the aggregate amount of the Commitments shall not be increased by an amount in excess of $375,000,000 (it being understood and agreed that the Commitments have previously been increased by $125,000,000, thus reducing the availability of increased Commitments from $500,000,000 to $375,000,000), (ii) any Commitment Amount Increase shall be in an amount not less than $5,000,000, (iii) no Default or Event of Default shall have occurred and be continuing at the time of the request or the effective date of such Commitment Amount Increase, and (iv) all representations and warranties contained in Section 6 hereof shall be true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) at the time of such request and on the effective date of such Commitment Amount Increase (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of such date). The effective date of a Commitment Amount Increase shall be as set forth in the related commitment amount increase request. Upon the effectiveness of any Commitment Amount Increase, (i) each Lender hereunder immediately prior to the effectiveness of such Commitment Amount Increase will automatically and without further act be deemed to have assigned to each relevant Commitment Amount Increase Lender, and each relevant Commitment Amount Increase Lender will automatically and without further act be deemed to have assumed, a portion of such Lender’s participations hereunder in outstanding Letters of Credit and Swing Loans, if applicable, such that, after giving effect to each deemed assignment and assumption of participations, all of the Lenders’ (including each Commitment Amount Increase Lender) (A) participations hereunder in Letters of Credit and (B) participations hereunder in Swing Loans shall be held on a pro rata basis on the basis of their respective Commitments (after giving effect to any increase in the aggregate Commitments pursuant to this Section 1.15) and (ii) each Lender hereunder immediately prior to the effectiveness of such Commitment Amount Increase will automatically and without further act be deemed to have assigned Loans to the other Lenders (including the Commitment Amount Increase Lenders), and such other Lenders (including the Commitment Amount Increase Lenders) shall be deemed to have purchased such Loans, in each case to the extent necessary so that all of the Lenders participate in each outstanding borrowing of Loans pro rata on the basis of their respective Commitment (after giving effect to any Commitment Amount Increase pursuant to this Section 1.15); it being understood and agreed that the minimum borrowing, pro rata borrowing, pro rata payment and funding indemnity requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence. It shall be a condition to such effectiveness that the Borrower shall not have previously terminated any portion of the Commitments pursuant to Section 1.12 hereof. The Borrower agrees to pay any reasonable and documented, out-of-pocket expenses of the Administrative Agent relating to any Commitment Amount Increase pursuant to Section 12.15 and arrangement fees related thereto as agreed between Administrative Agent and the Borrower in that certain fee letter dated March 14, 2018. Notwithstanding anything herein to the contrary, no Lender shall have any obligation to increase its Commitment and no Lender’s Commitment shall be increased without its consent thereto, and each Lender may at its option, unconditionally and without cause, decline to increase its Commitment.

 

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Section 1.16.       Extension of Stated Maturity Date. If the equity interests of AF REIT become listed and publicly traded on a national securities exchange, then the Stated Maturity Date shall automatically extend by two (2) years (i.e., to April 26, 2022) (the “Listing Extension”). If the Listing Extension shall have occurred, then the Borrower shall have the right, exercisable one time, and subject to the satisfaction of the conditions set forth in this Section 1.16, to extend the then current Stated Maturity Date by one additional year (i.e., to April 26, 2023). The Borrower may exercise such right only by executing and delivering to the Administrative Agent at least 30 days but not more than 90 days prior to the then current Stated Maturity Date, a written request for such extension (an “Extension Request”). The Administrative Agent shall notify the Lenders if it receives an Extension Request promptly upon receipt thereof. Subject solely to satisfaction of the following conditions, the Stated Maturity Date shall be extended for one year effective upon receipt by the Administrative Agent of the Extension Request and payment of the fee referred to in the following clause (y): (x) immediately prior to such extension and immediately after giving effect thereto, (A) no Default or Event of Default has occurred and is continuing at such time and (B) each of the representations and warranties set forth herein and in the other Loan Documents shall be and remain true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of said time, except to the extent the same expressly relate to an earlier date, in which case the same shall be true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of such earlier date and (y) the Borrower shall have paid to the Administrative Agent for the account of each Lender a fee equal to 0.15% of the amount of such Lender’s Commitment (whether or not utilized) in effect at said time, which shall be due and payable in full on the effective date of such extension. At any time after the Administrative Agent’s receipt of an Extension Request and prior to the effectiveness of any such extension, upon the Administrative Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief executive officer or chief financial officer of the Borrower certifying the matters referred to in the immediately preceding clauses (x)(A) and (x)(B).

 

SECTION 2.         Fees.

 

Section 2.1.           Fees. (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the ratable account of the Lenders in accordance with their Percentages a commitment fee at a rate per annum equal to (x) 0.15% if the average daily Unused Commitments are less than 50% of the Commitments then in effect and (y) 0.25% if the average daily Unused Commitments are greater than or equal to 50% of the Commitments then in effect (in each case, computed on the basis of a year of 360 days and the actual number of days elapsed) and determined based on the average daily Unused Commitments during such quarter. Such commitment fee shall be payable quarterly in arrears on the last day of each March, June, September, and December in each year (commencing June 30, 2018) and on the Termination Date, unless the Commitments are terminated in whole on an earlier date, in which event the commitment fee for the period to the date of such termination in whole shall be calculated and paid on the date of such termination. Any such commitment fee for the first quarter ending after the Closing Date shall be prorated according to the number of days this Agreement was in effect during such quarter.

 

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(b)           Letter of Credit Fees. On the date of issuance or extension, or increase in the amount, of any Letter of Credit (other than with respect to any deemed issuance hereunder on the Closing Date of any Existing Letter of Credit) pursuant to Section 1.3 hereof, the Borrower shall pay to the L/C Issuer for its own account a fronting fee equal to 0.125% of the face amount of (or of the increase in the face amount of) such Letter of Credit. Quarterly in arrears, on the last day of each March, June, September, and December, commencing on the first such date occurring after the date hereof, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders in accordance with their Percentages, a letter of credit fee (the “L/C Participation Fee”) at a rate per annum equal to the Applicable Margin for Eurodollar Loans (computed on the basis of a year of 360 days and the actual number of days elapsed) in effect during each day of such quarter applied to the daily average face amount of Letters of Credit outstanding during such quarter. In addition, the Borrower shall pay to the L/C Issuer for its own account the L/C Issuer’s customary issuance, drawing, negotiation, amendment, cancellation, assignment, and other administrative fees for each Letter of Credit as established by the L/C Issuer from time to time.

 

(c)           Administrative Agent and Other Fees. The Borrower shall pay to the Administrative Agent, for its own use and benefit, the fees agreed to between the Administrative Agent and the Borrower in that certain fee letter dated March 14, 2018, or as otherwise agreed to in writing between the Borrower and the Administrative Agent. The Borrower shall pay to the Administrative Agent, for the benefit of the Lenders and the Arrangers, as applicable, the fees agreed to between the Administrative Agent, the Arrangers and the Borrower in that certain fee letter dated March 14, 2018, or as otherwise agreed to in writing among the Borrower, the Administrative Agent, and the Arrangers.

 

SECTION 3.          Place and Application of Payments.

 

Section 3.1.          Place and Application of Payments. All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other Obligations payable by the Borrower under this Agreement and the other Loan Documents, shall be made by the Borrower to the Administrative Agent by no later than 1:00 p.m. (Chicago time) on the due date thereof at the office of the Administrative Agent in Chicago, Illinois (or such other location as the Administrative Agent may designate to the Borrower), for the benefit of the Lender(s) or L/C Issuer entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. All such payments shall be made in U.S. Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans and on Reimbursement Obligations in which the Lenders have purchased Participating Interests ratably to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement; provided, that if the Administrative Agent does not distribute such funds to the Lenders on the date the Administrative Agent receives (or is deemed to receive) payment from the Borrower, the Administrative Agent shall promptly thereafter distribute such funds together with interest thereon in respect of each day during the period commencing on the date such payment from the Borrower was received by the Administrative Agent (or the date the Administrative Agent was deemed to receive such payment) and ending on (but excluding) the date the Administrative Agent distributes such funds to the Lenders, at a rate per annum equal to the Federal Funds Rate for each such day. If the Administrative Agent causes amounts to be distributed to the Lenders in reliance upon the assumption that the Borrower will make a scheduled payment and such scheduled payment is not so made, each Lender shall, on demand, repay to the Administrative Agent the amount distributed to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was distributed to such Lender and ending on (but excluding) the date such Lender repays such amount to the Administrative Agent, at a rate per annum equal to: (i) from the date the distribution was made to the date two (2) Business Days after payment by such Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day.

 

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Anything contained herein to the contrary notwithstanding (including, without limitation, Section 1.8(b) hereof), all payments and collections received in respect of the Obligations and all payments under or in respect of the Guaranties received, in each instance, by the Administrative Agent or any of the Lenders after acceleration or the final maturity of the Obligations or termination of the Commitments as a result of an Event of Default shall be remitted to the Administrative Agent and distributed as follows:

 

(a)          first, to the payment of any outstanding costs and expenses incurred by the Administrative Agent in protecting, preserving or enforcing rights under the Loan Documents, and in any event including all costs and expenses of a character which the Borrower has agreed to pay the Administrative Agent under Section 12.15 hereof (such funds to be retained by the Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Lenders, in which event such amounts shall be remitted to the Lenders to reimburse them for payments theretofore made to the Administrative Agent);

 

(b)           second, to the payment of the Swing Loans, both for principal and accrued but unpaid interest;

 

(c)           third, to the payment of any outstanding interest and fees due under the Loan Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(d)          fourth, to the payment of principal on the Loans, unpaid Reimbursement Obligations, together with amounts to be held by the Administrative Agent as collateral security for any outstanding L/C Obligations pursuant to Section 9.4 hereof (until the Administrative Agent is holding an amount of cash equal to the then outstanding amount of all such L/C Obligations) and any Hedging Liability (other than any Excluded Swap Obligation), the aggregate amount paid to, or held as collateral security for, the Lenders and L/C Issuer and, in the case of Hedging Liability, their Affiliates to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

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(e)           fifth, to the payment of all other unpaid Obligations and all other indebtedness, obligations, and liabilities of the Borrower and the Guarantors evidenced by the Loan Documents (including, without limitation, Bank Product Obligations) to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; and

 

(f)            finally, to the Borrower or whoever else may be lawfully entitled thereto.

 

Section 3.2.         Payments Set Aside. To the extent that any payment by or on behalf of the Borrower or any other Loan Party is made to the Administrative Agent, any L/C Issuer or any Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and each L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation for each such day.

 

Section 3.3.          Account Debit. The Borrower hereby irrevocably authorizes the Administrative Agent to, solely during the continuation of an Event of Default, charge any of the Borrower’s deposit accounts maintained with the Administrative Agent for the amounts from time to time necessary to pay any then due Obligations; provided that the Borrower acknowledges and agrees that the Administrative Agent shall not be under an obligation to do so and the Administrative Agent shall not incur any liability to the Borrower or any other Person for the Administrative Agent’s failure to do so.

 

SECTION 4.          Guaranties.

 

Section 4.1.         Guaranties. The payment and performance of the Obligations, Hedging Liability (other than any Excluded Swap Obligation), and Bank Product Obligations shall at all times be guaranteed by AF REIT, Genie, each wholly-owned Subsidiary (that is a U.S. Person) of the Borrower that owns an Unencumbered Pool Property, and each wholly-owned Subsidiary (that is a U.S. Person) of the Borrower that owns an Unencumbered Pool Property Subsidiary, in each case pursuant to Section 13 hereof or pursuant to one or more guaranty agreements in form and substance reasonably acceptable to the Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties”; and AF REIT, Genie and each such wholly-owned Subsidiary executing and delivering this Agreement as a Guarantor or any such separate Guaranty being referred to herein as a “Guarantor” and collectively the “Guarantors”).

 

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Section 4.2.          Further Assurances. In the event the Borrower desires to include any additional Eligible Property in the Unencumbered Pool Value after the Closing Date, to the extent that such Eligible Property is not owned by an existing Guarantor or is not owned by a Controlled Affiliate that is owned by an existing Guarantor, as a condition to the inclusion of such Eligible Property in the Unencumbered Pool Value, the Borrower shall cause the Subsidiary which owns such Eligible Property or the Subsidiary that owns such Controlled Affiliate which owns such Eligible Property to execute a Guaranty or an Additional Guarantor Supplement in the form of Exhibit G attached hereto (the “Additional Guarantor Supplement”) as the Administrative Agent may then require, and the Borrower shall also deliver to the Administrative Agent, or cause such Subsidiary to deliver to the Administrative Agent, at the Borrower’s cost and expense, such other instruments, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.

 

Section 4.3.          Depository Bank. The Borrower shall maintain the Depository Account with the Administrative Agent (or such designated Affiliate).

 

SECTION 5.          Definitions; Interpretation.

 

Section 5.1.           Definitions. The following terms when used herein shall have the following meanings:

 

Act” is defined in Section 12.24 hereof.

 

Additional Guarantor Supplement” is defined in Section 4.2 hereof.

 

Adjusted EBITDA” means, as of any date of determination, an amount equal to (i) EBITDA for the most recently completed Fiscal Quarter computed on an annualized basis, minus (ii) the Capital Reserve on such date.

 

Adjusted LIBOR” is defined in Section 1.4(b) hereof.

 

“Adjustment Period” means the period from April 1, 2020 through March 31, 2021.

 

Adjusted Property NOI” means, as of any date of determination, with respect to any Real Property, the Property NOI for the most recently completed Fiscal Quarter computed on an annualized basis minus (i) the Capital Reserve, and (ii) the greater of (a) 3% of Property Income for the most recently completed Fiscal Quarter computed on an annualized basis and (b) actual management fees paid in cash to third party managers for the most recently completed Fiscal Quarter computed on an annualized basis. The Borrower’s Ownership Share of management fees received by, Property Income from and Capital Reserves held by Unconsolidated Affiliates shall be included in the calculation of Adjusted Property NOI consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

Adjusted Total Asset Value” means, as of any date of determination, an amount equal to the sum of

 

(I)            (a) with respect to each single-tenant Real Property owned for less than six (6) full Fiscal Quarters, the lesser of (x) the Appraised Value (if available) of such Real Property and (y) the aggregate acquisition cost of such Real Property or, if an Appraised Value is not available for such Real Property, the aggregate acquisition cost of such Real Property, or (b) with respect to all other single-tenant Real Properties, the quotient of (x) the consolidated Adjusted Property NOI from such Real Properties divided by (y) the Capitalization Rate, plus

 

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(II)          (a) with respect to each multi-tenant Real Property owned by the Borrower or its Subsidiaries on March 31, 2020, ninety percent (90%) of the Appraised Value, aggregate acquisition cost or consolidated Adjusted Property NOI divided by the Capitalization Rate for such Real Property, in each case as reported to the Administrative Agent and the Lenders on the Compliance Certificate delivered under Section 8.5(e) for the fiscal quarter ended March 31, 2020, (b) with respect to each multi-tenant Real Property purchased by the Borrower or its Subsidiaries from April 1, 2020 through June 30, 2020, ninety percent (90%) of the lesser of (x) the Appraised Value (if available) of such Real Property and (y) the aggregate acquisition cost of such Real Property or, if an Appraised Value is not available for such Real Property, the aggregate acquisition cost of such Real Property, and (c) with respect to each multi-tenant Real Property purchased by the Borrower or its Subsidiaries from July 1, 2020 through March 31, 2021, the lesser of (x) the Appraised Value (if available) of such Real Property and (y) the aggregate acquisition cost of such Real Property, or, if an Appraised Value is not available for such Real Property, the aggregate acquisition cost of such Real Property, plus

 

(III)         unrestricted cash and cash equivalents owned by the Borrower and its Subsidiaries as of such date, as determined in accordance with GAAP;

 

provided that the Adjusted Property NOI from Real Properties sold or otherwise transferred during the applicable Fiscal Quarter shall be excluded. The Borrower’s Ownership Share of assets held by Unconsolidated Affiliates shall be included in the calculation of Total Asset Value consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

Adjusted Unencumbered Pool Value” means, with respect to each Unencumbered Pool Property, as of any date of determination, an amount equal to:

 

(a)       with respect to each such Unencumbered Pool Property owned by the Borrower or its Subsidiaries on March 31, 2020, ninety percent (90%) of the Appraised Value, aggregate acquisition cost or consolidated Adjusted Property NOI divided by the Capitalization Rate for such Unencumbered Pool Property, in each case as reported to the Administrative Agent and the Lenders on the Compliance Certificate delivered under Section 8.5(e) for the fiscal quarter ended March 31, 2020;

 

(b)       with respect to each such Unencumbered Pool Property purchased by the Borrower or its Subsidiaries from April 1, 2020 through June 30, 2020, ninety percent (90%) of the lesser of (x) the Appraised Value (if available) of such Unencumbered Pool Property and (y) the aggregate acquisition cost of such Unencumbered Pool Property or, if an Appraised Value is not available for such Unencumbered Pool Property, the aggregate acquisition cost of such Unencumbered Pool Property; or

 

(c)       with respect to each such Unencumbered Pool Property purchased by the Borrower or its Subsidiaries from July 1, 2020 through March 31, 2021, the lesser of (x) the Appraised Value (if available) of such Unencumbered Pool Property and (y) the aggregate acquisition cost of such Unencumbered Pool Property or, if an Appraised Value is not available for such Unencumbered Pool Property, the aggregate acquisition cost of such Unencumbered Pool Property.

 

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Administrative Agent” means BMO Harris Bank N.A., in its capacity as Administrative Agent hereunder, and any successor in such capacity pursuant to Section 11.7 hereof.

 

Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

AF REIT” means American Finance Trust, Inc., a Maryland corporation.

 

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

Affected Lender” is defined in Section 1.13 hereof.

 

Affiliate” means any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person for purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 10% or more of the securities having the ordinary voting power for the election of directors or governing body of a corporation or 10% or more of the partnership or other ownership interest of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.

 

Aggregate Unencumbered Pool Value” means, as of any date of determination, the sum of Unencumbered Pool Values of all Unencumbered Pool Properties; provided that, “Aggregate Unencumbered Pool Value” shall mean, as of any date of determination during the Adjustment Period, the sum of Adjusted Unencumbered Pool Values of all Unencumbered Pool Properties.

 

Agreement” means this Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time pursuant to the terms hereof.

 

Anti-Corruption Law” means the FCPA and any law, rule or regulation of any jurisdiction concerning or relating to bribery or corruption that are applicable to Borrower or any Guarantor or any Subsidiary.

 

Applicable Margin” means, with respect to Loans, Reimbursement Obligations, and letter of credit fees payable under Section 2.1 hereof:

 

(a)           Until the first Pricing Date, the rates per annum shown opposite Level III in the schedule belowFrom the Third Amendment Closing Date through the first Pricing Date, the Applicable Margin for Base Rate Loans and Reimbursement Obligations shall be 1.50% and the Applicable Margin for Eurodollar Loans and the Letter of Credit Fee shall be 2.50%.

 

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(b)           Thereafter, from one Pricing Date to the next, the rates per annum determined in accordance with the following schedule:

 

Level   Consolidated Leverage
Ratio for Such Pricing Date
  Applicable Margin
for Base Rate Loans
and Reimbursement
Obligations shall be:
   Applicable Margin
for Eurodollar
Loans and Letter
of Credit Fee shall be:
 
I   Less than or equal to 0.40 to 1.00   0.60%   1.60%
II   Less than or equal to 0.45 to 1.00, but greater than 0.40 to 1.00   0.75%   1.75%
III   Less than or equal to 0.50 to 1.00, but greater than 0.45 to 1.00   0.90%   1.90%
IV   Less than or equal to 0.55 to 1.00, but greater than 0.50 to 1.00   1.05%   2.05%
V   Greater than 0.55 to 1.00   1.20%   2.20%

 

For purposes hereof, the term “Pricing Date” means, for any Fiscal Quarter of the Borrower ending on or after MarchJune 3130, 20182021, the date on which the Administrative Agent is in receipt of the Borrower’s most recent Compliance Certificate and financial statements (and, in the case of the year end financial statements, audit report) (the “Borrower Information”) for the Fiscal Quarter then ended, pursuant to Section 8.5 hereof. The Applicable Margin shall be established based on the Consolidated Leverage Ratio for the most recently completed Fiscal Quarter and the Applicable Margin established on a Pricing Date shall remain in effect until the next Pricing Date. If the Borrower has not delivered the Borrower Information by the date the same is required to be delivered under Section 8.5 hereof, then until such Borrower Information is delivered, the Applicable Margin shall be the highest Applicable Margin (i.e., Level V shall apply); provided, the Administrative Agent will provide notice to Borrower when such highest Applicable Margin goes into effect. If the Borrower subsequently delivers such Borrower Information before the next Pricing Date, the Applicable Margin established by such late delivered Borrower Information shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Applicable Margin established by such Borrower Information shall be in effect from the Pricing Date that occurs immediately after the end of the Fiscal Quarter covered by such Borrower Information until the next Pricing Date. Each determination of the Applicable Margin made by the Administrative Agent in accordance with the foregoing shall be conclusive and binding on the Borrower and the Lenders if reasonably determined. The parties understand that the Applicable Margin set forth herein shall be determined and may be adjusted from time to time based upon the Borrower Information. If it is subsequently determined that any such Borrower Information was incorrect (for whatever reason, including, without limitation, because of a subsequent restatement of earnings by the Borrower) at the time it was delivered to the Administrative Agent and the Lenders, and if the applicable interest rate or fees calculated for any period were lower than they should have been had the correct information been timely provided, then such Applicable Margin for such period shall be automatically recalculated using the correct Borrower Information. The Administrative Agent shall promptly notify the Borrower in writing of any additional interest and fees due because of such recalculation, and the Borrower shall pay within five (5) Business Days of receipt of such written notice such additional interest or fees due to the Administrative Agent, for the account of each Lender holding Commitments and Loans at the time the additional interest and fee payment is received. Any recalculation of the Applicable Margin required by this provision shall survive the termination of this Agreement, and this provision shall not in any way limit any of the Administrative Agent’s or any Lender’s other rights under this Agreement.

 

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Application” is defined in Section 1.3(b) hereof.

 

Appraisal” means an appraisal performed by (i) Butler Burgher Group, (ii) CBRE Group, (iii) Cushman & Wakefield, (iv) Duff & Phelps, (v) Integra Realty Resources or (vi) any other appraiser reasonably acceptable to the Administrative Agent according to FIRREA standards.

 

Appraised Value” means, as of any date of determination, with respect to any Real Property as of any date of determination, the “as-is” appraised value of such Real Property set forth in (i) an Appraisal obtained by the Borrower, a Subsidiary, or a Controlled Affiliate in connection with the acquisition of such Real Property, or (ii) any other Appraisal obtained by the Borrower, a Subsidiary or a Controlled Affiliate at any time following the acquisition of such Real Property and which the Borrower or such Subsidiary or Controlled Affiliate elects to include in the calculation of Total Asset Value, in each case to the extent such Appraisal is dated no earlier than eighteen (18) months prior to such date of determination.

 

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Arrangers” means BMO Capital Markets Corp., Citizens Bank, N.A., and SunTrust Robinson Humphrey, Inc., and BBVA USA, as Joint Lead Arrangers and Joint Book Runners.

 

Asset Under Development” means any Real Property under construction (excluding (i) any completed Real Property under minor renovation, (ii) any Real Property that is contiguous to and purchased simultaneously with any completed Real Property, and (iii) any Real Property that is substantially completed with an Occupancy Rate of at least 65%).

 

Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 12.12 hereof), and accepted by the Administrative Agent, in substantially the form of Exhibit F or any other form approved by the Administrative Agent.

 

Authorized Representative” means those persons shown on the list of officers provided by the Borrower pursuant to Section 7.2 hereof or on any update of any such list provided by the Borrower to the Administrative Agent, or any further or different officers of the Borrower so named by any Authorized Representative of the Borrower in a written notice to the Administrative Agent.

 

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Available Amount” means, as of any date of determination, an amount equal to the lesser of:

 

(a)           60% of the Aggregate Unencumbered Pool Value; and

 

(b)           the maximum amount of Debt Service Indebtedness that could be incurred without causing the Implied Debt Service Coverage Ratio to be less than 1.50 to 1.00;

 

provided that, notwithstanding the foregoing, “Available Amount” shall mean, as of any date of determination during the Adjustment Period, an amount equal to the lesser of (x) 60% of the Aggregate Unencumbered Pool Value and (y) the maximum amount of Total Unsecured Indebtedness that could be incurred without causing the Implied Unsecured Interest Coverage Ratio to be less than (i) for the Fiscal Quarter ended June 30, 2020, 1.35 to 1.00, (ii) for the Fiscal Quarter ending September 30, 2020, 2.00 to 1.00, and (iii) for the Fiscal Quarters ending December 31, 2020 and March 31, 2021, 2.50 to 1.00.

 

Available Amount Certificate” means the certificate in the form of Exhibit I hereto, or in such other form reasonably acceptable to the Administrative Agent, to be delivered to the Administrative Agent pursuant to Sections 7.2(j), 7.3, and 8.5 hereof.

 

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

Bank Products” means treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services) provided to the Borrower or any Guarantor by any Lender or any of its Affiliates.

 

Bank Product Obligations” of the Borrower and the Guarantors means any and all of their obligations, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Bank Products.

 

Bankruptcy Event” means, with respect to any Person, any event of the type described in clause (j) or (k) of Section 9.1 hereof with respect to such Person.

 

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Base Rate” is defined in Section 1.4(a) hereof.

 

Base Rate Loan” means a Loan bearing interest at a rate specified in Section 1.4(a) hereof.

 

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

Borrower” is defined in the introductory paragraph of this Agreement.

 

Borrowing” means the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type by the Lenders on a single date and, in the case of Eurodollar Loans, for a single Interest Period. Borrowings of Loans are made and maintained ratably from each of the Lenders according to their Percentages. A Borrowing is “advanced” on the day Lenders advance funds comprising such Borrowing to the Borrower, is “continued” on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Loans to the other, all as determined pursuant to Section 1.6 hereof. Borrowings of Swing Loans are made by the Swing Line Lender in accordance with the procedures set forth in Section 1.2 hereof.

 

Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Chicago, Illinois and, if the applicable Business Day relates to the advance or continuation of, or conversion into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar deposits in the interbank eurodollar market in London, England.

 

Capital Lease” means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee; provided, however, that, notwithstanding anything in Section 5.3 to the contrary, to the extent that any change in GAAP after the Closing Date results in any lease which is, or would be, classified as an operating lease under GAAP as in effect on the Closing Date being classified as a Capital Lease after giving effect to such change in GAAP, such lease shall continue to be deemed an operating lease for purposes of the Loan Documents.

 

Capital Reserve” means, as of any date of determination, an amount equal to the product of (i) $0.25 multiplied by (ii) the square footage of all Real Properties on such date.

 

Capitalization Rate” means (i) for single-tenant net lease Real Properties occupied by Tenants maintaining (or a parent company of such Tenant maintaining) a BBB- or Baa3 Rating or better from S&P’s or Moody’s, 7.00%, and (ii) for all other Real Properties, 7.50%.

 

Capitalized Lease Obligation” means, with respect to any Person as of any date of determination, the amount of the liability shown on the balance sheet of such Person in respect of a Capital Lease determined in accordance with GAAP.

 

Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or Lenders, as collateral for L/C Obligations or obligations of Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances subject to a first priority perfected security interest in favor of the Administrative Agent or, if the Administrative Agent and each applicable L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and each applicable L/C Issuer.

 

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Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future amendments.

 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

Change of Control” means any of (a) the acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than the Manager and its Affiliates at any time of beneficial ownership of 35% or more of the outstanding capital stock or other equity interests of AF REIT on a fully diluted basis, (b) the failure of individuals who are members of the board of directors (or similar governing body) of AF REIT on the Closing Date (together with any new or replacement directors whose initial nomination for election was approved by a majority of the directors who were either directors on the Closing Date or previously so approved) to constitute a majority of the board of directors (or similar governing body) of AF REIT, (c) the failure of AF REIT to own, directly or indirectly, at least 76% of the Stock of the Borrower, (d) the failure of AF REIT to Control the Borrower, (e) the failure of Edward M. Weil to be chairman of the board of directors, chief executive officer or director of AF REIT, (f) Katie P. Kurtz, Lisa D. Kabnick or Leslie Michelson shall die or become disabled or otherwise cease to be active on a daily basis in the management of AF REIT or serve as directors of AF REIT, and such event results in fewer than two (2) of such individuals being active on a daily basis in the management of AF REIT or serving as directors of AF REIT; provided that if fewer than two (2) of such individuals shall continue to be active on a daily basis in the management of AF REIT or serve as directors of AF REIT, it shall not be a “Change of Control” if a replacement executive of comparable experience and reasonably satisfactory to the Required Lenders shall have been retained within six (6) months of such event such that there are not fewer than two (2) such individuals active in the daily management of AF REIT or serving as directors of AF REIT, or (g) before an Internalization, the Manager, or a replacement advisor consented to in writing by the Required Lenders (such consent to not be unreasonably withheld or delayed) shall fail to be the advisor of the Borrower.

 

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Closing Date” means the date of this Agreement.

 

Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

 

Collateral Account” is defined in Section 9.4 hereof.

 

Commitment” means, as to any Lender, the obligation of such Lender to make Revolving Loans and to participate in Swing Loans and Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof. The Borrower and the Lenders acknowledge and agree that the Commitments of the Lenders, in the aggregate, are equal to $415,000,000540,000,000 on the Third Amendment Closing Date.

 

Commitment Amount Increase” is defined in Section 1.15 hereof.

 

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

Compliance Certificate” is defined in Section 8.5 hereof.

 

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profit Taxes.

 

Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (i) Total Indebtedness of AF REIT and its Subsidiaries on a consolidated basis as of such date to (ii) Total Asset Value as of such date.

 

Consolidated Secured Leverage Ratio” means, as of any date of determination, the ratio of (i) Total Secured Indebtedness of AF REIT and its Subsidiaries on a consolidated basis as of such date to (ii) Total Asset Value as of such date.

 

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

Controlled Affiliate” means a Subsidiary (i) that is not a Wholly Owned Subsidiary of the Borrower, (ii) the equity interests of which are greater than or equal to ninety-five percent (95%) owned by a Loan Party, and (iii) with respect to which such Loan Party has Control, including, without limitation, the right to take the following management actions without the need to obtain the consent of any Person: (a) to create Liens on such Subsidiary’s Property as security for Indebtedness and (B) to sell, convey, transfer or otherwise dispose of such Subsidiary’s Property.

 

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Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

 

Credit Event” means the advancing of any Loan, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit.

 

Customary Recourse Exceptions” means, with respect to any Indebtedness, personal recourse that is limited to fraud, misrepresentation, misapplication of cash, waste, Environmental Claims and liabilities, prohibited transfers, and violations of single purpose entity covenants (and other standard “bad boy” carveouts).

 

Debt Service” means, with respect to any Person for any period of time, the sum of (a) Interest Expense for such period and (b) the greater of (i) zero or (ii) scheduled principal amortization paid on Total Indebtedness for such period (exclusive of any balloon payments or prepayments of principal paid on such Total Indebtedness).

 

Debt Service Indebtedness” means, with respect to any Person as of any date of determination, Indebtedness of such Person which (i) amortizes over a period of thirty (30) years with equal payments of principal and interest due and payable on a monthly basis, and (ii) bears interest at a per annum rate equal to the greater of (x) 6.50% per annum, and (y) the current yield on United States treasuries having the closest maturity date to the tenth (10th) anniversary of the date of determination, plus 2.50%.

 

Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

 

Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default.

 

Defaulting Lender” means, subject to Section 1.14(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or any L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 1.14(b)) upon delivery of written notice of such determination to the Borrower, the L/C Issuer, the Swing Line Lender and each Lender.

 

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Depository Account” means the Borrower’s central operating account or any successor account thereto.

 

EBITDA” means, for any period, determined on a consolidated basis of AF REIT and its Subsidiaries in accordance with GAAP, net income (or loss) for such period plus, without duplication and to the extent included as an expense in the calculation of net income (or loss) for such period, the sum of (i) depreciation and amortization expense; (ii) Interest Expense; (iii) franchise, excise and income tax expense (including any interest or penalties related to the foregoing); (iv) extraordinary, unrealized, non recurring or unusual losses, including impairment charges and reserves and losses on sales of assets outside of the ordinary course of business and costs and expenses incurred during such period with respect to acquisitions consummated; (v) amortization of intangibles (including goodwill) and organization costs; (vi) any other non-cash charges; (vii) all commissions, guaranty fees, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and the net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP; (viii) fees, expenses and charges incurred during such period, directly relating to the negotiation of and entry into of (A) this Agreement, the other Loan Documents and any amendments thereto or any agreement entered into in connection therewith, (B) any investment, acquisition, equity issuance or incurrence of indebtedness permitted hereunder, any associated financings or any other asset purchase permitted hereunder, (C) the merger of Retail Centers of America and American Finance Trust or (D) arrangements in connection with the listing of the Stock of AF REIT on a national securities exchange, the issuance of the Incentive Listing Note and the entry into the Outperformance Agreement, and any tender offer or share repurchase program consummated in connection with, or after, such listing; (ix) any loss in connection with extinguishment or modification of debt; and (x) to the extent required to be treated as an expense under GAAP, reasonable transaction costs and expenses incurred during such period in connection with acquisitions permitted hereunder (whether or not consummated), minus, without duplication and to the extent included as income in the calculation of net income (or loss) for such period, (a) funds received by the Borrower or a Subsidiary as rent but which are reserved for capital expenses; (b) unrealized gains on the sale of assets; (c) income tax benefits; (d) interest income; (e) any extraordinary, unusual or non-recurring income or gains (including, whether or not included as a separate item in the statement of net income for such period, gains on the sales of assets outside of the ordinary course of business); (f) any other non-cash income; and (g) any cash payment made during such period described in clause (vi) above subsequent to the Fiscal Quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of net income. The Borrower’s Ownership Share of the EBITDA of its Unconsolidated Affiliates will be included when determining EBITDA of AF REIT and its Subsidiaries.

 

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EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) in the case of any assignment of a Revolving Credit Commitment, the L/C Issuer and Swing Line Lender as provided for in Section 12.12 hereof, (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld, conditioned or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower, any Subsidiary or any other Affiliate of the Borrower or any Subsidiary.

 

Eligible Property” means a Real Property that satisfies the following conditions:

 

(a)               as of the date such Real Property first becomes an Unencumbered Pool Property, (i) such Real Property has an Occupancy Rate of not less than 70% and (ii) the percentage of the rentable area of such Real Property occupied by Tenants pursuant to bona fide Leases is not less than 70%;

 

(b)               as of the date such Real Property first becomes an Unencumbered Pool Property, such Real Property is (i) operating and open for business (to the extent occupied) and (ii) any Tenant of such Real Property with a Significant Lease has not given any indication of its intent to cease operating or being open for business;

 

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(c)               such Real Property is one hundred percent (100%) owned in fee simple or one hundred percent (100%) leased pursuant to a Qualified Ground Lease, individually or collectively, by a Wholly Owned Subsidiary or a Controlled Affiliate;

 

(d)               such Real Property is a property located in the contiguous United States;

 

(e)               (i)(x) if such Real Property is held by a Wholly Owned Subsidiary of the Borrower, the Borrower’s beneficial ownership interest in such Wholly Owned Subsidiary is not subject to any Lien (other than Permitted Liens) or to any negative pledge, (y) if such Real Property is held by a Controlled Affiliate, the beneficial ownership interest in such Controlled Affiliate held by the applicable Loan Party that is the direct parent of such Controlled Affiliate is not subject to any Lien (other than Permitted Liens) or to any negative pledge, and (z) in either case of the foregoing clause (x) or (y), such Real Property is not subject to any Lien (other than Permitted Liens) or to any negative pledge, (ii) the applicable Wholly Owned Subsidiary or Controlled Affiliate has the unilateral right to sell, transfer or otherwise dispose of such Real Property and to create a Lien on such Real Property as security for Indebtedness, and (iii) the Wholly Owned Subsidiary or Controlled Affiliate shall have either executed this Agreement as a Guarantor or shall have delivered to the Administrative Agent (A) an Additional Guarantor Supplement or a separate Guaranty pursuant to Section 4.2 hereof, and (B) each of the documents required by Section 7.3 hereof;

 

(f)                such Real Property is free of all material structural defects, material title defects, material environmental conditions or other adverse matters which, individually or collectively, materially impair the value of such Real Property; and

 

(g)               Tenants of such Real Property under Significant Leases, if any, are no more than 90 days in arrears on base rental or other similar payments due under their applicable Significant Leases.

 

Environmental Claim” means any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, corrective or response action in connection with a Hazardous Material, Environmental Law or order of a Governmental Authority or (d) from any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

 

Environmental Law” means any current or future Legal Requirement pertaining to (a) the protection of health, safety and the indoor or outdoor environment, (b) the conservation, management or use of natural resources and wildlife, (c) the protection or use of surface water or groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material or (e) pollution (including any Release to air, land, surface water or groundwater), and any amendment, rule, regulation, order or directive issued thereunder.

 

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ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

 

Eurodollar Loan” means a Loan bearing interest at the rate specified in Section 1.4(b) hereof.

 

Eurodollar Reserve Percentage” is defined in Section 1.4(b) hereof.

 

Event of Default” means any event or condition identified as such in Section 9.1 hereof.

 

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason not to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 1.13 hereof) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 12.1 amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 12.1(b) or Section 12.1(d), and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

Existing Letters of Credit” means those letters of credit issued on account of the Borrower by BMO Harris Bank N.A. and listed on Schedule 1.2.

 

Extension Request” is defined in Section 1.16 hereof.

 

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FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreements with respect thereto.

 

FCPA” means the Foreign Corrupt Practices Act, 15 U.S.C. §§78dd-1, et seq.

 

Federal Funds Rate” means the fluctuating interest rate per annum described in part (i) of clause (b) of the definition of Base Rate appearing in Section 1.4(a) hereof.

 

FIRREA” means the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, and all regulations promulgated pursuant thereto.

 

Fiscal Quarter” means each of the three-month periods ending on March 31, June 30, September 30 and December 31 of each Fiscal Year.

 

Fiscal Year” means each twelve-month period ending on December 31.

 

Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (i) Adjusted EBITDA to (ii) Fixed Charges of AF REIT and its Subsidiaries for the most recently completed Fiscal Quarter computed on an annualized basis.

 

Fixed Charges” means, with respect to any Person for any period of time, Debt Service for such period, plus (a) cash dividends to preferred equity holders and required cash distributions (other than distributions by the Borrower to holders of operating partnership units, distributions by AF REIT to common equity holders, and distributions made under the Incentive Listing Note) made or to be made during such period, and (b) cash payments of base rent under Ground Leases made or to be made during such period, unless such payments are deducted from Property NOI and EBITDA. The Borrower’s Ownership Share of the Fixed Charges of its Unconsolidated Affiliates will be included when determining Fixed Charges of AF REIT and its Subsidiaries.

 

Foreign Lender” means a Lender that is not a U.S. Person.

 

Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to any L/C Issuer, such Defaulting Lender’s Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such L/C Issuer other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Percentage of outstanding Swing Loans made by the Swing Line Lender other than Swing Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.

 

Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

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GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

 

Genie” means Genie Acquisition, LLC, a Delaware limited liability company.

 

Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Governmental Affiliated Loan Corporations” Federal Home Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan Banks, Federal National Mortgage Association, Government National Mortgage Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or any other agency or instrumentality of the United States of America.

 

Ground Lease” means a ground lease of real Property.

 

Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

Guarantor” and “Guarantors” are defined in Section 4.1 hereof.

 

Guaranty” and “Guaranties” are defined in Section 4.1 hereof.

 

Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which is hazardous or toxic and is regulated under Environmental Law, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law.

 

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Hazardous Material Activity” means any activity, event or occurrence involving a Hazardous Material, including, without limitation, the manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation, handling of or corrective or response action to any Hazardous Material.

 

Hedging Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or its Subsidiaries shall be a Hedging Agreement.

 

Hedging Liability” means the liability of the Borrower or any Guarantor to any of the Lenders, or any Affiliates of any such Lenders in respect of any Hedging Agreement as the Borrower or such Guarantor, as the case may be, may from time to time enter into with any one or more of the Lenders party to this Agreement or their Affiliates, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor).

 

Implied Debt Service” means, with respect to any Person for any period of time, the aggregate Debt Service that would be due and payable during such period on the Debt Service Indebtedness.

 

Implied Debt Service Coverage Ratio” means, as of any date of determination, the ratio of (i) the Adjusted Property NOI for all Unencumbered Pool Properties as of such date to (ii) the Implied Debt Service for the Rolling Period then ended.

 

“Implied Unsecured Interest Coverage Ratio” means, as of any date of determination, the ratio of (i) the Adjusted Property NOI for all Unencumbered Pool Properties as of such date to (ii) the Implied Unsecured Interest Expense for the Rolling Period then ended.

 

“Implied Unsecured Interest Expense” means, for any period of time, the aggregate Interest Expense that would be due and payable during such period on the Total Unsecured Indebtedness of the Borrower and its Subsidiaries at a rate of the greater of (i) 3.00% per annum and (ii) the interest rate applicable at such time to the Revolving Loans.

 

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Incentive Listing Note” means the convertible note in form and substance reasonably acceptable to the Administrative Agent, to be issued by the Borrower to the Special Limited Partner in accordance with its obligations under the Borrower’s organizational documents to redeem the Special Limited Partner’s interest in the Borrower, in an amount equal to fifteen percent (15%) of the amount, if any, by which (i) the sum of (A) the market value of AF REIT’s outstanding common stock plus (B) the sum of all distributions paid by AF REIT prior to the listing of the Stock of AF REIT on a national securities exchange, exceeds (ii) the sum of (X) the total gross proceeds of all public and private offerings, including issuance of AF REIT’s common stock pursuant to a merger or business combination, consummated prior to the date AF REIT’s common stock is first listed on a national securities exchange plus (Y) the amount of cash flow necessary to generate a six percent (6%) annual (based on a 365-day year) cumulative, non-compounded pre-tax return to such stockholders (with no accrual of additional amounts on the outstanding obligations), having no stated maturity date and payable solely from the net proceeds received by AF REIT from the sale of any of the Borrower’s direct or indirect investments in real property, loans and other investments permitted by the Borrower’s organizational documents occurring after AF REIT’s common stock is first listed on a national securities exchange, as amended or otherwise modified from time to time as permitted pursuant to the terms hereof.

 

Indebtedness” means for any Person (without duplication) (a) all indebtedness created, assumed or incurred in any manner by such Person representing money borrowed (including as evidenced by bonds, debentures, notes, loan agreements and other similar instruments), (b) all indebtedness for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business which are not more than one hundred eighty (180) days past due and which are being contested in good faith by appropriate proceedings diligently conducted), (c) all Capitalized Lease Obligations of such Person, (d) all direct or contingent obligations of such Person on or with respect to letters of credit, bankers’ acceptances, bank guarantees, surety bonds and other similar extensions of credit whether or not representing obligations for borrowed money, (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of disqualified stock, (f) guarantees of such Person in respect of obligations of the kind referred to in clauses (a) through (e) above, (g) the negative mark-to-market value of interest rate swaps, and (h) all obligations of the kind referred to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien upon Property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness, but limited to the lesser of (1) the fair market value of the Property subject to such Lien and (2) the aggregate amount of the obligations so secured. Indebtedness of the type described in clause (g) will constitute Indebtedness solely for the purposes of determining whether an Event of Default arising from a default under other Indebtedness shall have occurred pursuant to Section 9.1(f). Notwithstanding the foregoing, “Indebtedness” shall not include the Incentive Listing Note or a Permitted Incentive Listing Note Distribution permitted pursuant to the terms hereof and made in connection therewith.

 

Indemnified Taxes” means (a) all Taxes other than Excluded Taxes imposed on or with respect to any payment made by or on account of any obligation of the Borrower and (b) to the extent not otherwise described in (a), Other Taxes.

 

Initial Unencumbered Pool Properties” means, collectively, the Real Property listed on Schedule 1.1 and “Initial Unencumbered Pool Property” means any of such Real Property.

 

Interest Expense” means, with respect to any Person for any period of time, the cash interest expense whether paid, accrued or capitalized (without deduction of consolidated interest income) of such Person for such period. Interest Expense shall exclude any amortization of (A) deferred financing fees, including the write-off of such fees relating to the early retirement of the related Indebtedness for borrowed money, and (B) debt premiums and discounts. The Borrower’s Ownership Share of the Interest Expense of its Unconsolidated Affiliates will be included when determining Interest Expense of AF REIT and its Subsidiaries.

 

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Interest Payment Date” means (a) with respect to any Eurodollar Loan, the last day of each Interest Period with respect to such Eurodollar Loan and, if the applicable Interest Period is longer than (3) three months, each day occurring every three (3) months after the commencement of such Interest Period, (b) with respect to any Base Rate Loan (other than Swing Loans), the last day of every calendar quarter, (c) with respect to any Eurodollar Loan and/or any Base Rate Loan, the Termination Date, and (d) as to any Swing Loan, (i) bearing interest by reference to the Base Rate, the last day of every calendar month, and on the Termination Date and (ii) bearing interest by reference to the Swing Line Lender’s Quoted Rate, the last day of the Interest Period with respect to such Swing Loan, and on the Termination Date.

 

Interest Period” means the period commencing on the date a Borrowing of Eurodollar Loans or Swing Loans (bearing interest at the Swing Line Lender’s Quoted Rate) is advanced, continued, or created by conversion and ending (a) in the case of Eurodollar Loans, 1, 2, 3, or 6 months thereafter and (b) in the case of Swing Loans bearing interest at the Swing Line Lender’s Quoted Rate, on the date one (1) to five (5) Business Days thereafter as mutually agreed by the Borrower and the Swing Line Lender, provided, however, that:

 

(i)              no Interest Period shall extend beyond the Termination Date;

 

(ii)              whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Borrowing of Eurodollar Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and

 

(iii)            for purposes of determining an Interest Period for a Borrowing of Eurodollar Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

 

Internalization” means an internalization by AF REIT of the services provided to it by the Manager.

 

Land Assets” means any Real Property which is not an Asset Under Development and on which no significant improvements have been constructed (excluding any Real Property that is contiguous to and purchased simultaneously with any completed Real Property).

 

L/C Issuer” means BMO Harris Bank N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 1.3(h) hereof.

 

L/C Obligations” means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations.

 

L/C Participation Fee” is defined in Section 2.1(b) hereof.

 

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L/C Sublimit” means $15,000,000, as such amount may be reduced pursuant to the terms hereof.

 

Lease” means each existing or future lease, sublease (to the extent of any property owner’s rights thereunder), license, or other similar agreement under the terms of which any Person has or acquires any right to occupy or use any Real Property or any part thereof, or interest therein, as the same may be amended, supplemented or modified.

 

Legal Requirement” means any treaty, convention, statute, law, regulation, ordinance, license, permit, governmental approval, injunction, judgment, order, consent decree or other requirement of any Governmental Authority, whether federal, state, or local.

 

Lenders” means and includes BMO Harris Bank N.A. and the other financial institutions from time to time party to this Agreement, including each assignee Lender pursuant to Section 12.12 hereof and, unless the context otherwise requires, the Swing Line Lender.

 

Lending Office” is defined in Section 10.5 hereof.

 

Letter of Credit” is defined in Section 1.3(a) hereof.

 

LIBOR” is defined in Section 1.4(b) hereof.

 

LIBOR Index Rate” is defined in Section 1.4(b) hereof.

 

LIBOR Quoted Rate” is defined in Section 1.4(a) hereof.

 

Lien” means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement.

 

Listing Extension” is defined in Section 1.16 hereof.

 

Loan” means any Revolving Loan or Swing Loan, whether outstanding as a Base Rate Loan or Eurodollar Loan or otherwise, each of which is a “type” of Loan hereunder.

 

Loan Documents” means this Agreement, the Notes (if any), the Applications, the Guaranties, if any, the Special Limited Partner Subordination Agreement, and each other instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith.

 

Loan Parties” means, collectively, AF REIT, the Borrower and each other Guarantor.

 

Manager” means American Finance Advisors, LLC, a Delaware limited liability company.

 

“Management Agreement” means that certain Third Amended and Restated Advisory Agreement dated as of September 6, 2016, among AF REIT, the Borrower and the Manager, as the same may be further modified or amended in accordance with the terms of this Agreement.

 

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Material Adverse Effect” means (a) a material adverse change in, or material adverse effect upon, the operations, performance, business, Property or financial condition of AF REIT and its Subsidiaries taken as a whole, (b) a material impairment of the ability of the Borrower or any Guarantor to perform its obligations under any Loan Document or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower or any Guarantor of any Loan Document or the rights and remedies of the Administrative Agent and the Lenders thereunder.

 

Metropolitan Statistical Area” means any of the metropolitan statistical areas as defined from time to time by the United States Office of Management and Budget.

 

MFFO” means AF REIT’s “Modified Funds From Operations” as such term is defined in and determined in accordance with the Investment Program Association’s Practice Guideline 2010-01, dated as of November 2, 2010, as modified from time to time, and, prior to listing of the Stock of AF REIT on a national securities exchange, calculated per AF REIT’s filings on Form 10-K or Form 10-Q, as the case may be, most recently delivered prior to any date of determination, plus the sum of deferred financing costs, deferred leasing commissions and non-recurring and non-cash items.

 

Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of the L/C Issuers with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion except as otherwise provided for herein.

 

Moody’s” means Moody’s Investors Service, Inc., or any successor thereof.

 

Net Worth” means, as of any date of determination, total stockholders’ equity reflected on AF REIT’s consolidated balance sheet as reported in its Form 10-K or 10-Q, as the case may be, most recently delivered prior to any date of determination.

 

Note” and “Notes” are defined in Section 1.10 hereof.

 

Obligations” means all obligations of the Borrower to pay principal and interest on the Loans, all Reimbursement Obligations owing under the Applications, all fees and charges payable hereunder, and all other payment obligations of the Borrower or any Guarantor arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

 

Occupancy Rate” means for any Real Property, the percentage of the rentable area of such Real Property leased by Tenants pursuant to bona fide Leases, in each case, which Tenants are not subject to a then continuing Bankruptcy Event, or if subject to a then continuing Bankruptcy Event (i) the trustee in bankruptcy of such Tenant shall have accepted and assumed such Lease or the Tenant shall be not more than 30 days in arrears on base rental or other similar payments due under the Leases; (ii) to the extent that the Tenant shall have filed, and the bankruptcy court shall have approved, the Tenant’s plan for reorganization, the Tenant shall be performing its obligations pursuant to the approved plan of reorganization; or (iii) the status of such Tenant’s Lease shall be otherwise reasonably acceptable to the Administrative Agent.

 

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OFAC” means the United States Department of Treasury Office of Foreign Assets Control.

 

OFAC Event” is defined in Section 8.13(c) hereof.

 

OFAC Sanctions Programs” means all laws, regulations, and Executive Orders administered by OFAC, including without limitation, the Bank Secrecy Act, anti-money laundering laws (including, without limitation, the Patriot Act), and all economic and trade sanction programs administered by OFAC, any and all similar United States federal laws, regulations or Executive Orders (whether administered by OFAC or otherwise), and any similar laws, regulations or orders adopted by any State within the United States.

 

OFAC SDN List” means the list of the Specially Designated Nationals and Blocked Persons maintained by OFAC.

 

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

Other Recourse Debt” means, as of any date of determination, the aggregate principal amount of all consolidated Indebtedness outstanding evidenced by notes, bonds, debentures or similar instruments, letters of credit (including the face amount of any undrawn letters of credit) and capital lease obligations, in each case, which is recourse to, or has a deficiency guaranty provided by, the Borrower or AF REIT (directly or by a guaranty thereof, but without duplication), other than with respect to the Loans, Hedging Liability, Bank Product Obligations and other Obligations and Customary Recourse Exceptions. For the avoidance of doubt, if any Indebtedness is partially guaranteed by the Borrower or AF REIT, then solely the portion of such Indebtedness that is so guaranteed shall constitute Other Recourse Debt.

 

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 1.13 hereof).

 

Outperformance Agreement” means the Multi-Year Outperformance Agreement, to be entered into among AF REIT, the Borrower and the Manager and in form and substance substantially reasonably satisfactory to the Administrative Agent, as amended or otherwise modified from time to time.

 

Ownership Share” means with respect to any Subsidiary of a Person (other than a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or Unconsolidated Affiliate or (b) such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary or Unconsolidated Affiliate.

 

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Participating Interest” is defined in Section 1.3(e) hereof.

 

Participating Lender” is defined in Section 1.3(e) hereof.

 

Patriot Act” is defined in Section 12.24 hereof.

 

PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA.

 

Percentage” means, for each Lender, the percentage of the Commitments represented by such Lender’s Commitment or, if the Commitments have been terminated, the percentage held by such Lender (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all Loans and L/C Obligations then outstanding.

 

“Permitted Incentive Listing Note Distributions” means the principal payments to be made on the Incentive Listing Note pursuant to the terms set forth in the Borrower’s organizational documents as in effect on the date hereof or as amended with respect to the Incentive Listing Note in a manner reasonably satisfactory to the Administrative Agent, but only if such payments (a) shall be made solely from the net sales proceeds from the sale of a Property in compliance with Section 8.9, (b) shall not be made when any Default or Event of Default exists and shall not result in non-compliance by the Loan Parties with the terms and conditions of this Agreement and the other Loan Documents, including without limitation, the financial covenants contained in Section 8.20, after giving effect to such distribution, (c) shall not otherwise be required to be applied pursuant to Section 1.8(b), and (d) are made in compliance with the Special Limited Partner Subordination Agreement and at a time when no breach or default thereunder on the part of the Special Limited Partner exists.

 

Permitted Liens” means each of the following: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 8.3; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than thirty (30) days or that are being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) easements, zoning restrictions, rights of way and other encumbrances on title to real property that do not materially and adversely affect the value of such real property or the use of such real property for its present purposes; (e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of like nature incurred in the ordinary course of business; (f) Liens in favor of the United States of America for amounts paid to the Borrower or any Guarantor as progress payments under government contracts entered into by it; (g) attachment, judgment and other similar Liens arising in connection with court, reference or arbitration proceedings, provided that the same have been in existence less than twenty (20) days, that the same have been discharged or that execution or enforcement thereof has been stayed pending appeal; (h) the rights of tenants or lessees under leases or subleases not interfering with the ordinary conduct of business of such Person; (i) Liens in favor of the Administrative Agent for its benefit and/or the benefit of the Lenders and the L/C Issuer; (j) Liens on Real Properties that are not Unencumbered Pool Properties and Liens on Stock and Stock Equivalents of any Subsidiary that is neither (x) a Guarantor or an Unencumbered Pool Property Subsidiary nor (y) a direct or indirect parent of a Guarantor or an Unencumbered Pool Property Subsidiary; (k) Liens existing on the date hereof and listed on Schedule 1.3 attached hereto; (l) Liens securing obligations in the nature of personal property financing leases for furniture, furnishings or similar assets, Capital Lease Obligations and other purchase money obligations for fixed or capital assets; provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (ii) the obligations secured thereby do not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition, and (iii) with respect to Capital Leases, such Liens do not at any time extend to or cover any assets other than the assets subject to such Capital Leases; (m) such other title and survey exceptions as the Administrative Agent has approved in writing in the Administrative Agent’s reasonable discretion and (n) other Liens securing Indebtedness or other obligations in an aggregate principal amount at any time outstanding not to exceed $1,000,000 determined as of the date of incurrence.

 

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Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof.

 

Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that either (a) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group or (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

 

Property” or “Properties” means, as to any Person, all types of real (including the Real Property), personal, tangible, intangible or mixed property, including leasehold estates created by Ground Leases, owned by such Person whether or not included in the most recent balance sheet of such Person and its subsidiaries under GAAP, including, as to any Subsidiary, any Real Property owned by it.

 

Property Expenses” means, as to any Real Property, the costs (including, but not limited to, management fees, payments under Ground Leases, bad debt expenses, payroll, real estate taxes, assessments, insurance, utilities, landscaping and other similar charges) of operating and maintaining such Real Property, which are the responsibility of the Borrower or the applicable Subsidiary that are not paid directly by the applicable Tenant, but excluding Debt Service, income tax expense, capital expenses, depreciation, amortization, interest costs and other non-cash expenses.

 

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Property Income” means, as to any Real Property, cash rents (excluding non cash straight line rent) and other cash revenues received by a Subsidiary in the ordinary course for such Real Property, but excluding security deposits and prepaid rent except to the extent applied in satisfaction of applicable Tenants’ obligations for rent. The Borrower’s Ownership Share of assets held by Unconsolidated Affiliates shall be included in the calculation of Property Income consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

Property NOI” means, with respect to any Real Property for any period of time, the aggregate amount of (i) Property Income for such period minus (ii) Property Expenses for such period. The Borrower’s Ownership Share of assets held by Unconsolidated Affiliates shall be included in the calculation of Property NOI consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Qualified Ground Lease” means any Ground Lease (a) which is a direct Ground Lease granted by the fee owner of real property, (b) which may be transferred and/or assigned without the consent of the lessor (or as to which the lease expressly provides that (i) such lease may be transferred and/or assigned with the consent of the lessor and (ii) such consent shall not be unreasonably withheld or delayed) or subject to certain reasonable pre-defined requirements, (c) which has a remaining term (including any renewal terms exercisable at the sole option of the lessee) of at least twenty (20) years, (d) under which no material default has occurred and is continuing, (e) with respect to which a Lien may be granted without the consent of the lessor, (f) which contains lender protection provisions acceptable to the Administrative Agent, including, without limitation, provisions to the effect that (i) the lessor shall notify any holder of a leasehold mortgage Lien in such lease of the occurrence of any default by the lessee under such lease and shall afford such holder the option to cure such default, and (ii) in the event that such lease is terminated, such holder shall have the option to enter into a new lease having terms substantially identical to those contained in the terminated lease and (g) which is otherwise reasonably acceptable in form and substance to the Administrative Agent.

 

Rating” means the debt rating provided by S&P or Moody’s with respect to the unsecured senior long-term non-credit enhanced debt of a Person.

 

RCRA” means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

 

Real Property” or “Real Properties” means the real property owned by the Borrower or any of its Subsidiaries.

 

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Recipient” means (a) the Administrative Agent, (b) any Lender, and (c) any L/C Issuer, as applicable.

 

Reimbursement Obligation” is defined in Section 1.3(c) hereof.

 

REIT” means a “real estate investment trust” in accordance with Section 856 of the Code.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migration, dumping, or disposing into the indoor or outdoor environment, including, without limitation, the abandonment or discarding of barrels, drums, containers, tanks or other receptacles containing or previously containing any Hazardous Material.

 

Required Lenders” means, as of the date of determination thereof, (i) if there is only one (1) Lender, such Lender, (ii) if there are two (2) or three (3) Lenders at such time, at least two (2) Lenders, and (iii) if there are more than three (3) Lenders at such time, Lenders whose outstanding Loans, interests in Letters of Credit and Unused Commitments constitute more than 50% of the sum of the total outstanding Loans, interests in Letters of Credit, and Unused Commitments of the Lenders.

 

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

 

Responsible Officer” means, with respect to AF REIT, Genie or the Borrower, the chief executive officer, president, chief financial officer, chief accounting officer, treasurer, assistant treasurer, controller, or chief legal officer or the chief operating officer of such Person.

 

Restricted Payments” means dividends on or other distributions in respect of any class or series of Stock, Stock Equivalents or other equity interests of AF REIT, Genie, the Borrower or its Subsidiaries or the direct or indirect purchase, redemption, acquisition, or retirement of any of AF REIT’s, the Borrower’s or a Subsidiaries’ Stock, Stock Equivalents or other equity interest.

 

Revolving Credit” means the credit facility for making Loans and Swing Loans and issuing Letters of Credit described in Sections 1.1, 1.2 and 1.3 hereof.

 

Revolving Credit Availability” means, as of any time the same is to be determined, the amount (if any) by which (a) the lesser of (1) the Available Amount as then determined and computed in accordance with this Agreement, and (2) the Revolving Credit Commitments as then in effect, exceeds (b) the aggregate principal amount of Loans and L/C Obligations then outstanding.

 

Revolving Loan” is defined in Section 1.1 hereof and, as so defined, includes a Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Revolving Loan hereunder.

 

Rolling Period” means, as of any date of determination, the four Fiscal Quarters ending on or immediately preceding such date.

 

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S&P” means S&P Global Inc., and any successor thereto.

 

Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principle, rules, standards and practices promulgated, approved or incorporated by the Securities Exchange Commission or the Public Company Accounting Oversight Board, as each of the foregoing may be amended.

 

Significant Lease” means, as to any particular Real Property, each Lease which constitutes 30% or more of all base rent revenue of such Real Property.

 

Special Limited Partner” means American Finance Special Limited Partner, LLC.

 

Special Limited Partner Subordination Agreement” means that certain subordination agreement to be entered into among the Special Limited Partner, the Borrower, AF REIT and the Administrative Agent in form and substance reasonably satisfactory to the Administrative Agent.

 

Specialty Property” means any Real Property that is a convenience store or gas station or that the Administrative Agent otherwise determines in its reasonable discretion in good faith is a “Specialty Property.”

 

Stated Maturity Date” means April 26, 2020, as such date may be extended pursuant to Section 1.16.

 

Stock” means shares of capital stock, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting, and includes, without limitation, common stock, but excluding any preferred stock or other preferred equity securities.

 

Stock Equivalents” means all securities (other than Stock) convertible into or exchangeable for Stock at the option of the holder, and all warrants, options or other rights to purchase or subscribe for any stock, whether or not presently convertible, exchangeable or exercisable.

 

Subsidiary” means, as to any particular parent corporation or organization, any other corporation or organization more than 50% of the outstanding Voting Stock of which is at the time directly or indirectly owned by such parent corporation or organization or by any one or more other entities which are themselves subsidiaries of such parent corporation or organization. Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of AF REIT or the Borrower or of any of their direct or indirect Subsidiaries.

 

Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

Swing Line” means the credit facility for making one or more Swing Loans described in Section 1.2 hereof.

 

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Swing Line Lender” means BMO Harris Bank N.A., acting in its capacity as the Lender of Swing Loans hereunder, or any successor Lender acting in such capacity appointed pursuant to Section 12.12 hereof.

 

Swing Line Lender’s Quoted Rate” is defined in Section 1.2(c) hereof.

 

Swing Line Sublimit” means $10,000,000, as such amount may be reduced pursuant to the terms hereof.

 

Swing Loan” and “Swing Loans” each is defined in Section 1.2 hereof.

 

Swing Note” is defined in Section 1.11 hereof.

 

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including back up withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Tenant” means any Person leasing, subleasing or otherwise occupying any portion of a Real Property under a Lease.

 

Termination Date” means the earlier of (i) the Stated Maturity Date and (ii) the date on which the Commitments are terminated in whole pursuant to Section 1.12, 9.2 or 9.3 hereof.

 

“Third Amendment Closing Date” means July 24, 2020.

 

“Third Amendment Effective Date” means April 1, 2020.

 

Total Asset Value” means, as of any date of determination, an amount equal to the sum of (i) (a) with respect to alleach Real PropertiesProperty owned for less than six (6) full Fiscal Quarters, the lesser of (x) the Appraised Value (if available) of such Real PropertiesProperty and (y) the aggregate acquisition cost of such Real PropertiesProperty or, if an Appraised Value is not available for such Real Property, the aggregate acquisition cost of such Real Property, or (b) with respect to all other Real Properties, the quotient of (x) the consolidated Adjusted Property NOI from such Real Properties divided by (y) the Capitalization Rate, plus (ii) unrestricted cash and cash equivalents owned by the Borrower and its Subsidiaries as of such date, as determined in accordance with GAAP; provided that the Adjusted Property NOI from Real Properties sold or otherwise transferred during the applicable Fiscal Quarter shall be excluded. The Borrower’s Ownership Share of assets held by Unconsolidated Affiliates shall be included in the calculation of Total Asset Value consistent with the above described treatment for assets owned by AF REIT or a Subsidiary. Notwithstanding the foregoing, “Total Asset Value” shall mean, as of any date of determination during the Adjustment Period, the Adjusted Total Asset Value.

 

Total Indebtedness” means, with respect to any Person and its Subsidiaries as of any date of determination, (i) the aggregate principal amount of all consolidated Indebtedness outstanding evidenced by notes, bonds, debentures or similar instruments, letters of credit (including the face amount of any undrawn letters of credit) and capital lease obligations of such Person and its Subsidiaries (directly or by a guaranty thereof, but without duplication), plus (ii) such Person’s Ownership Share of the Indebtedness of its Unconsolidated Affiliates (except if such Indebtedness, or portion thereof, is recourse to such Person, in which case the greater of (a) such Person’s Ownership Share of the Indebtedness and (b) the amount of the recourse portion of such Indebtedness, shall be included as Indebtedness of such Person), minus any unrestricted cash or cash equivalents of such Person and its Subsidiaries, as determined in accordance with GAAP.

 

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Total Secured Indebtedness” means, with respect to any Person and its Subsidiaries as of any date of determination, (i) the aggregate principal amount of all consolidated Indebtedness outstanding evidenced by notes, bonds, debentures or similar instruments, letters of credit (including the face amount of any undrawn letters of credit) and capital lease obligations of such Person and its Subsidiaries (directly or by a guaranty thereof, but without duplication), in each case, that are secured by a Lien, plus (ii) such Person’s Ownership Share of the Total Secured Indebtedness of its Unconsolidated Affiliates (except if such Total Secured Indebtedness, or portion thereof, is recourse to such Person, in which case the greater of (a) such Person’s Ownership Share of the Total Secured Indebtedness and (b) the amount of the recourse portion of such Total Secured Indebtedness, shall be included as Indebtedness of such Person).

 

“Total Unsecured Indebtedness” means, with respect to any Person and its Subsidiaries as of any date of determination, (i) Total Indebtedness of such Person and its Subsidiaries minus (ii) Total Secured Indebtedness of such Person and its Subsidiaries.

 

UCC” means the Uniform Commercial Code as in effect in the State of New York.

 

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

 

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

Unconsolidated Affiliate” means with respect to any Person, any other Person in whom such Person holds an investment, which investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person.

 

Unencumbered Pool Determination Date” means each date on which the Available Amount is certified in writing to the Administrative Agent, which shall occur as follows:

 

(a)               Quarterly. For quarterly certifications, as of the last day of each Fiscal Quarter.

 

(b)               Property Adjustments. Upon or following each addition or deletion of an Eligible Property, upon or promptly following such addition or deletion.

 

Unencumbered Pool Property” means, as at any date of determination, any Eligible Property which is taken into account in calculating the Unencumbered Pool Value.

 

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Unencumbered Pool Requirements” means with respect to the calculation of the Unencumbered Pool Value, collectively, that:

 

(a)               [Reserved];

 

(b)               the minimum aggregate Occupancy Rate of all Unencumbered Pool Properties shall be no less than 80% at all times;

 

(c)               no more than 20% of the Aggregate Unencumbered Pool Value may be comprised of the Unencumbered Pool Value from any one Unencumbered Pool Property;

 

(d)               no more than 30% of the Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value may be derived from any one Metropolitan Statistical Area;

 

(e)               no more than 20% of the Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value may be derived from any one Tenant;

 

(f)                no more than 20% of the Aggregate Unencumbered Pool Value may be comprised of the Unencumbered Pool Value from Unencumbered Pool Properties subject to Qualified Ground Leases;

 

(g)               the minimum Occupancy Rate of each Unencumbered Pool Property shall be no less than 70% for any two consecutive quarters;

 

(h)               the Unencumbered Pool Value for Unencumbered Pool Properties owned by Controlled Affiliates may not exceed $35,000,000; and

 

(i)                no more than 25% of the Aggregate Unencumbered Pool Value may be comprised of the Unencumbered Pool Value from Unencumbered Pool Properties that are Specialty Properties.

 

Unencumbered Pool Property Subsidiary” means any Controlled Affiliate that owns an Unencumbered Pool Property.

 

Unencumbered Pool Value” means, with respect to each Unencumbered Pool Property, as of any date of determination, an amount equal to:

 

(a)               with respect to any Unencumbered Pool Property owned for less than six (6) full Fiscal Quarters, the lesser of (x) the Appraised Value (if available) of such Unencumbered Pool Property and (y) the aggregate acquisition cost of such Unencumbered Pool Property or, if an Appraised Value is not available for such Unencumbered Pool Property, the aggregate acquisition cost of such Unencumbered Pool Property; or

 

(b)               with respect to each other Unencumbered Pool Property, the quotient of (x) the consolidated Adjusted Property NOI of such Unencumbered Pool Property divided by (y) the Capitalization Rate;

 

provided that, notwithstanding the foregoing, “Unencumbered Pool Value” shall mean, as of any date of determination during the Adjustment Period, the Adjusted Unencumbered Pool Value.

 

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Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if any) by which the present value of all vested nonforfeitable accrued benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA.

 

Unused Commitments” means, at any time, the difference between the Commitments then in effect and the aggregate outstanding principal amount of Loans (other than Swing Loans) and L/C Obligations.

 

U.S. Dollars” and “$” each means the lawful currency of the United States of America.

 

U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

 

U.S.” and “United States” means the United States of America.

 

Voting Stock” of any Person means capital stock or other equity interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency.

 

Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of the equity interests (other than, in the case of a corporation, directors’ qualifying shares) are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person.

 

Withholding Agent” means the Borrower and the Administrative Agent.

 

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write--down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

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Section 5.2.           Interpretation. The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references to time of day herein are references to Chicago, Illinois, time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement. All references to “cash equivalents” shall be construed to refer to those investments described in Section 8.8(a) through (e) and to “aggregate acquisition cost” shall be determined as historically reported to the Administrative Agent.

 

Section 5.3.           Change in Accounting Principles. If, after the date of this Agreement, there shall occur any change in GAAP from those used in the preparation of the financial statements referred to in Section 6.5 hereof and such change shall result in a change in the method of calculation of any financial covenant, standard or term found in this Agreement, either the Borrower or the Required Lenders may, by written notice to the Lenders and the Borrower, respectively, require that the Lenders and the Borrower negotiate in good faith to amend such covenants, standards, and terms so as equitably to reflect such change in accounting principles, with the desired result being that the criteria for evaluating the financial condition of AF REIT and its Subsidiaries shall be the same as if such change had not been made. No delay by the Borrower or the Required Lenders in requiring such negotiation shall limit their right to so require such a negotiation at any time after such a change in accounting principles. Until any such covenant, standard, or term is amended in accordance with this Section 5.3, financial covenants shall be computed and determined in accordance with GAAP in effect prior to such change in accounting principles. Without limiting the generality of the foregoing, the Borrower shall neither be deemed to be in compliance with any financial covenant hereunder nor out-of-compliance with any financial covenant hereunder if such state of compliance or noncompliance, as the case may be, would not exist but for the occurrence of a change in accounting principles after the Closing Date.

 

Section 5.4.           Non-Wholly Owned Subsidiary Computations. When determining the Applicable Margin, compliance with Section 8.7, 8.8 and 8.9, and compliance by AF REIT or the Borrower with any financial covenant contained in any of the Loan Documents (a) only the Ownership Share of AF REIT or the Borrower, as applicable, of the financial attributes of a Subsidiary that is not a Wholly Owned Subsidiary shall be included and (b) AF REIT’s Ownership Share of the Borrower shall be deemed to be 100.0%.

 

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SECTION6.      Representations and Warranties.

 

The Borrower and each Guarantor represents and warrants to the Administrative Agent, the Lenders, and the L/C Issuer as follows:

 

Section 6.1.           Organization and Qualification. The Borrower is duly organized, validly existing, and in good standing as a limited partnership under the laws of the State of Delaware. AF REIT is duly organized, validly existing, and in good standing as a corporation and a real estate investment trust under the laws of the State of Maryland. Each of AF REIT and the Borrower has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying, except to the extent that the failure to do so would not have a Material Adverse Effect.

 

Section 6.2.           Subsidiaries. Each Subsidiary is (a) duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is organized (except, solely with respect to any Subsidiary of the Borrower other than any Guarantor or any Unencumbered Pool Property Subsidiary, to the extent that the failure to be duly organized, to validly exist and/or to be in good standing would not have a Material Adverse Effect) and (b) has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying, except in each case referred to in clause (b) to the extent that the failure to do so would not have a Material Adverse Effect. As of the Closing Date (or, if later, as of the most recent date such Schedule has been or was required pursuant to Section 8.5(l) hereof to be supplemented) Schedule 6.2 hereto is a correct and complete copy of the Organizational Chart. All of the outstanding shares of capital stock and other equity interests of each Guarantor and each Unencumbered Pool Property Subsidiary are validly issued and outstanding and, with respect to such Subsidiaries that are corporations, fully paid and nonassessable, and all such shares and other equity interests indicated on Schedule 6.2 as owned by AF REIT, the Borrower or a Subsidiary are owned, beneficially and of record, by AF REIT, the Borrower or such Subsidiary or, with respect to any Controlled Affiliate or Unconsolidated Affiliate, such other Person as is set forth on Schedule 6.2, and, in the case of such shares and other equity interests of any Guarantor and any Unencumbered Pool Property Subsidiary, are owned free and clear of all Liens (other than Permitted Liens). Other than as publicly disclosed by AF REIT or any Subsidiary of AF REIT in any filings with any securities exchange or the Securities and Exchange Commission or any successor agency, there are no outstanding commitments or other obligations of the Borrower, any Guarantor or any Unencumbered Pool Property Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equity interests of the Borrower, any Guarantor or any Unencumbered Pool Property Subsidiary (other than, in the case of any such Unencumbered Pool Property Subsidiary, customary rights of a minority equity holder that would not allow such Unencumbered Pool Property Subsidiary to cease to be a Controlled Affiliate).

 

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Section 6.3.           Authority and Validity of Obligations. The Borrower has full right and authority to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings herein provided for, and to perform all of its obligations hereunder and under the other Loan Documents executed by it. Each Guarantor has full right and authority to enter into the Loan Documents executed by it, to guarantee the Obligations, Hedging Liability (other than any Excluded Swap Obligation), and Bank Product Obligations, and to perform all of its obligations under the Loan Documents executed by it. The Loan Documents delivered by the Borrower and each Guarantor have been duly authorized, executed, and delivered by such Persons and constitute valid and binding obligations of the Borrower and each Guarantor enforceable against them in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this Agreement and the other Loan Documents do not, nor does the performance or observance by the Borrower or any Guarantor of any of the matters and things herein or therein provided for, (a) contravene or constitute a default under any provision of law or any judgment, injunction, order or decree binding upon the Borrower or any Guarantor or any provision of the organizational documents (e.g., charter, certificate or articles of incorporation and by laws, certificate or articles of association and operating agreement, partnership agreement, or other similar organizational documents) of the Borrower or any Guarantor, (b) contravene or constitute a default under any covenant, indenture or agreement of or affecting the Borrower or any Guarantor or any of their Property, in each case where such contravention or default, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, or (c) result in the creation or imposition of any Lien on any Property of the Borrower or any Guarantor (other than in favor of the Administrative Agent for its benefit and/or the benefit of the Lenders and the L/C Issuer).

 

Section 6.4.           Use of Proceeds; Margin Stock. The Borrower shall use the proceeds of the Revolving Credit to refinance existing Indebtedness, fund real estate acquisitions, finance capital expenditures and working capital, and for general corporate purposes (including for the purpose of any tender offer or share repurchase program entered into in conjunction with, or after, listing of the Stock of AF REIT on a national securities exchange). Neither the Borrower nor any Guarantor is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Loan or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock, except, in each case, in connection with any Restricted Payment permitted hereunder that is otherwise not in violation of Regulation U or X of the Board of Governors of the Federal Reserve System. Margin stock (as hereinabove defined) constitutes less than 25% of the assets of the Borrower and the Guarantors. Notwithstanding the foregoing, the Borrower shall not use the proceeds of the Revolving Credit to accumulate and/or maintain cash or cash equivalents in depository or investment accounts of the Borrower or any of its Subsidiaries outside of the ordinary course of business and not in excess of amounts necessary to meet its current working capital requirements as determined in good faith by the Borrower.

 

Section 6.5.           Financial Reports. The consolidated balance sheet of AF REIT and its Subsidiaries as of December 31, 2017 and the related consolidated statements of income, retained earnings and cash flows of AF REIT and its Subsidiaries for the Fiscal Year then ended, and accompanying notes thereto, which financial statements are accompanied by the unqualified audit report of independent public accountants, and the unaudited interim consolidated balance sheet of AF REIT and its Subsidiaries as of September 30, 2017, and the related consolidated statements of income, retained earnings and cash flows of AF REIT and its Subsidiaries for the Fiscal Quarter then ended, heretofore furnished to the Administrative Agent and the Lenders, fairly present the consolidated financial condition of AF REIT and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis, except as otherwise expressly noted therein. To the Borrower’s knowledge, none of AF REIT, the Borrower or any Subsidiary has contingent liabilities which are material to it and are required to be set forth in its financial statements or notes thereto in accordance with GAAP other than as indicated on such financial statements and notes thereto (including with respect to future periods as to which this representation is required to be remade, on the financial statements furnished pursuant to Section 8.5 hereof).

 

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Section 6.6.           No Material Adverse Change. Since December 31, 2017, there has been no change in the business, financial condition, operations, performance or properties of AF REIT, the Borrower or any Subsidiary taken as a whole, which would reasonably be expected to have a Material Adverse Effect.

 

Section 6.7.           Full Disclosure. The statements and factual information (but not any budgets, projections, estimates or other forward-looking information) furnished by or on behalf of the Borrower to the Administrative Agent and the Lenders in connection with the negotiation of this Agreement and the other Loan Documents and the commitments by the Lenders to provide all or part of the financing contemplated hereby, when taken as a whole and as supplemented to any date this representation and warranty is made, do not contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained herein or therein not misleading, the Administrative Agent and the Lenders acknowledging that as to any budgets, projections, estimates or other forward-looking information furnished to the Administrative Agent and the Lenders, the Borrower only represents that the same were prepared in good faith on the basis of information and estimates the Borrower believed to be reasonable at the time such budgets, projections, estimates or other forward-looking information was furnished; provided, further, that such representation and warranty shall not apply to the accuracy of any appraisal, title commitment, survey, or engineering and environmental reports, or any other reports, prepared by third parties or legal conclusions or analysis provided by the Borrower’s or the Guarantors’ counsel. The information included in the Beneficial Ownership Certification, as updated in accordance with Section 8.5(k), is true and correct in all respects.

 

Section 6.8.           Trademarks, Franchises, and Licenses. AF REIT, the Borrower and their Subsidiaries own, possess, or have the right to use all patents, licenses, franchises, trademarks, trade names, trade styles, copyrights, trade secrets, know how, and confidential commercial and proprietary information necessary to conduct their businesses as now conducted, without known conflict with any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary right of any other Person except, in each case, where the failure to do so would not have a Material Adverse Effect.

 

Section 6.9.           Governmental Authority and Licensing. AF REIT, the Borrower and their Subsidiaries have received all licenses, permits, and approvals of all federal, state, and local governmental authorities, if any, necessary to conduct their businesses, in each case where the failure to obtain or maintain the same would reasonably be expected to have a Material Adverse Effect. No investigation or proceeding, which, if adversely determined, could reasonably be expected to result in revocation or denial of any material license, permit or approval, is pending or, to the knowledge of the Borrower or AF REIT, threatened in writing except where such revocation or denial would not reasonably be expected to have a Material Adverse Effect.

 

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Section 6.10.       Good Title. AF REIT, the Borrower and their Subsidiaries have good and defensible title (or valid leasehold interests) to their assets as reflected on the most recent consolidated balance sheet of AF REIT, the Borrower and their Subsidiaries furnished to the Administrative Agent and the Lenders (except for sales of assets in the ordinary course of business), except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The assets owned by the Borrower and each Guarantor are subject to no Liens, other than Permitted Liens.

 

Section 6.11.       Litigation and Other Controversies. There is no litigation or governmental or arbitration proceeding or labor controversy pending, nor to the knowledge of the Borrower threatened in writing, against AF REIT, the Borrower or any Subsidiary or any of their Property which if adversely determined, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect other than as set forth on Schedule 6.11.

 

Section 6.12.       Taxes. All material tax returns required to be filed by AF REIT, the Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, and all Taxes upon AF REIT, the Borrower or any Subsidiary or upon any of its Property, income or franchises, which are shown to be due and payable in such returns, have been paid, except (a) such taxes, assessments, fees and governmental charges, if any, as are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and as to which adequate reserves established in accordance with GAAP have been provided or (b) would not result in a Material Adverse Effect. Adequate provisions in accordance with GAAP for material taxes on the books of AF REIT, the Borrower and each Subsidiary have been made for all open years, and for its current fiscal period.

 

Section 6.13.       Approvals. No authorization, consent, license or exemption from, or filing or registration with, any court or governmental department, agency or instrumentality, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or performance by the Borrower or any Guarantor of any Loan Document.

 

Section 6.14.       Affiliate Transactions. Except as permitted by Section 8.14 hereof, none of AF REIT, the Borrower or any Subsidiary is a party to any contracts or agreements with any of its Affiliates on terms and conditions which are less favorable to AF REIT, the Borrower or such Subsidiary than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other.

 

Section 6.15.       Investment Company. None of AF REIT, the Borrower, any Subsidiary, or any Unconsolidated Affiliate is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

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Section 6.16.       ERISA. The Borrower and each other member of its Controlled Group has fulfilled its obligations under the minimum funding standards of and is in compliance in all material respects with ERISA and the Code to the extent applicable to it and has not incurred any liability to the PBGC or a Plan under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. None of the Borrower or any Subsidiary has any material contingent liabilities with respect to any post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in article 6 of Title I of ERISA.

 

Section 6.17.       Compliance with Laws. (a) AF REIT, the Borrower and their Subsidiaries are in compliance with the requirements of all Legal Requirements applicable to or pertaining to their Property or business operations (including, without limitation, the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, zoning regulations and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes and substances), where any such non compliance, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(b)               Without limiting the representations and warranties set forth in Section 6.17(a) above, except for such matters, individually or in the aggregate, which would not reasonably be expected to result in a Material Adverse Effect, each of the Borrower and AF REIT represents and warrants that: (i) AF REIT, the Borrower and their Subsidiaries, and each of the Real Properties, comply in all material respects with all applicable Environmental Laws; (ii) AF REIT, the Borrower and their Subsidiaries have obtained all governmental approvals required for their operations and each of the Real Properties by any applicable Environmental Law; (iii) AF REIT, the Borrower and their Subsidiaries have not, and the Borrower has no knowledge of any other Person who has, caused any Release, threatened Release or disposal of any Hazardous Material at, on, about, or off any of the Real Properties in any material quantity and, to the knowledge of the Borrower, none of the Real Properties are adversely affected by any Release, threatened Release or disposal of a Hazardous Material originating or emanating from any other property; (iv) AF REIT, the Borrower and their Subsidiaries have no notice or knowledge that the Real Properties contain or have contained any: (1) underground storage tank or material amounts of asbestos containing building material, (2) landfills or dumps, (3) hazardous waste management facility as defined pursuant to RCRA or any comparable state law, or (4) site on or nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable state law; (v) AF REIT, the Borrower and their Subsidiaries have not used a material quantity of any Hazardous Material and have conducted no Hazardous Material Activity at any of the Real Properties; (vi) AF REIT, the Borrower and their Subsidiaries have no material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (vii) AF REIT, the Borrower and their Subsidiaries are not subject to, have no notice or knowledge of and are not required to give any notice of any Environmental Claim involving AF REIT, the Borrower or any Subsidiary or any of the Real Properties, and there are no conditions or occurrences at any of the Real Properties which could reasonably be anticipated to form the basis for an Environmental Claim against the Borrower or any Subsidiary or such Real Properties; (viii) none of the Real Properties are subject to any, and the Borrower has no knowledge of any imminent restriction on the ownership, occupancy, use or transferability of the Real Properties in connection with any (1) Environmental Law or (2) Release, threatened Release or disposal of a Hazardous Material; and (ix) there are no conditions or circumstances at any of the Real Properties which pose an unreasonable risk to the environment or the health or safety of Persons.

 

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(c)               AF REIT, the Borrower and their Subsidiaries are in material compliance with all Anti-Corruption Laws. AF REIT, the Borrower and their Subsidiaries have implemented and maintain in effect policies and procedures designed to ensure compliance in all material respects by AF REIT, the Borrower and their Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws.

 

Section 6.18.       OFAC. (a) AF REIT and the Borrower are in compliance with the requirements of all OFAC Sanctions Programs applicable to it, (b) each Subsidiary is in compliance with the requirements of all OFAC Sanctions Programs applicable to such Subsidiary, (c) the Borrower has provided to the Administrative Agent, the L/C Issuer, and the Lenders all information requested by them regarding the Borrower, the Subsidiaries and other Affiliates of the Borrower necessary for the Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs, and (d) to the Borrower’s knowledge, neither the Borrower nor any of its Subsidiaries nor, to the knowledge of AF REIT, Borrower or any of the Subsidiaries, any officer, director or Affiliate of AF REIT, Borrower or any of their Subsidiaries, is a Person, that is, or is owned or controlled by Persons that are, (i) the target of any OFAC Sanctions Programs or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of any OFAC Sanctions Programs.

 

Section 6.19.       Other Agreements. None of AF REIT, the Borrower or any Subsidiary is in default under the terms of any covenant, indenture or agreement of or affecting such Person or any of its Property, which default, if uncured, would reasonably be expected to have a Material Adverse Effect.

 

Section 6.20.       Solvency. AF REIT, the Borrower and their Subsidiaries, taken as a whole, are solvent, able to pay their debts as they become due, and have sufficient capital to carry on their business as presently conducted and all businesses (if any) which are currently contemplated to be undertaken by them.

 

Section 6.21.       No Default. No Default or Event of Default has occurred and is continuing.

 

Section 6.22.       No Broker Fees. No broker’s or finder’s fee or commission owing to any broker or finder engaged by the Borrower or any Subsidiary will be payable with respect hereto or any of the transactions contemplated thereby.

 

Section 6.23.       Condition of Property; Casualties; Condemnation. Except to the extent that the same would not reasonably be expected to result in a Material Adverse Effect, each Real Property, (a) is in good repair, working order and condition, normal wear and tear excepted, (b) is free of structural defects, (c) is not subject to material deferred maintenance, (d) has and will have all building systems contained therein in good repair, working order and condition, normal wear and tear excepted and (e) is not located in a flood plain or flood hazard area, or if located in a flood plain or flood hazard area is covered by full replacement cost flood insurance. For the avoidance of doubt, in no event shall the representations contained in the foregoing clause (a) through (d) be deemed to be applicable to any Property owned by a Tenant. None of the Real Properties is currently materially adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of property or cancellation of contracts, permits or concessions by a Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy which is not in the process of being repaired, except, solely with respect Real Properties that are not Unencumbered Pool Properties, to the extent that the same would not reasonably be expected to result in a Material Adverse Effect. No condemnation or other like proceedings that has had, or would reasonably be expected to result in, a Material Adverse Effect, is pending, served or, to the knowledge of the Borrower, threatened in writing against any Real Property. Promptly after the request of the Administrative Agent, the Borrower shall deliver a current property condition report, in form and substance reasonably acceptable to Administrative Agent from an independent engineering or architectural firm reasonably acceptable to Administrative Agent, with respect to any Unencumbered Pool Property specified by Administrative Agent that, in the reasonable determination of the Administrative Agent, has a maintenance or structural issue that would materially and adversely affect the value or use of such Eligible Property.

 

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Section 6.24.       Legal Requirements and Zoning. Except as disclosed in the zoning reports furnished to Administrative Agent, to the Borrower’s knowledge and except where the failure of any of the following to be true and correct would not have a Material Adverse Effect, the use and operation of each Real Property constitutes a legal use (including legally nonconforming use) under applicable zoning regulations (as the same may be modified by special use permits or the granting of variances) and complies in all material respects with all Legal Requirements, and does not violate in any material respect any approvals, restrictions of record or any material agreement affecting any such Real Property (or any portion thereof).

 

Section 6.25.       REIT Status. AF REIT (a) is a REIT, (b) has not revoked its election to be a REIT, and (c) for its current “tax year” as defined in the Code is and for all prior tax years subsequent to its election to be a REIT has been entitled to a dividends paid deduction which meets the requirements of Section 857 of the Code.

 

SECTION7.      Conditions Precedent.

 

Section 7.1.           All Credit Events. At the time of each Credit Event:

 

(a)           each of the representations and warranties set forth herein and in the other Loan Documents shall be and remain true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of said time, except to the extent the same expressly relate to an earlier date, in which case the same shall be true and correct in all material respects (where not already qualified by materiality or Material Adverse Effect, otherwise in all respects) as of such earlier date;

 

(b)           no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event and, after giving effect to such extension of credit, the Revolving Credit Availability, as then determined and computed, shall be no less than $0;

 

(c)           in the case of a Borrowing, the Administrative Agent shall have received the notice required by Section 1.6 hereof, and the L/C Issuer shall have received (i) in the case of the issuance of any Letter of Credit, a duly completed Application for such Letter of Credit together with any fees called for by Section 2.1 hereof, and (ii) in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor, in a form reasonably acceptable to the L/C Issuer, together with any fees called for by Section 2.1 hereof; and

 

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(d)           such Credit Event shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to the Administrative Agent, the L/C Issuer or any Lender (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect; and

 

(e)           from the Third Amendment Effective Date through the last day of the Adjustment Period, a certificate in form and substance reasonably satisfactory to the Administrative Agent and signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower or another officer of the Borrower reasonably acceptable to the Administrative Agent setting forth the calculations supporting the Borrower’s compliance with Section 8.20(f) hereof.

 

Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Credit Event as to the facts specified in subsections (a) through (c), inclusive, of this Section 7.1; provided, however, that the Lenders may continue to make advances under the Revolving Credit, in the sole discretion of the Lenders, notwithstanding the failure of the Borrower to satisfy one or more of the conditions set forth above and any such advances so made shall not be deemed a waiver of any Default or Event of Default or other condition set forth above that may then exist.

 

Section 7.2.           Initial Credit Event. Before or concurrently with the initial Credit Event:

 

(a)           the Administrative Agent shall have received this Agreement duly executed by the Borrower, each Guarantor, and the Lenders;

 

(b)           if requested at least five (5) Business Days prior to the Closing Date by any Lender, the Administrative Agent shall have received, a Note payable to such Lender and duly executed by the Borrower dated the Closing Date and otherwise in compliance with the provisions of Section 1.10 hereof;

 

(c)           the Administrative Agent shall have received evidence of insurance required to be maintained under the Loan Documents;

 

(d)           the Administrative Agent shall have received copies of the Borrower’s, each Guarantor’s, and each Unencumbered Pool Property Subsidiary’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto, certified in each instance by an authorized officer of AF REIT (on behalf of itself and in its capacity as a direct or indirect owner of the Borrower, each other Guarantor, and each Unencumbered Pool Property Subsidiary);

 

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(e)           the Administrative Agent shall have received copies of resolutions authorizing the execution, delivery and performance by the Borrower and each Guarantor of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on the Borrower’s and each Guarantor’s behalf, all certified in each instance by an authorized officer of AF REIT (on behalf of itself and in its capacity as a direct or indirect owner of the Borrower and each other Guarantor);

 

(f)            the Administrative Agent shall have received copies of the certificates of good standing for the Borrower, each Guarantor, and each Unencumbered Pool Property Subsidiary (dated no earlier than thirty (30) days prior to the Closing Date) from the office of the secretary of the state (or similar office) of its incorporation or organization and of each state in which an Initial Unencumbered Pool Property is located where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that the failure to do so would not have a Material Adverse Effect;

 

(g)           the Administrative Agent shall have received a list of the Borrower’s Authorized Representatives;

 

(h)           the Administrative Agent shall have received the initial fees called for by Section 2.1 hereof;

 

(i)            the capital and organizational structure of AF REIT, the Borrower and its Subsidiaries shall be reasonably satisfactory to the Administrative Agent (including, for the sake of clarity, the structure of any Controlled Affiliate);

 

(j)            the Administrative Agent shall have received (i) a copy of the audited consolidated balance sheet of AF REIT and its Subsidiaries for the Fiscal Year ended December 31, 2017 and the consolidated statements of income, retained earnings, and cash flows of AF REIT, the Borrower and its Subsidiaries for such Fiscal Year, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous Fiscal Year, (ii) a copy of the unaudited interim consolidated balance sheet of AF REIT and its Subsidiaries for the Fiscal Quarter ended September 30, 2017, and the related consolidated statements of income, retained earnings and cash flows of AF REIT and its Subsidiaries for such Fiscal Quarter, (iii) a copy of AF REIT’s projections for the Fiscal Years ending December 31, 2018, December 31, 2019, and December 31, 2020, including consolidated projections of revenues, expenses and balance sheet on a quarter by quarter basis, with such projections in reasonable detail prepared by the Borrower (which shall include a summary of all significant assumptions made in preparing such projections), and (iv) an Available Amount Certificate showing the computation of the Available Amount with the inclusion of the Initial Unencumbered Pool Properties, each in form and substance reasonably acceptable to the Administrative Agent;

 

(k)           the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that (i) since December 31, 2017, no material adverse change in the business, financial condition, operations, performance or properties of the Borrower or the Guarantors, taken as a whole, shall have occurred and (ii) attached thereto is a true, correct, and complete organizational chart (the “Organizational Chart”) of AF REIT, its Subsidiaries, and its Unconsolidated Affiliates as of the Closing Date, which identifies the jurisdiction of AF REIT, each Subsidiary and each Unconsolidated Affiliate and the form of which is otherwise reasonably acceptable to the Administrative Agent;

 

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(l)            the Administrative Agent shall have received financing statement, tax, and judgment lien search results against the Borrower, each Guarantor, and each Unencumbered Pool Property Subsidiary evidencing the absence of Liens on its Property except for Permitted Liens or as otherwise permitted by Section 8.7 hereof;

 

(m)          the Administrative Agent shall have received a written opinion of Duane Morris LLP, counsel to the Borrower and each Guarantor, in form and substance reasonably acceptable to the Administrative Agent;

 

(n)           the Administrative Agent shall have received a fully executed Internal Revenue Service Form W-9 for the Borrower and each Guarantor; and the Administrative Agent and the Borrower shall have received the Internal Revenue Service Forms and any applicable attachments required by Section 12.1(g);

 

(o)           the Administrative Agent shall have received pay off and lien release letters from creditors of the Loan Parties (other than Indebtedness intended to remain outstanding after the Closing Date and, if secured, secured by Liens permitted to remain outstanding by Sections 8.7) setting forth, among other things, the total amount of indebtedness outstanding and owing to them (or outstanding letters of credit issued for the account of any Loan Party or its Subsidiaries) and containing an undertaking to cause to be delivered to the Administrative Agent UCC termination statements and any other lien release instruments necessary to release their Liens on the assets of any Loan Party or Unencumbered Pool Property Subsidiary, which pay off and lien release letters shall be in form and substance acceptable to the Administrative Agent; and

 

(p)           the Administrative Agent and each Lender shall have received any information or materials reasonably requested at least five (5) Business Days prior to the Closing Date by the Administrative Agent or such Lender in order to assist the Administrative Agent or such Lender in maintaining compliance with (i) the Patriot Act and (ii) any applicable “know your customer” or similar rules and regulations.

 

Section 7.3.           Eligible Property Additions and Deletions of Unencumbered Pool Properties. (a) As of the Closing Date, the Borrower represents and warrants to the Lenders and the Administrative Agent that the Initial Unencumbered Pool Properties qualify as Eligible Properties and that the information provided on Schedule 1.1 is true and correct.

 

(b)           Upon not less than ten (10) Business Days prior written notice from the Borrower to the Administrative Agent, the Borrower may, from time to time, request that a Real Property be added (subject to the other requirements for a Real Property qualifying as an Eligible Property) as an Unencumbered Pool Property, and such Real Property shall be added as an Unencumbered Pool Property upon Administrative Agent’s satisfaction that the following conditions have been met (collectively, the “Eligibility Conditions”):

 

(1)               the Administrative Agent shall have received a certificate evidencing compliance with the Unencumbered Pool Requirements on a pro forma basis;

 

(2)               if (x) the Subsidiary owning such Real Property or (y) the Subsidiary owning such Controlled Affiliate that owns such Real Property, in either case is not a Guarantor (each, a “New Guarantor”) the Administrative Agent shall have received a duly executed Additional Guarantor Supplement from such New Guarantor, together with the following:

 

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(A)             the Administrative Agent shall have received copies of such New Guarantor’s and such Controlled Affiliate’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto, certified in each instance by such Guarantor’s Secretary or Assistant Secretary;

 

(B)              the Administrative Agent shall have received copies of resolutions of such New Guarantor’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of the Loan Documents to which it is a party and the consummation of the transactions contemplated thereby, together with specimen signatures of the persons authorized to execute such documents on such New Guarantor’s behalf, all certified in each instance by its Secretary or Assistant Secretary or other Authorized Representative;

 

(C)              the Administrative Agent shall have received copies of the certificates of good standing for such New Guarantor and such Controlled Affiliate from the office of the secretary of the state (or similar office) of its incorporation or organization and of each state in which an Unencumbered Pool Property is located; and

 

(D)             the Administrative Agent shall have received a fully executed Internal Revenue Service Form W-9 for such New Guarantor;

 

(3)               the Administrative Agent shall have received financing statement, tax, and judgment lien search results against any such New Guarantor and such Real Property evidencing the absence of Liens, except for Permitted Liens or as otherwise permitted by Section 8.7 hereof.

 

(c)           In the event that any Unencumbered Pool Property shall at any time cease to constitute an Eligible Property, (i) the Borrower shall, as soon as reasonably possible after obtaining knowledge thereof, notify the Administrative Agent in writing of the same and (ii) the Unencumbered Pool Value of such Unencumbered Pool Property shall automatically be deemed to be $0 at such time and at all times after until such time as the same again qualifies as an Eligible Property. In the event that, at any time, the Unencumbered Pool Requirements shall be violated, no Default or Event of Default shall result from said violation, and (A) the Borrower shall, as soon as reasonably possible after obtaining knowledge thereof, notify the Administrative Agent in writing of the same, which written notice shall include a designation by the Borrower of any Real Property or Real Properties, at the Borrower’s option, to be discounted or deleted as Unencumbered Pool Properties in order to restore compliance with the Unencumbered Pool Requirements, and (B) if discounted, the Unencumbered Pool Value of each such Real Property shall be deemed reduced to the maximum amount that would result in compliance with the Unencumbered Pool Requirements, or, if deleted, each such Real Property shall automatically cease to constitute an Unencumbered Pool Property from the date of such written notice until such time as the same is added by the Borrower as an Unencumbered Pool Property in accordance with the preceding paragraph (provided that the addition of the same at such time does not result in a violation of the Unencumbered Pool Requirements). Notwithstanding anything herein to the contrary, in the event that any Unencumbered Pool Property shall cause any of the requirements set forth in the definition of “Unencumbered Pool Requirements” not to be satisfied, such failure shall not constitute a Default or Event of Default, it being agreed and understood that the only consequence of such Unencumbered Pool Property causing non-compliance with any such requirements shall be the discounting or removal of such Real Property from the calculation of the Unencumbered Pool Value pursuant to this Section 7.3(c).

 

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(d)           Upon not less than three (3) Business Days prior written notice from Borrower to the Administrative Agent, the Borrower may, from time to time, designate that a Real Property be deleted as an Unencumbered Pool Property; provided, however, that the Borrower shall not be permitted to designate that a Real Property be deleted as an Unencumbered Pool Property without the consent of the Required Lenders in their sole discretion if (i) such deletion would result in fewer than twelve (12) Unencumbered Pool Properties, or (ii) such deletion would reduce the Unencumbered Pool Value below $250,000,000. Such notice shall be accompanied by an Available Amount Certificate setting forth (i) the components of the Available Amount (in such detail as reasonably required by the Administrative Agent) calculated on a pro forma basis (as of the most recent Available Amount Certificate delivered in accordance with Section 8.5(d) or Section 8.5(n) hereof) after giving effect to such deletion of the designated Real Property as an Unencumbered Pool Property, (ii) that no Default or Event of Default is then continuing (including after taking into account the deletion of such Unencumbered Pool Property) and (iii) that such deletion shall not cause the other Unencumbered Pool Properties to violate the Unencumbered Pool Requirements. Upon the deletion of a Real Property as an Unencumbered Pool Property (whether automatically or as a result of an election by the Borrower, as described above), the Guarantor which owned such Real Property, but that does not otherwise own any other Unencumbered Pool Property, shall, upon the Borrower’s written request, be released from its obligations under this Agreement or, if applicable, its separate Guaranty and any other Loan Documents pursuant to lien releases and other documentation reasonably acceptable to the Borrower and the Administrative Agent.

 

Section 7.4.          Incentive Listing Note. Simultaneously with the entering into of the Incentive Listing Note, the Borrower and the Special Limited Partner shall enter into the Special Limited Partner Subordination Agreement.

 

 

SECTION8.      Covenants.

The Borrower and each Guarantor agrees that, until the date that all the Commitments have expired or terminated and the principal of and interest on each Loan and Reimbursement Obligation and all fees, expenses and other amounts payable under any Loan Document (other than contingent indemnification obligations for which no claim or demand has been made) have been paid in full in cash and all Letters of Credit have expired or been terminated (or have been Cash Collateralized or otherwise backstopped (including by “grandfathering” into future credit facilities) in a manner reasonably satisfactory to the Administrative Agent and each applicable L/C Issuer), except to the extent compliance in any case or cases is cured or waived in writing pursuant to the terms of Section 12.13 hereof:

 

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Section 8.1.           Maintenance of Existence. (i) The Borrower shall, and shall cause each Guarantor to, preserve and maintain its existence, except as otherwise provided in Section 8.10(c) and Section 8.10(d) hereof. (ii) The Borrower shall, and shall cause each Guarantor to, preserve and keep in force and effect all licenses, permits, franchises, approvals, patents, trademarks, trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

Section 8.2.          Maintenance of Properties. The Borrower shall, and shall cause each Guarantor and Unencumbered Pool Property Subsidiary to, or, to the extent any such obligations are expressly the obligation of the applicable Tenant under the Lease in effect for such Property, the Borrower shall cause the applicable Tenant to, maintain, preserve, and keep all of its Property in working condition and order (ordinary wear and tear and damage by casualty excepted), and the Borrower and each Guarantor shall, and shall cause its Unencumbered Pool Property Subsidiary to, or, to the extent any such obligations are expressly the obligation of the applicable Tenant under the Lease in effect for such Property, shall cause the applicable Tenant to, from time to time, make all necessary repairs, renewals, replacements, additions, and betterments to its Property so that such Property shall at all times be fully preserved and maintained, except, in each case, (i) to the extent that, in the reasonable business judgment of such Person, any such Property is no longer necessary for the proper conduct of the business of such Person and (ii) where the failure to do so would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. The Borrower shall not, and shall not permit any Guarantor or Unencumbered Pool Property Subsidiary to, amend, modify or terminate any material contract or agreement to which it is a party if such amendment, modification or termination or waiver would reasonably be expected to cause a Material Adverse Effect.

 

Section 8.3.         Taxes and Assessments. The Borrower and each Guarantor shall, and shall cause its or their Unencumbered Pool Property Subsidiaries or its or their respective Tenants to, duly pay and discharge all material Taxes, rates, assessments, fees, and governmental charges upon or against it or its Property, in each case before the same become delinquent, unless and to the extent that the same are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves established in accordance with GAAP are provided therefor.

 

Section 8.4.           Insurance. The Borrower shall insure and keep insured, and shall cause AF REIT and each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, insure and keep insured, with financially sound and reputable insurance companies all insurable Property owned by it which is of a character usually insured by Persons similarly situated and operating like Properties against loss or damage from such hazards and risks, and in such amounts, as are insured by Persons similarly situated and operating like Properties; and the Borrower shall, and shall cause AF REIT and each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, insure, such other hazards and risks (including, without limitation, business interruption, employers’ and public liability risks) with financially sound and reputable insurance companies as and to the extent usually insured by Persons similarly situated and conducting similar businesses. The Borrower shall, upon the request of the Administrative Agent, furnish to the Administrative Agent and the Lenders a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section 8.4.

 

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Section 8.5.           Financial Reports. The Borrower shall, and shall cause AF REIT and each Subsidiary to, maintain a standard system of accounting in accordance with GAAP and shall furnish to the Administrative Agent, each Lender, the L/C Issuer and each of their duly authorized representatives such information respecting the business and financial condition of AF REIT, the Borrower and each Subsidiary as the Administrative Agent or such Lender may reasonably request; and without any request, shall furnish to the Administrative Agent for distribution to the Lenders and L/C Issuer:

 

(a)           as soon as available, and in any event no later than ninety (90) days after the last day of each Fiscal Year of the Borrower (commencing with the Fiscal Year ending on December 31, 2018), a copy of the audited consolidated balance sheet of AF REIT and its Subsidiaries as of the last day of the Fiscal Year then ended and the consolidated statements of income, retained earnings, and cash flows of AF REIT and its Subsidiaries for the Fiscal Year then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous Fiscal Year, accompanied by an unqualified opinion of KPMG LLP or any other independent public accountants of recognized national standing, selected by the Borrower (if not KPMG LLP or any other of the “Big Four”) and reasonably satisfactory to the Administrative Agent, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in all material respects in accordance with GAAP the consolidated financial condition of AF REIT and its Subsidiaries as of the close of such Fiscal Year and the results of their operations and cash flows for the Fiscal Year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards; provided, however, that the Borrower may satisfy its obligations to deliver the financial statements described in this Section 8.5(a) by furnishing to the Administrative Agent a copy of its annual report on Form 10-K in respect of such Fiscal Year together with the financial statements required to be attached thereto, provided the Borrower is required to file such annual report on Form 10-K with the Securities and Exchange Commission and such filing is actually made;

 

(b)            [Reserved];

 

(c)           as soon as available, and in any event no later than forty-five (45) days after the last day of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower (commencing with the Fiscal Quarter ending on March 31, 2018), a copy of the consolidated balance sheet of AF REIT, the Borrower and its Subsidiaries as of the last day of such Fiscal Quarter and the consolidated statements of income, retained earnings, and cash flows of AF REIT and its Subsidiaries for the Fiscal Quarter and for the Fiscal Year to date period then ended, each in reasonable detail showing, in comparative form, the figures for the corresponding date and period in the previous Fiscal Year, prepared by the Borrower in accordance with GAAP (subject to the absence of footnote disclosures and year end audit adjustments) and certified to by its chief financial officer or another officer of the Borrower reasonably acceptable to the Administrative Agent; provided, however, that the Borrower may satisfy its obligations to deliver the financial statements described in this Section 8.5(c) by furnishing to the Administrative Agent a copy of its quarterly report on Form 10-Q in respect of such Fiscal Quarter together with the financial statements required to be attached thereto, provided the Borrower is required to file such quarterly report on Form 10-Q with the Securities and Exchange Commission and such filing is actually made;

 

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(d)           as soon as available, and in any event within (i) forty-five (45) days after the last day of each of the first three Fiscal Quarters of each Fiscal Year (commencing with the Fiscal Quarter ending on March 31, 2018) and (ii) ninety (90) days after the last day of the last Fiscal Quarter of each Fiscal Year (commencing with the Fiscal Year ending on December 31, 2018), an Available Amount Certificate showing the computation of the Available Amount in reasonable detail as of the close of business on the last day of such Fiscal Quarter, prepared by the Borrower and certified to by its chief financial officer or another officer of the Borrower reasonably acceptable to the Administrative Agent;

 

(e)           with each of the financial statements delivered pursuant to subsections (a) and (c) above, a compliance certificate (“Compliance Certificate”) in the form attached hereto as Exhibit E signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower or another officer of the Borrower reasonably acceptable to the Administrative Agent to the effect that to such officer’s knowledge and belief no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken or being taken by AF REIT, the Borrower or any Subsidiary to remedy the same. Such certificate shall also set forth the calculations supporting such statements in respect of Section 8.20 hereof and the Borrower’s calculation of the Ownership Share of each Subsidiary and Unconsolidated Affiliate;

 

(f)            promptly after request by the Administrative Agent, any additional written reports, management letters or other detailed information contained in writing concerning significant aspects of AF REIT’s, the Borrower’s or any Subsidiary’s operations and financial affairs given to it by its independent public accountants and submitted to the board of directors (or similar governing body) of the Borrower;

 

(g)           promptly after the sending or filing thereof, copies of each financial statement, report, or proxy statement sent by AF REIT or any Subsidiary to its stockholders or other equity holders;

 

(h)           promptly after receipt thereof, if any, a copy of each audit made by any regulatory agency of the books and records of AF REIT, the Borrower or any Subsidiary or of notice of any material noncompliance with any applicable Legal Requirements relating to AF REIT, the Borrower or any Subsidiary, or its business;

 

(i)            as soon as available, and in any event within sixty (60) days after the end of each Fiscal Year of the Borrower (commencing with the Fiscal Year ending on December 31, 2018), a copy of the Borrower’s projections for the following year including consolidated projections of revenues, expenses and balance sheet on a quarter by quarter basis, with such projections in reasonable detail prepared by the Borrower and in form satisfactory to the Administrative Agent (which shall include a summary of all significant assumptions made in preparing such projections);

 

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(j)            notice of any Change of Control;

 

(k)           promptly after any Responsible Officer of the Borrower obtaining knowledge thereof, written notice of (i) any threatened (in writing) or pending litigation or governmental or arbitration proceeding or labor controversy against AF REIT, the Borrower or any Subsidiary or any of their Property which would reasonably be expected to have a Material Adverse Effect, (ii) the occurrence of any other matter which would reasonably be expected to have a Material Adverse Effect, (iii) the occurrence of any Default or Event of Default, or (iv) any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in of such certification;

 

(l)            with each of the financial statements delivered pursuant to subsections (a) and (c) above, if there have been any changes to the organizational list of AF REIT, the Borrower and the Subsidiaries during the most recently ended Fiscal Quarter, a revised organizational list, together with a summary of the changes;

 

(m)          as soon as available, a copy of the Incentive Listing Note and the Outperformance Agreement; and

 

(n)           promptly after the request the Administrative Agent or the Required Lenders, (i) any other information or report reasonably requested by such Person(s) or (ii) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the Patriot Act or other applicable Anti-Corruption Laws and the Beneficial Ownership Regulation; and

 

(o)           as soon as available and no later than 30 days after the last day of each calendar month (provided that with respect to any such last day that is also the last day of a Fiscal Year or Fiscal Quarter, the delivery under this clause (o) shall be due concurrently with the delivery of the financial statements delivered pursuant to subsections (a) and (c) above, as applicable) , commencing with the calendar month ending June 30, 2020 and through the last calendar month during the Adjustment Period, a certificate in form and substance reasonably satisfactory to the Administrative Agent and signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower or another officer of the Borrower reasonably acceptable to the Administrative Agent setting forth the calculations supporting the Borrower’s compliance with Section 8.20(f) hereof.

 

Section 8.6.          Inspection. The Borrower shall, and shall cause AF REIT and each Subsidiary to, permit each of the Arrangers (or any of their affiliates), coordinating through the Administrative Agent, and each of their duly authorized representatives and agents, during normal business hours, to visit and inspect any of its Property, corporate books, and financial records, to examine and make copies of its books of accounts and other financial records (which shall be subject to the confidentiality requirements of Section 12.25 hereof), and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers, employees and independent public accountants (and by this provision the Borrower hereby authorizes such accountants to discuss with either of the Arrangers (or any of their affiliates) the finances and affairs of AF REIT, the Borrower and their Subsidiaries) at such reasonable times as the Administrative Agent may designate, with reasonable prior notice to the Borrower and no more often than once in any period of twelve (12) consecutive months unless an Event of Default has occurred and is continuing. The Administrative Agent shall use reasonable efforts to coordinate inspections undertaken in accordance with this Section 8.6 to (i) minimize the administrative burden of such inspections on AF REIT, the Borrower and their Subsidiaries, (ii) minimize the interference with the business of AF REIT, the Borrower and their Subsidiaries, and (iii) not disturb the occupancy of any Real Property by any Tenant.

 

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Section 8.7.           Liens. The Borrower shall not, nor shall it permit any Guarantor or Unencumbered Pool Property Subsidiary to, create, incur or permit to exist any Lien of any kind on any Property owned by any such Person, other than Permitted Liens.

 

Section 8.8.           Investments, Acquisitions, Loans and Advances. The Borrower shall not, nor shall it permit AF REIT or any Subsidiary to, (i) directly or indirectly, make, retain or have outstanding any investments (whether through the purchase of stock or obligations or otherwise) in any Person, real property or improvements on real property, or any loans, advances, lines of credit, mortgage loans or other financings (including pursuant to sale/leaseback transactions) to any other Person, or (ii) acquire any real property, improvements on real property or all or any substantial part of the assets or business of any other Person or division thereof; provided, however, that the foregoing shall not apply to nor operate to prevent, with respect to AF REIT, the Borrower or any Subsidiary, any of the following:

 

(a)           investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one (1) year of the date of issuance thereof;

 

(b)           investments in commercial paper with a Rating of at least P-1 by Moody’s and at least A-1 by S&P maturing within one (1) year of the date of issuance thereof;

 

(c)           investments in demand or time deposits, certificates of deposit or bankers acceptances of any Lender or by any United States commercial bank having capital and surplus of not less than $100,000,000 which have a maturity of one (1) year or less;

 

(d)           investments in repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System;

 

(e)           investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c), and (d) above;

 

(f)            AF REIT’s investment in the Borrower, the Borrower’s investments from time to time in its Subsidiaries, and investments made from time to time by a Subsidiary in one or more of its Subsidiaries, including, in each case, guaranties of Indebtedness of Borrower, Guarantors or any of their respective Subsidiaries;

 

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(g)           intercompany advances made from time to time among the Borrower and its Subsidiaries in the ordinary course of business to finance working capital needs;

 

(h)           investments from time to time in individual Real Properties (including Eligible Properties) or in entities which own such individual Real Properties (including Eligible Properties), provided that such investment does not cause a breach of the financial covenants set forth in Section 8.20 hereof or clauses (i), (j) or (k) below;

 

(i)            cash investments in Unconsolidated Affiliates in an amount not to exceed in the aggregate at any one time outstanding 20% of the Total Asset Value at such time;

 

(j)            investments in Assets Under Development in an amount not to exceed in the aggregate at any one time outstanding 10% of the Total Asset Value at such time;

 

(k)           investments in Land Assets in an amount not to exceed in the aggregate at any one time outstanding 10% of the Total Asset Value at such time;

 

(l)            investments in deposit account and securities accounts opened in the ordinary course of business and in compliance with the terms of this Agreement;

 

(m)          investments pursuant to Hedging Agreements that are not otherwise prohibited by the terms of this Agreement;

 

(n)           investments existing on the date hereof and set forth on Schedule 8.8;

 

(o)           advances to officers, directors and employees of the Borrower and Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes;

 

(p)           investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;

 

(q)           investments in mortgages and mezzanine loans, commercial mortgage-backed securities, and Governmental Affiliated Loan Corporations in an amount not to exceed in the aggregate at any one time outstanding 10% of Total Asset Value at such time;

 

(r)            investments by AF REIT for the redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any equity interests of AF REIT or the Borrower now or hereafter outstanding to the extent permitted in Section 8.24 below;

 

(s)           investments permitted under applicable law in the publicly-traded equity interests of REITs or other real estate companies conducting business, services or activities substantially similar or related to those engaged by AF REIT, the Borrower and their Subsidiaries as of the date hereof not to at any time exceed 10% of Total Asset Value;

 

(t)            investments not otherwise permitted under this Section 8.8 in an aggregate amount not to exceed $3,000,000; and

 

(u)           investments in the form of mergers or consolidations permitted under Section 8.9.

 

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The Borrower’s Ownership Share of any investment of the type described in clauses (i), (j), (k), (q), (s) and (t) by its Unconsolidated Affiliates will be included for purposes hereof. Investments of the type described in clauses (i), (j), (k), (q), (s) and (t) immediately preceding shall, at no time, exceed in the aggregate at any one time, 35% of the Total Asset Value at such time. In determining the amount of investments, acquisitions, loans, and advances permitted under this Section, (i) investments and acquisitions shall always be taken at the book value (as defined in GAAP) thereof and (ii) loans and advances shall be taken at the principal amount thereof then remaining unpaid.

 

Notwithstanding the foregoing, (x) if proceeds of the Revolving Credit are used during the Adjustment Period for an investment of the type described in clause (h) above, then such acquired Real Property must be an Eligible Property and the Borrower shall request that such Eligible Property be added as an Unencumbered Pool Property pursuant to Section 7.3 and (y) during the Adjustment Period the Borrower shall not, nor shall it permit AF REIT or any Subsidiary to make an investment in or acquisition of any multi-tenant Real Property or of the type described in clauses (i), (j), or (k).

 

Section 8.9.          Mergers, Consolidations and Sales. Except in connection with an acquisition of an Eligible Property or otherwise with the prior written consent of the Required Lenders (which shall not be unreasonably withheld, conditioned or delayed), the Borrower shall not, nor shall it permit AF REIT or any Subsidiary to, merge or consolidate, or sell, transfer, lease or otherwise dispose of all or any part of its Property, including any disposition of Property as part of a sale and leaseback transaction, or in any event sell or discount (with or without recourse) any of its notes or accounts receivable; provided, however, so long as no Default or Event of Default is then continuing or would result therefrom, this Section shall not apply to nor operate to prevent:

 

(a)           the sale, transfer, lease or other disposition of Property of the Borrower or any of the Subsidiaries to one another in the ordinary course of its business;

 

(b)           the merger of any Subsidiary with and into the Borrower or any other Subsidiary, provided that, in the case of any merger involving the Borrower, the Borrower is the entity surviving the merger;

 

(c)           any sale, transfer, lease or other disposition of Property of the Borrower or any Subsidiary (including any disposition of Property as part of a sale and leaseback transaction) in the ordinary course of business;

 

(d)           Leases of portions of any Real Property to Tenants;

 

(e)           any merger if it results in the simultaneous payoff in immediately available funds of the Obligations (other than contingent indemnification obligations for which no claim or demand has been made and Obligations under Letters of Credit that have been Cash Collateralized or otherwise backstopped (including by “grandfathering” into future credit facilities) on terms reasonably satisfactory to the Administrative Agent and the applicable L/C Issuer);

 

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(f)            merger or consolidation, directly or indirectly, with any other Person so long as (i) AF REIT, the Borrower or a Guarantor, as applicable, shall be the survivor thereof and no Change of Control shall result therefrom; provided that if the Borrower is a party to such merger or consolidation, the Borrower shall be the survivor thereof; (ii) the Borrower shall have given the Administrative Agent and the Lenders at least 30 days’ prior written notice of such consolidation or merger; (iii) immediately prior thereto, and immediately thereafter and after giving effect thereto, no Default or Event of Default has occurred or would result therefrom; and (iv) at the time the Borrower gives notice pursuant to clause (ii) of this subsection, the Borrower shall have delivered to the Administrative Agent for distribution to each of the Lenders a Compliance Certificate, calculated on a pro forma basis based on information then available to the Borrower, evidencing the continued compliance by AF REIT, the Borrower and the Subsidiaries with the terms and conditions of this Agreement and the other Loan Documents, including, without limitation, the financial covenants contained in Section 8.20, after giving effect to such consolidation or merger;

 

(g)           AF REIT and the Borrower may issue or sell equity interests; provided that AF REIT and the Borrower, as the case may be, shall remain in compliance with the definition of Change of Control;

 

(h)           to the extent constituting an investment of the type covered thereunder, transactions expressly permitted under Section 8.8; and

 

(i)            the liquidation or dissolution of, or the sale, transfer or disposition of substantially all the equity interests of, (x) Genie and (y) any other Subsidiary of the Borrower that does not own, directly or indirectly, any Unencumbered Pool Property (or, prior to, or substantially concurrent with, such liquidation, dissolution, sale, transfer or disposition, any such Unencumbered Pool Property is deleted as an Unencumbered Pool Property pursuant to Section 7.3(d)), so long as such Subsidiary is not otherwise required hereunder to be a Guarantor.

 

Nothing in this Section 8.9 shall prohibit the dissolution of a Subsidiary which has disposed of its assets in accordance with this Agreement.

 

Section 8.10.       Maintenance of Subsidiaries. The Borrower shall not assign, sell or transfer, nor shall it permit any of its Subsidiaries to issue, assign, sell or transfer, any shares of capital stock or other equity interests of any of the Borrower’s Subsidiaries that are Guarantors to any Person that is not the Borrower or a wholly-owned direct or indirect Subsidiary of the Borrower; provided, however, that the foregoing shall not operate to prevent (a) Liens (if any, it being agreed and understood that no such Liens are being created by the Loan Documents on the Closing Date) on the capital stock or other equity interests of Guarantors granted to the Administrative Agent, (b) the issuance, sale and transfer to any Person of any shares of capital stock of a Guarantor solely for the purpose of qualifying, and to the extent legally necessary to qualify, such person as a director of such Guarantor and (c) any transaction permitted by Section 8.9(b), (e), (f) or (i) above.

 

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Section 8.11.       ERISA. The Borrower shall, and shall cause each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to (i) with respect to any Loan Party or Unencumbered Pool Property Subsidiary, result in the imposition of a Lien against any of its Property or (ii) with respect to all other Subsidiaries, have a Material Adverse Effect. The Borrower shall, and shall cause AF REIT and each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, promptly notify the Administrative Agent and each Lender of: (a) the occurrence of any reportable event (as defined in Section 4043 of ERISA) with respect to a Plan, (b) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (c) its intention to terminate or withdraw from any Plan, and (d) the occurrence of any event with respect to any Plan which would result in the incurrence by AF REIT, the Borrower, any Subsidiary, or any Unconsolidated Affiliate of any material liability, fine or penalty, or any material increase in the contingent liability of AF REIT, the Borrower, any Subsidiary, or any Unconsolidated Affiliate with respect to any post-retirement Welfare Plan benefit; provided that with respect to any Subsidiary that is not a Loan Party or an Unencumbered Pool Property Subsidiary, such notice shall only be required, in each case, to the extent such event would reasonably be expected to have a Material Adverse Effect. The Borrower shall not, and shall not permit AF REIT or any Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates not to, permit any of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA, the Code or any of the respective regulations promulgated thereunder, where such event would reasonably be expected to have a Material Adverse Effect.

 

Section 8.12.       Compliance with Laws. (a) The Borrower shall, and shall cause AF REIT and each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, comply in all respects with all Legal Requirements applicable to or pertaining to its Property or business operations, where any such non compliance, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(b)           The Borrower shall, and shall cause AF REIT and each Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, at all times, do the following to the extent the failure to do so, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect: (i) comply in all material respects with, and maintain each of the Real Properties in compliance in all material respects with, all applicable Environmental Laws; (ii) use commercially reasonable efforts to require that each Tenant of any of the Real Properties or any part thereof comply in all material respects with all applicable Environmental Laws; (iii) obtain and maintain in full force and effect all material governmental approvals required by any applicable Environmental Law for operations at each of the Real Properties; (iv) cure any material violation of applicable Environmental Laws by it or at any of the Real Properties; (v) not allow the presence or operation at any of the Real Properties of any (1) landfill or dump or (2) hazardous waste management facility or solid waste disposal facility as defined pursuant to RCRA or any comparable state law (other than any private sewage treatment plant maintained at any Real Property in compliance with Environmental Laws); (vi) not manufacture, use, generate, transport, treat, store, release, dispose or handle any Hazardous Material at any of the Properties except in the ordinary course of its business and in compliance with Environmental Laws; (vii) within ten (10) Business Days after receipt of written notice of the same in connection with AF REIT, the Borrower, any Subsidiary, any Unconsolidated Subsidiary or any of the Real Properties, notify the Administrative Agent in writing of, and provide any reasonably requested documents with respect to, any of the following: (1) any material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (2) any material Environmental Claim; (3) any material violation of an Environmental Law or material Release, threatened Release or disposal of a Hazardous Material; (4) any restriction on the ownership, occupancy, use or transferability arising pursuant to any (x) Release, threatened Release or disposal of a Hazardous Material or (y) Environmental Law; or (5) any environmental, natural resource, health or safety condition which would reasonably be expected to have a Material Adverse Effect; (viii) conduct, at its expense, any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any material Release, threatened Release or disposal of a Hazardous Material as required to be performed by any applicable Environmental Law, (ix) abide by and observe any restrictions on the use of the Real Properties imposed by any Governmental Authority as set forth in a deed or other instrument affecting AF REIT’s, the Borrower’s, any Subsidiary’s, or any Unconsolidated Subsidiary’s interest therein; (x) promptly provide or otherwise make available to the Administrative Agent any reasonably requested environmental record concerning the Real Properties which AF REIT, the Borrower, any Subsidiary, or any Unconsolidated Subsidiary possesses or can reasonably obtain; and (xi) perform, satisfy, and implement any operation or maintenance actions required by any Governmental Authority or Environmental Law or included in any no further action letter or covenant not to sue issued by any Governmental Authority under any Environmental Law. The Administrative Agent shall give prompt notice to each Lender of any notice from the Borrower received pursuant to this Section 8.12(b).

 

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Section 8.13.       Compliance with OFAC Sanctions Programs and Anti-Corruption Laws. (a) AF REIT shall at all times comply with the requirements of all OFAC Sanctions Programs applicable to AF REIT and shall cause the Borrower and each of the Subsidiaries to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, comply with the requirements of all OFAC Sanctions Programs applicable to such Person.

 

(b)          The Borrower shall provide the Administrative Agent, the L/C Issuer, and the Lenders any information regarding AF REIT, the Borrower, their Subsidiaries, the Unconsolidated Affiliates, and each of their other Affiliates necessary for the Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs; subject, however, in the case of Affiliates (other than the Subsidiaries), to the Borrower’s ability to provide information applicable to them.

 

(c)           If the Borrower obtains actual knowledge or receives any written notice that AF REIT, the Borrower, any Subsidiary, any Unconsolidated Affiliate, or any officer, director or Affiliate thereof or that any Person that owns or controls any such Person is the target of any OFAC Sanctions Programs or is located, organized or resident in a country or territory that is, or whose government is, the subject of any OFAC Sanctions Programs (such occurrence, an “OFAC Event”), the Borrower shall promptly (i) give written notice to the Administrative Agent, the L/C Issuer, and the Lenders of such OFAC Event, and (ii) comply with all applicable Legal Requirements with respect to such OFAC Event (regardless of whether the target person is located within the jurisdiction of the United States of America), including the OFAC Sanctions Programs, and the Borrower hereby authorizes and consents to the Administrative Agent, the L/C Issuer, and the Lenders taking any and all steps the Administrative Agent, the L/C Issuer, or the Lenders deem necessary, in their sole but reasonable discretion, to avoid violation of all applicable Legal Requirements with respect to any such OFAC Event, including the requirements of the OFAC Sanctions Programs (including the freezing and/or blocking of assets and reporting such action to OFAC).

 

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(d)          AF REIT shall not, nor shall it permit the Borrower or any Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates not to, directly or, to any Loan Party’s knowledge, indirectly, use the proceeds of the Facilities, or lend, contribute or otherwise make available such proceeds to any other Person, to fund any activities or business of or with any Person or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of any OFAC Sanctions Programs, except to the extent permissible for a Person required to comply with any OFAC Sanctions Programs.

 

(e)           AF REIT shall not, nor shall it permit the Borrower or any Subsidiary to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates not to, violate any Anti Corruption Law in any material respect.

 

(f)           AF REIT shall, and shall cause the Borrower and each of its Subsidiaries to, and shall use commercially reasonable efforts to cause each of its Unconsolidated Affiliates to, maintain in effect policies and procedures designed to ensure compliance in all material respects by AF REIT, the Borrower, each of their Subsidiaries, and each of their Unconsolidated Affiliates, and their respective directors, officers, employees, and agents with applicable Anti-Corruption Laws.

 

Section 8.14.      Burdensome Contracts With Affiliates. AF REIT shall not, nor shall it permit the Borrower or any Subsidiary to, enter into any contract, agreement or business arrangement with any of its Affiliates on terms and conditions which are less favorable to AF REIT, the Borrower or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other; provided that, notwithstanding the foregoing, (i) the Borrower may issue the Incentive Listing Note provided that such Incentive Listing Note shall be permitted only to the extent that such Incentive Listing Note (x) includes no accrual of additional amounts on the outstanding principal obligations thereunder, and (y) is not secured by any collateral from the Borrower or AF REIT and (ii) the Borrower may enter into the Outperformance Agreement and issue LTIP Units as set forth therein. Notwithstanding the foregoing, the Borrower shall not enter into any amendment or replacement of, prepayment, redemption or defeasance of the Incentive Listing Note unless the consent of the Administrative Agent has been obtained; provided that nothing in this Section 8.14 shall prohibit the Incentive Listing Note from being contributed to the Borrower in exchange for equity interests of the Borrower.

 

Section 8.15.      No Changes in Fiscal Year. The Fiscal Year of AF REIT and its Subsidiaries ends on December 31 of each year; and the Borrower shall not, nor shall it permit AF REIT or any Subsidiary to, change its Fiscal Year from its present basis.

 

Section 8.16.      Formation of Subsidiaries. Promptly upon the formation or acquisition of any Guarantor, the Borrower shall provide the Administrative Agent and the Lenders notice thereof and timely comply with the requirements of Section 4.2 hereof.

 

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Section 8.17.       Change in the Nature of Business. The Borrower shall not, nor shall it permit AF REIT or any Subsidiary to, engage in any business or activity if, as a result thereof, the general nature of the business of AF REIT or any Subsidiary would be changed in any material respect from the general nature of the business engaged in by it as of the Closing Date; provided that nothing herein shall be deemed to prohibit or restrict the Borrower or any Subsidiary from engaging in any business which is reasonably related to the core business engaged in by it on the Closing Date.

 

Section 8.18.       Use of Proceeds. The Borrower shall use the credit extended under this Agreement solely for the purposes set forth in, or otherwise permitted by, Section 6.4 hereof.

 

Section 8.19.       No Restrictions. Except as provided herein, the Borrower shall not, nor shall it permit any Guarantor or Unencumbered Pool Property Subsidiary to, directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of the Borrower or any Guarantor or Unencumbered Pool Property Subsidiary to: (a) pay dividends or make any other distribution on any capital stock or other equity interests owned by AF REIT, the Borrower or any other Guarantor, (b) pay any indebtedness owed to AF REIT, the Borrower or any other Subsidiary, or (c) guarantee the Obligations, Hedging Liability (other than any Excluded Swap Obligation), and Bank Product Obligations and/or grant Liens on its assets to the Administrative Agent.

 

Section 8.20.       Financial Covenants.

 

(a)          Maximum Consolidated Leverage Ratio. As of the last day of each Fiscal Quarter of the Borrower (commencing with the Fiscal Quarter ending March 31, 2018), the Borrower shall not permit the Consolidated Leverage Ratio to be greater than 0.60 to 1.00.

 

(b)          Minimum Fixed Charge Coverage Ratio. As of the last day of each Fiscal Quarter of the Borrower (commencing with the Fiscal Quarter ending March 31, 2018), the Borrower shall not permit the Fixed Charge Coverage Ratio to be less than (i) during the Adjustment Period, 1.25 to 1.00 and (ii) thereafter, 1.65 to 1.00.

 

(c)          Maximum Other Recourse Debt to Total Asset Value Ratio. As of the last day of each Fiscal Quarter of the Borrower (commencing with the Fiscal Quarter ending March 31, 2018), the Borrower shall not permit the ratio of (i) Other Recourse Debt as of such date to (ii) Total Asset Value as of such date to be greater than 0.10 to 1.00.

 

(d)          Maintenance of Net Worth. As of the last day of each Fiscal Quarter of the Borrower (commencing with the Fiscal Quarter ending March 31, 2018), AF REIT shall maintain a Net Worth of not less than the sum of (a) $1,375,000,000 plus (b) 80% of the aggregate net cash proceeds received by AF REIT after December 31, 2017 in connection with any offering of Stock or Stock Equivalents.

 

(e)          Maximum Consolidated Secured Leverage Ratio. As of the last day of each Fiscal Quarter of the Borrower (commencing with the Fiscal Quarter ending March 31, 2018), the Borrower shall not permit the Consolidated Secured Leverage Ratio to be greater than 0.50 to 1.00.

 

(f)           Liquidity. As of the last day of each fiscal month of the Borrower during the Adjustment Period (commencing with the fiscal month ended June 30, 2020), the Borrower shall not permit the sum of the Available Amount (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n) hereof) and unrestricted cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date to be less than $100,000,000.

 

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Section 8.21.       [Reserved].

 

Section 8.22.       Electronic Delivery of Certain Information. (a) Documents, including financial reports to be delivered pursuant to Section 8.5 hereof, required to be delivered pursuant to this Agreement may be delivered by electronic communication and delivery, including, the Internet, including the website maintained by the Securities and Exchange Commission, e-mail or intranet websites to which the Administrative Agent and each Lender have access (including a commercial, third-party website or a website sponsored or hosted by the Administrative Agent) provided that the foregoing shall not apply to (i) notices to any Lender (or the L/C Issuer) pursuant to Section 1. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been delivered on the date and time on which the Administrative Agent or the Borrower posts such documents or the documents become available on a commercial website and the Borrower notifies the Administrative Agent of said posting by causing an e-mail notification to be sent to an e-mail address specified from time to time by the Administrative Agent and provides a link thereto; provided if such notice or other communication is not sent or posted during the normal business hours of the recipient on a Business Day, said posting date and time shall be deemed to have commenced as of 9:00 a.m. Chicago time on the opening of business on the next Business Day for the recipient. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificates required by Sections 8.5(d) and 8.5(e) to the Administrative Agent. Except for the certificates required by Sections 8.5(d) and 8.5(e), the Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery.

 

(b)          Documents required to be delivered pursuant to Section 1 may be delivered electronically to a website provided for such purpose by the Administrative Agent pursuant to the procedures provided to the Borrower by the Administrative Agent.

 

Section 8.23.       REIT Status. AF REIT shall maintain its status as a REIT and all of the representations and warranties set forth in Section 6.25 shall remain true and correct at all times.

 

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Section 8.24.       Restricted Payments. Neither the Borrower nor AF REIT shall, nor shall they permit any Subsidiary to, declare or make any Restricted Payment; provided that:

 

(a)          with respect to each period of four (or fewer, as specified in clauses (ii)(AB) and (ii)(BC) below) consecutive Fiscal Quarters ending on the last day of any Fiscal Quarter, commencing with the period of two consecutive Fiscal Quarters ending on September 30, 2019, the Borrower may declare or make cash distributions to AF REIT, and the Borrower may declare or make cash distributions to its other equity holders, in an aggregate amount (excluding cash distributions permitted pursuant to the other clauses of this section) not to exceed the greater of (i) the amount necessary for AF REIT to be able to make distributions required to maintain its status as a REIT (i.e., to satisfy the distribution requirements set forth in Section 857(a) of the Code) and (ii) (A) for the Fiscal Quarter endedQuarters ending June 30, 2020 and September 30, 20192020, ninety-five percent (95%) of AF REIT’s MFFO for such period of two consecutive Fiscal Quarters ended September 30, 2019an amount equal to $0.85 per common share of AF REIT per annum, pro-rated on a daily basis for the applicable Fiscal Quarter multiplied by the number of common shares of AF REIT at the end of such Fiscal Quarter plus the amount of any dividends required to be paid in accordance with AF REIT’s 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, (B) for the period of two consecutive Fiscal QuarterQuarters ending December 31, 20192020, ninety-one hundred five percent (95105%) of AF REIT’s MFFO for such period of threetwo consecutive Fiscal Quarters ending December 31, 20192020 multiplied by two (2), and (C) for the period of three consecutive Fiscal QuarterQuarters ending March 31, 20202021, one hundred five percent (105%) of AF REIT’s MFFO for such period of three consecutive Fiscal Quarters ending March 31, 2021 multiplied by four-thirds (4/3), and (D) for the period of four consecutive Fiscal Quarters ending June 30, 2021 and for each period of four consecutive Fiscal QuarterQuarters ending thereafter, ninety-five percent (95%) of AF REIT’s MFFO for such period of four consecutive Fiscal Quarters; provided that, in each case for clauses (ii)(A), (ii)(B) and (ii)(C), if, on a pro forma basis after giving effect to such Restricted Payments and any Borrowing hereunder in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)), the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing hereunder in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n) hereof) plus unrestricted cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date is less than $125,000,000 the applicable percentage of AF REIT’s MFFO shall be decreased to ninety-five percent (95%); provided further that, for clause (ii)(D), if, on a pro forma basis after giving effect to such Restricted Payments and any Borrowing hereunder in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)), (I) the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing hereunder in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n) hereof) andplus unrestricted cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date is no less than $60,000,000 and (II) the Consolidated Leverage Ratio is less than or equal to 0.575 to 1.00, such percentage shall be increased to one hundred five percent (105%) for such applicable Fiscal Quarter; provided, further that, (x) during the continuance of an Event of Default, Restricted Payments made pursuant to this clause (a) shall not exceed the amounts described in clause (a)(i), and (y) following a Bankruptcy Event with respect to the Borrower or the acceleration of the Obligations, the Borrower shall not make any cash distributions; provided, further, that, to the extent the Borrower was permitted to declare or make a cash distribution to AF REIT pursuant to this clause (a), AF REIT shall be permitted to distribute such amounts to its equity holders as a dividend or other distribution;

 

(b)          any Subsidiary may make Restricted Payments, directly or indirectly, to the Borrower or any other Subsidiary that is a Guarantor;

 

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(c)          any of AF REIT, the Borrower or any Subsidiary may declare and make dividend payments or other distributions payable solely in the common equity interests or other equity interests of such entity including (i) “cashless exercises” of options granted under any share option plan adopted by the Borrower, (ii) distributions of rights or equity securities under any rights plan adopted by the Borrower and (iii) distributions (or effect stock splits or reverse stock splits) with respect to its equity interests payable solely in additional shares of its equity interests;

 

(d)         AF REIT, the Borrower and each Subsidiary may make cash payments in lieu of the issuance of fractional shares representing insignificant interests in connection with the exercise of warrants, options or other securities convertible into or exchangeable for equity interests of the Borrower or any Subsidiary;

 

(e)          so long as no Change of Control results therefrom, AF REIT, the Borrower and each Subsidiary may make Restricted Payments in connection with the implementation of or pursuant to any retirement, health, stock option and other benefit plans, bonus plans, performance based incentive plans, and other similar forms of compensation for the benefit of the directors, officers and employees of AF REIT, the Borrower and the Subsidiaries;

 

(f)          so long as no Change of Control results therefrom, the Borrower and each Subsidiary may make dividends or distributions to a Subsidiary, the Borrower or AF REIT to allow AF REIT to, and AF REIT may, make payments in connection with share purchase programs and cash distributions reinvested in the Borrower or AF REIT through the BorrowerAF REIT’s distribution reinvestment plan, and the Borrower may make corresponding dividends or distributions to its other equity holders, in each case, to the extent not otherwise prohibited by the terms of this Agreement;

 

(g)          AF REIT and the Borrower may exercise any redemption or conversion rights with respect to the equity interests of AF REIT and the Borrower in accordance with the terms of the governing documents setting out any such rights;

 

(h)         AF REIT or the Borrower may make Restricted Payments to the Special Limited Partner in respect of the Incentive Listing Note consisting of (i) the issuance of operating partnership units of the Borrower or common stock of AF REIT to the Special Limited Partner upon the conversion thereof (other than any Permitted Incentive Listing Note Distribution), and (ii) Permitted Incentive Listing Note Distributions permitted pursuant to the terms hereof;

 

(i)           the Borrower may make Restricted Payments to the Manager in respect of LTIP Units pursuant to the Outperformance Agreement; and

 

(j)           from time to time prior to the date of the listing of the Stock of AF REIT on a national securities exchange, the Borrower and AF REIT may consummate tender offers and share repurchases, and make Restricted Payments to fund the consideration therefor, in an amount not to exceed $30,000,000 in the aggregate; provided that (i) the Borrower shall have on a pro forma basis after giving effect to any such Restricted Payment and any Borrowing hereunder in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)) a Consolidated Leverage Ratio of not greater than 0.55 to 1.00, and (ii) the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing hereunder in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n) hereof) and cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date shall be no less than $40,000,000; and

 

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(j)           (k) in connection with a listing of the Stock of AF REIT on a national securities exchange, on and from time to time after the date of such listingAdjustment Period, the Borrower and AF REIT may (x) consummate tender offers and share repurchases, and make Restricted Payments to fund the consideration therefor and (y) consummate exchanges by the Special Limited Partner of its rights under the Incentive Listing Note for operating partnership units of the Borrower, and redeem such operating partnership units pursuant to the terms of the Borrower’s organizational documents, and make Restricted Payments to fund the consideration therefor; provided that (i) the Borrower shall have on a pro forma basis after giving effect to any such Restricted Payment and any Borrowing hereunder in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)) a Consolidated Leverage Ratio of not greater than 0.55 to 1.00, and (ii) the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing hereunder in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n) hereof) and cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date shall be no less than $40,000,000.

 

Section 8.25.        Management Agreement . During the continuance of a Default under Section 9.1(a) or any Event of Default, without the prior written consent of the Administrative Agent, the Borrower shall not permit or agree to any amendment, modification, restatement or replacement of the Management Agreement which increases the amount of management, advisory or other similar fees or payments payable thereunder or is otherwise adverse to the interests of the Administrative Agent or the Lenders.

 

SECTION 9.      Events of Default and Remedies.

 

Section 9.1.          Events of Default. Any one or more of the following shall constitute an “Event of Default” hereunder:

 

(a)          default in the payment when due of (i) all or any part of the principal of any Loan (whether at the stated maturity thereof or at any other time provided for in this Agreement, including a mandatory prepayment required by Section 1.8(b)), (ii) any Reimbursement Obligation (except in any case in which a Loan has been made in the amount of the Reimbursement Obligations then due and the proceeds thereof applied to pay such Reimbursement Obligations as contemplated by Section 1.2(c)), (iii) any payment when due of any interest or (iv) any fee or other Obligation payable hereunder or under any other Loan Document, with such default in payment continuing for (A) in the case of the foregoing clauses (ii) and (iii), three (3) Business Days after receipt of written notice thereof from the Administrative Agent and (B) in the case of the foregoing clause (iv), five (5) Business Days after receipt of written notice thereof from the Administrative Agent;

 

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(b)         default in the observance or performance of any covenant set forth in Sections 7.4, 8.1(i) (solely with respect to AF REIT or the Borrower), 8.5(a), (c), (d), (e), (i), (j), (k) and (m), 8.7, 8.8, 8.9, 8.10, 8.18, 8.20, 8.23 or 8.24 hereof;

 

(c)          default in the observance or performance of any other provision hereof or of any other Loan Document which is not remedied within thirty (30) days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer of the Borrower and (ii) written notice thereof is given to the Borrower by the Administrative Agent; provided, however, if such a default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that the Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for the Borrower in the exercise of due diligence to cure such default, provided such additional period shall not exceed sixty (60) days;

 

(d)          any representation or warranty made herein or in any other Loan Document or in any certificate furnished to the Administrative Agent or the Lenders pursuant hereto or thereto or in connection with any transaction contemplated hereby or thereby proves untrue in any material respect (where not already qualified by materiality or Material Adverse Effect, otherwise in any respect) as of the date of the issuance or making or deemed making thereof (except to the extent such representation and warranty relates to an earlier date, in which case it proves untrue in any material respect (where not already qualified by materiality or Material Adverse Effect, otherwise in any respect) as of such date) and shall not be cured or remedied so that such representation, warranty, certification or statement of fact is no longer incorrect or misleading in any material respect within ten (10) days after the earlier of notice from the Administrative Agent or the actual knowledge of the Borrower thereof;

 

(e)          (i) any event occurs or condition exists (other than those described in subsections (a) through (d) above) which is specified as an event of default under any of the other Loan Documents (and the related grace and/or cure period, if any, shall have expired), or any of the Loan Documents shall for any reason not be or shall cease to be in full force and effect or is declared to be null and void; or (ii) the Borrower or any Guarantor takes any action for the purpose of terminating, repudiating or rescinding any Loan Document executed by it or any of its obligations thereunder;

 

(f)           default (with expiration of any grace and/or cure periods related thereto) shall occur under any Indebtedness issued, assumed or guaranteed by the Borrower or any Guarantor aggregating in excess of (i) with respect to any recourse Indebtedness issued, assumed or guaranteed by the Borrower or any Guarantor, $10,000,000 in the aggregate, or (ii) with respect to any other Indebtedness issued, assumed or guaranteed by the Borrower or any Guarantor, $100,000,000 in the aggregate, or a default (with expiration of any grace and/or cure periods related thereto) shall occur with respect to any Indebtedness issued, assumed or guaranteed by the Borrower or any Guarantor, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such Indebtedness (whether or not such maturity is in fact accelerated);

 

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(g)          any judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, shall be entered or filed against the Borrower or any Guarantor, or against any of its respective Property, in an aggregate amount in excess of $10,000,000 (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing), and which remains undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days;

 

(h)          the Borrower or any Guarantor, or any member of its Controlled Group, shall fail to pay when due an amount or amounts aggregating in excess of $10,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $10,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any Guarantor, or any other member of its Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any Guarantor, or any member of its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated;

 

(i)           any Change of Control shall occur;

 

(j)           the Borrower or any Guarantor shall (i) admit in writing its inability to pay, its debts generally as they become due, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (iv) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it within sixty (60) days, (v) take any board of director or shareholder action (including the convening of a meeting) in furtherance of any matter described in parts (i) through (iv) above, or (vi) fail to contest in good faith any appointment or proceeding described in Section 9.1(k) hereof;

 

(k)           an order for relief under the United States Bankruptcy Code, as amended, shall have entered involuntarily against the Borrower or any Guarantor or a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any Guarantor, or any substantial part of its Property and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days; and

 

(l)           the subordination provisions relating to the Incentive Listing Note (the “Subordination Provisions”) shall fail to be enforceable by the Administrative Agent in accordance with the terms thereof, or any Loan Party (or any representative thereof) shall, directly or indirectly, repudiate, challenge or contest in writing (i) the effectiveness, validity or enforceability of any of the Subordination Provisions, or (ii) that any of such Subordination Provisions exist for the benefit of the Administrative Agent, any Lender or the L/C Issuer.

 

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Section 9.2.          Non-Bankruptcy Defaults. When any Event of Default (other than those described in subsection (j) or (k) of Section 9.1 hereof with respect to the Borrower) has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower: (a) if so directed by the Required Lenders, terminate the remaining Commitments and all other obligations of the Lenders hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Lenders, declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Loan Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Lenders, demand that, with respect to each Letter of Credit then outstanding, the Borrower immediately either (i) pay to the Administrative Agent the full amount then available for drawing thereunder, (ii) deliver to the Administrative Agent Cash Collateral in an amount equal to 105% of the aggregate amount thereof or (iii) return or cause to be returned to L/C Issuer such Letter of Credit for cancellation, and the Borrower agrees to immediately take such action and acknowledges and agrees that the Lenders would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Administrative Agent, for the benefit of the Lenders, shall have the right to require the Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit. The Administrative Agent, after giving notice to the Borrower pursuant to Section 9.1(c) or this Section 9.2, shall also promptly send a copy of such notice to the other Lenders, but the failure to do so shall not impair or annul the effect of such notice.

 

Section 9.3.         Bankruptcy Defaults. When any Event of Default described in subsections (j) or (k) of Section 9.1 hereof with respect to the Borrower has occurred and is continuing, all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Loan Documents without presentment, demand, protest or notice of any kind, the obligation of the Lenders to extend further credit pursuant to any of the terms hereof shall immediately terminate and, with respect to each Letter of Credit then outstanding, the Borrower immediately either (i) pay to the Administrative Agent the full amount then available for drawing thereunder, (ii) deliver to the Administrative Agent Cash Collateral in an amount equal to 105% of the aggregate amount thereof or (iii) return or cause to be returned to L/C Issuer such Letter of Credit for cancellation, the Borrower acknowledging and agreeing that the Lenders would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Lenders, and the Administrative Agent on their behalf, shall have the right to require the Borrower to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit.

 

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Section 9.4.        Collateral for Undrawn Letters of Credit. (a) If the prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 1.8(b), Section 1.14, Section 9.2 or Section 9.3 above, the Borrower shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below.

 

(b)         All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative Agent in one or more separate collateral accounts (each such account, and the credit balances, properties, and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the “Collateral Account”) as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the L/C Issuer, and to the payment of the unpaid balance of all other Obligations (and to all Hedging Liability (other than any Excluded Swap Obligation) and Bank Product Obligations). The Collateral Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent, the Lenders, and the L/C Issuer. If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that the Administrative Agent is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments out of the Collateral Account for application to amounts then due and owing from the Borrower to the L/C Issuer, the Administrative Agent or the Lenders. If the Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 1.8(b) hereof, if any, at the request of the Borrower the Administrative Agent shall release to the Borrower amounts held in the Collateral Account so long as at the time of the release and after giving effect thereto no Default or Event of Default is then continuing. If the Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 9.2 or 9.3 hereof, so long as no Letters of Credit, Commitments, Loans or other Obligations, Hedging Liability (other than any Excluded Swap Obligation), or Bank Product Obligations remain outstanding, at the request of the Borrower the Administrative Agent shall release to the Borrower any remaining amounts held in the Collateral Account.

 

(c)           At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any L/C Issuer (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize the L/C Issuers’ Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 1.14(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

 

(i)              Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grant to the Administrative Agent, for the benefit of the L/C Issuers, and agree to maintain, a first priority security interest in all such Cash Collateral as security for such Defaulting Lender’s obligation to fund participations in respect of L/C Obligations, to be applied pursuant to clause (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the L/C Issuer as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower shall, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

 

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(ii)             Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 9.4 or Section 1.14 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of L/C Obligations (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

 

(iii)            Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce any L/C Issuer’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 9.4(c) following (A) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (B) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided that, subject to Section 1.14 the Person providing Cash Collateral and the L/C Issuer may agree (but shall not be obligated to) that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.

 

SECTION 10.       Change in Circumstances.

 

Section 10.1.        Change of Law. Notwithstanding any other provisions of this Agreement or any other Loan Document, if at any time any Change in Law makes it unlawful for any Lender to make or continue to maintain any Eurodollar Loans or to perform its obligations as contemplated hereby, such Lender shall promptly give notice thereof to the Borrower and such Lender’s obligations to make or maintain Eurodollar Loans under this Agreement shall be suspended until it is no longer unlawful for such Lender to make or maintain Eurodollar Loans. The Borrower shall prepay on demand the outstanding principal amount of any such affected Eurodollar Loans, together with all interest accrued thereon and all other amounts then due and payable to such Lender under this Agreement; provided, however, subject to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender, which Base Rate Loans shall not be made ratably by the Lenders but only from such affected Lender.

 

Section 10.2.        Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for any Borrowing of Eurodollar Loans:

 

(a)            the Administrative Agent in good faith determines that deposits in U.S. Dollars (in the applicable amounts) are not being offered to it in the interbank eurodollar market for such Interest Period, or that by reason of circumstances affecting the interbank eurodollar market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or

 

(b)           the Required Lenders in good faith advise the Administrative Agent that (i) LIBOR as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their Eurodollar Loans for such Interest Period or (ii) that the making or funding of Eurodollar Loans becomes impracticable, then the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Lenders to make Eurodollar Loans shall be suspended.

 

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If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in clause (a) above have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a) have not arisen but the supervisor for the administrator of the LIBOR Index Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBOR Index Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrower shall endeavor to establish an alternate rate of interest to LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable. Notwithstanding anything to the contrary in Section 12.13, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance with this section, (x) any borrowing request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, Eurodollar Loans shall be ineffective, and (y) any borrowing request that requests a Borrowing of Eurodollar Loans, shall be made as a Borrowing of Base Rate Loans; provided that, if such alternate rate of interest shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

 

Section 10.3.         Increased Cost and Reduced Return. (a) If any Change in Law shall:

 

(i)              subject any Lender (or its Lending Office) or the L/C Issuer to any Tax (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, and (C) Connection Income Taxes) with respect to its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make Eurodollar Loans, issue a Letter of Credit, or to participate therein; or

 

(ii)              impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Eurodollar Loans any such requirement included in an applicable Eurodollar Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Lending Office) or the L/C Issuer or shall impose on any Lender (or its Lending Office) or the L/C Issuer or on the interbank market any other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to participate therein; and the result of any of the foregoing is to increase the cost to such Lender (or its Lending Office) or the L/C Issuer of making or maintaining any Eurodollar Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Lender (or its Lending Office) or the L/C Issuer under this Agreement or under any other Loan Document with respect thereto, by an amount deemed by such Lender or L/C Issuer to be material, then, within fifteen (15) days after demand by such Lender or L/C Issuer (with a copy to the Administrative Agent), the Borrower shall be obligated to pay to such Lender or L/C Issuer such additional amount or amounts as will compensate such Lender or L/C Issuer for such increased cost or reduction.

 

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(b)           If any Lender or L/C Issuer determines that any Change in Law affecting such Lender or L/C Issuer or any lending office of such Lender or such Lender’s or L/C Issuer’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or L/C Issuer’s capital or on the capital of such Lender’s or L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Loans held by, such Lender, or the Letters of Credit issued by any L/C Issuer, to a level below that which such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or L/C Issuer’s policies and the policies of such Lender’s or L/C Issuer’s holding company with respect to capital adequacy), then from time to time, within 15 days after demand by such Lender or L/C Issuer (with a copy to the Administrative Agent), the Borrower shall pay to such Lender or L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company for any such reduction suffered.

 

(c)           A certificate of a Lender or L/C Issuer claiming compensation under this Section 10.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive if reasonably determined absent manifest error. In determining such amount, such Lender or L/C Issuer may use any reasonable averaging and attribution methods.

 

(d)           Failure or delay on the part of any Lender or L/C Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or L/C Issuer’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or L/C Issuer pursuant to this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender or L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

Section 10.4.        Lending Offices. Each Lender may, at its option, elect to make its Loans hereunder at the branch, office or affiliate specified on the appropriate signature page hereof (each a “Lending Office”) for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to the Borrower and the Administrative Agent. To the extent reasonably possible, a Lender shall designate an alternative branch or funding office with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Section 10.3 hereof or to avoid the unavailability of Eurodollar Loans under Section 10.2 hereof, so long as such designation is not otherwise materially disadvantageous to the Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

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Section 10.5.        Discretion of Lender as to Manner of Funding. Notwithstanding any other provision of this Agreement, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder with respect to Eurodollar Loans shall be made as if each Lender had actually funded and maintained each Eurodollar Loan through the purchase of deposits in the interbank eurodollar market having a maturity corresponding to such Loan’s Interest Period, and bearing an interest rate equal to LIBOR for such Interest Period.

 

                Section 10.6.        Benchmark Replacement Setting.

 

                (a)        Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (Chicago time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.

 

                (b)        Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

 

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                (c)        Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (d) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section titled “Benchmark Replacement Setting,” including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section titled “Benchmark Replacement Setting.”

 

                (d)        Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

                (e)        Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

 

                (f)        Certain Defined Terms. As used in this Section titled “Benchmark Replacement Setting”:

 

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of this Section titled “Benchmark Replacement Setting.”

 

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“Benchmark” means, initially, USD LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (a) of this Section titled “Benchmark Replacement Setting.”

 

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

 

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

 

(3) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents;

 

provided that, in no event shall the Benchmark Replacement be less than 0.25%.

 

“Benchmark Replacement Adjustment” means, with respect to any replacement of the then current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement: (1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent: (a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; (b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and (2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated syndicated credit facilities; provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.

 

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“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

 

“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or (3) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (Chicago time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

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“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section titled “Benchmark Replacement Setting.”

 

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.

 

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“Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of (1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and (2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from USD LIBOR and the provision by the Administrative Agent of written notice of such election to the Lenders.

 

“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR.

 

“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

 

“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined by the Administrative Agent in its reasonable discretion.

 

“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

 

“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day.

 

“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

 

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

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“USD LIBOR” means the London interbank offered rate for U.S. dollars.

 

 

SECTION11.  The Administrative Agent.

 

Section 11.1.       Appointment and Authorization of Administrative Agent. Each Lender and the L/C Issuer hereby appoints BMO Harris Bank N.A. as the Administrative Agent under the Loan Documents and hereby authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto. The provisions of this Section 11 are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuers, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

 

Section 11.2.       Administrative Agent and its Affiliates. The Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise or refrain from exercising such rights and power as though it were not the Administrative Agent, and the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor and generally engage in any kind of business with the Borrower or any Affiliate of the Borrower as if it were not the Administrative Agent under the Loan Documents. The term “Lender” as used herein and in all other Loan Documents, unless the context otherwise clearly requires, includes the Administrative Agent in its capacity as a Lender (if applicable).

 

Section 11.3.       Action by Administrative Agent. If the Administrative Agent receives from the Borrower a written notice of an Event of Default pursuant to Section 8.5(k) hereof, the Administrative Agent shall promptly give each of the Lenders and L/C Issuer written notice thereof. The obligations of the Administrative Agent under the Loan Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, the Administrative Agent and its Related Parties shall not be required to take any action hereunder with respect to any Default or Event of Default, except as expressly provided in Sections 9.2 and 9.5. Upon the occurrence of an Event of Default, unless and until the Required Lenders give such direction, the Administrative Agent may (but shall not be obligated to) take or refrain from taking such actions as it deems appropriate and in the best interest of all the Lenders and L/C Issuer. In no event, however, shall the Administrative Agent be required to take any action in violation of applicable Legal Requirements or of any provision of any Loan Document, and the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Loan Document unless it first receives any further assurances of its indemnification from the Lenders that it may require, including prepayment of any related expenses and any other protection it requires against any and all costs, expenses, and liabilities which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall be entitled to assume that no Default or Event of Default exists unless notified in writing to the contrary by a Lender, the L/C Issuer, or the Borrower. In all cases in which the Loan Documents do not require the Administrative Agent to take specific action, the Administrative Agent shall be fully justified in using its discretion in failing to take or in taking any action thereunder. Any instructions of the Required Lenders, or of any other group of Lenders called for under the specific provisions of the Loan Documents, shall be binding upon all the Lenders and the holders of the Obligations.

 

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Section 11.4.       Consultation with Experts. The Administrative Agent may consult with legal counsel, independent public accountants, and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

 

Section 11.5.       Liability of Administrative Agent; Credit Decision. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with the Loan Documents: (i) with the consent or at the request of the Required Lenders (or of any other group of Lenders called for under the specific provisions of the Loan Documents) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify: (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document or any Credit Event; (ii) the performance or observance of any of the covenants or agreements of AF REIT, the Borrower or any Subsidiary contained herein or in any other Loan Document; (iii) the satisfaction of any condition specified in Section 7 hereof, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectability hereof or of any other Loan Document or of any other documents or writing furnished in connection with any Loan Document; and the Administrative Agent makes no representation of any kind or character with respect to any such matter mentioned in this sentence. The Administrative Agent may execute any of its duties under any of the Loan Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, the L/C Issuer, the Borrower, or any other Person for the default or misconduct of any such agents or attorneys-in-fact selected with reasonable care. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) believed by it to be genuine or to be sent by the proper party or parties. In particular and without limiting any of the foregoing, the Administrative Agent shall have no responsibility for confirming the accuracy of any Compliance Certificate or other document or instrument received by it under the Loan Documents. The Administrative Agent may treat the payee of any Obligation as the holder thereof until written notice of transfer shall have been filed with the Administrative Agent signed by such payee in form satisfactory to the Administrative Agent. Each Lender and L/C Issuer acknowledges that it has independently and without reliance on the Administrative Agent or any other Lender or L/C Issuer, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to the Borrower in the manner set forth in the Loan Documents. It shall be the responsibility of each Lender and L/C Issuer to keep itself informed as to the creditworthiness of the Borrower and its Subsidiaries, and the Administrative Agent shall have no liability to any Lender or L/C Issuer with respect thereto.

 

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Section 11.6.       Indemnity. The Lenders shall ratably, in accordance with their respective Percentages, indemnify and hold the Administrative Agent, and its directors, officers, employees, agents, and representatives harmless from and against any liabilities, losses, costs or expenses suffered or incurred by it under any Loan Document or in connection with the transactions contemplated thereby, regardless of when asserted or arising, except to the extent they are promptly reimbursed for the same by the Borrower and except to the extent that any event giving rise to a claim was caused by the gross negligence, bad faith, or willful misconduct of the party seeking to be indemnified as determined by a court of competent jurisdiction by final non-appealable judgment. The obligations of the Lenders under this Section 11.6 shall survive termination of this Agreement. The Administrative Agent shall be entitled to offset amounts received for the account of a Lender under this Agreement against unpaid amounts due from such Lender to the Administrative Agent, any L/C Issuer, or Swing Line Lender hereunder (whether as fundings of participations, indemnities or otherwise, and with any amounts offset for the benefit of the Administrative Agent to be held by it for its own account and with any amounts offset for the benefit of a L/C Issuer or Swing Line Lender to be remitted by the Administrative Agent to or for the account of such L/C Issuer or Swing Line Lender, as applicable), but shall not be entitled to offset against amounts owed to the Administrative Agent or any L/C Issuer or Swing Line Lender by any Lender arising outside of this Agreement and the other Loan Documents.

 

Section 11.7.       Resignation and Removal of Administrative Agent and Successor Administrative Agent. (a) The Administrative Agent may resign at any time by giving written notice thereof to the Lenders, the L/C Issuer, and the Borrower. Upon any such resignation of the Administrative Agent, the Required Lenders shall have the right to appoint a successor Administrative Agent, which shall so long as no Event of Default has occurred and is continuing, be reasonably acceptable to the Borrower. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall so long as no Event of Default has occurred and is continuing, be reasonably acceptable to the Borrower, and which may be any Lender hereunder or any commercial bank, or an Affiliate of a commercial bank, having an office in the United States of America and having a combined capital and surplus of at least $200,000,000.

 

(b)               If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders shall have the right to appoint a successor Administrative Agent, which shall so long as no Event of Default has occurred and is continuing, be reasonably acceptable to the Borrower. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

 

(c)               Upon the acceptance of its appointment as the Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the prior Administrative Agent under the Loan Documents, and the prior Administrative Agent shall be discharged from its duties and obligations thereunder. After any Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 11 and all protective provisions of the other Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent, but no successor Administrative Agent shall in any event be liable or responsible for any actions of its predecessor. If the Administrative Agent resigns or is removed and no successor is appointed, the rights and obligations of such Administrative Agent shall be automatically assumed by the Required Lenders and the Borrower shall be directed to make all payments due each Lender and L/C Issuer hereunder directly to such Lender or L/C Issuer.

 

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Section 11.8.       L/C Issuer and Swing Line Lender. The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the Swing Line Lender shall act on behalf of the Lenders with respect to the Swing Loans made hereunder. The L/C Issuer and the Swing Line Lender shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Section 11 with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the Applications pertaining to such Letters of Credit or by the Swing Line Lender in connection with Swing Loans made or to be made hereunder as fully as if the term “Administrative Agent”, as used in this Section 11, included the L/C Issuer with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to such L/C Issuer or Swing Line Lender, as applicable. Any resignation by the Person then acting as Administrative Agent pursuant to Section 11.7 shall also constitute its resignation or the resignation of its Affiliate as L/C Issuer and Swingline Lender except as it may otherwise agree. If such Person then acting as L/C Issuer so resigns, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Loans or fund risk participations in Reimbursement Obligations pursuant to Section 1.3. If such Person then acting as Swing Line Lender resigns, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Loans or fund risk participations in outstanding Swing Loans pursuant to Section 1.2(b). Upon the appointment by the Borrower of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable (other than any rights to indemnity payments or other amounts that remain owing to the retiring L/C Issuer or Swing Line Lender), and (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents other than with respect to its outstanding Letters of Credit and Swing Loans, and (iii) upon the request of the resigning L/C Issuer, the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the resigning L/C Issuer to effectively assume the obligations of the resigning L/C Issuer with respect to such Letters of Credit.

 

Section 11.9.       Hedging Liability and Bank Product Obligations. By virtue of a Lender’s execution of this Agreement or an assignment agreement pursuant to Section 12.12 hereof, as the case may be, any Affiliate of such Lender with whom AF REIT, the Borrower or any Subsidiary has entered into an agreement creating Hedging Liability or Bank Product Obligations shall be deemed a Lender party hereto for purposes of any reference in a Loan Document to the parties for whom the Administrative Agent is acting, it being understood and agreed that the rights and benefits of such Affiliate under the Loan Documents consist exclusively of such Affiliate’s right to share in payments and collections out of the Guaranties as more fully set forth in Section 3.1 hereof. In connection with any such distribution of payments and collections, or any request for the release of the Guaranties and the Administrative Agent’s Liens in connection with the termination of the Commitments and the payment in full of the Obligations, the Administrative Agent shall be entitled to assume no amounts are due to any Lender or its Affiliate with respect to Hedging Liability or Bank Product Obligations unless such Lender has notified the Administrative Agent in writing of the amount of any such liability owed to it or its Affiliate prior to such distribution or payment or release of Guaranties.

 

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Section 11.10.   Designation of Additional Agents. The Administrative Agent shall have the continuing right, for purposes hereof, at any time and from time to time to designate one or more of the Lenders (and/or its or their Affiliates) as “syndication agents,” “documentation agents,” “book runners,” “lead arrangers,” “arrangers” or other designations for purposes hereto, but such designation shall have no substantive effect, and such Lenders and their Affiliates shall have no additional powers, duties or responsibilities as a result thereof.

 

Section 11.11.   Authorization to Enter into Subordination Agreement. Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to enter into the Special Limited Partner Subordination Agreement, and any other subordination or intercreditor agreement, on its behalf and to take such action on its behalf under the provisions of any such agreement. Each Lender further agrees to be bound by the terms and conditions of the Special Limited Partner Subordination Agreement and any other subordination or intercreditor agreement. Each Lender hereby authorizes and directs the Administrative Agent to issue blockage notices at the direction of the Administrative Agent or the Required Lenders.

 

SECTION12.  Miscellaneous.

 

Section 12.1.       Taxes.

 

(a)               Certain Defined Terms. For purposes of this Section, the term “Lender” includes the L/C Issuer and the term “applicable law” includes FATCA.

 

(b)               Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

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(c)               Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(d)               Indemnification by the Loan Parties. The Loan Parties shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(e)               Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.11 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set-off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (e).

 

(f)                Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(g)               Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 12.1(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

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(ii)              Without limiting the generality of the foregoing,

 

(A)             any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)              any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

(i)                in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(ii)              executed originals of IRS Form W-8ECI;

 

(iii)             in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN-E; or

 

(iv)             to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;

 

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(C)              any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

 

(D)             if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

 

(h)               Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after Tax position than the indemnified party would have been in if the Tax subject to indemnification had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

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(i)                Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

Section 12.2.       [Reserved].

 

Section 12.3.       No Waiver, Cumulative Remedies. No delay or failure on the part of the Administrative Agent, the L/C Issuer, or any Lender, or on the part of the holder or holders of any of the Obligations, in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right. The rights and remedies hereunder of the Administrative Agent, the L/C Issuer, the Lenders, and of the holder or holders of any of the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have.

 

Section 12.4.       Non-Business Days. If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall be due and payable. In the case of any payment of principal falling due on a day which is not a Business Day, interest on such principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall be due and payable on the next scheduled date for the payment of interest.

 

Section 12.5.       Survival of Representations. All representations and warranties made herein or in any other Loan Document or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder.

 

Section 12.6.       Survival of Indemnities. All indemnities and other provisions relative to reimbursement to the Lenders and L/C Issuer of amounts sufficient to protect the yield of the Lenders and L/C Issuer with respect to the Loans and Letters of Credit, including, but not limited to, Sections 1.11, 10.3, and 12.15 hereof, shall survive the termination of this Agreement and the other Loan Documents and the payment of the Obligations.

 

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Section 12.7.       Sharing of Set-Off. Each Lender agrees with each other Lender a party hereto that if such Lender shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise, on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such Obligations then outstanding to the Lenders, then such Lender shall purchase for cash at face value, but without recourse, ratably from each of the other Lenders such amount of the Loans or Reimbursement Obligations, or participations therein, held by each such other Lenders (or interest therein) as shall be necessary to cause such Lender to share such excess payment ratably with all the other Lenders; provided, however, that if any such purchase is made by any Lender, and if such excess payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section 12.7, amounts owed to or recovered by the L/C Issuer in connection with Reimbursement Obligations in which Lenders have been required to fund their participation shall be treated as amounts owed to or recovered by the L/C Issuer as a Lender hereunder.

 

Section 12.8.       Notices. (a) Except as otherwise specified herein, all notices hereunder and under the other Loan Documents shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or facsimile number set forth below, or such other address or facsimile number as such party may hereafter specify by notice to the Administrative Agent and the Borrower given by courier, by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices under the Loan Documents to any Lender shall be addressed to its address or facsimile number set forth on its Administrative Questionnaire; and notices under the Loan Documents to the Borrower, any Guarantor, the Administrative Agent, or L/C Issuer shall be addressed to its respective address or facsimile number set forth below:

 

to the Borrower or any Guarantor: to the Administrative Agent or L/C Issuer:
American Finance Operating Partnership, L.P.
405 Park Ave, 15th Floor
New York, NY 10022
Attention:  Boris Korotkin
Telephone:  (212) 415-6578
Email:  BKorotkin@AR-Global.com
Fax:  (215) 887-2585
BMO Harris Bank N.A.
100 High Street, 26th Floor
Boston, MA  02110
Attention:  Lloyd Baron
Telephone:  (617) 960-2372
Email:  lloyd.baron@bmo.com
with a copy to:  

Proskauer Rose LLP
Eleven Times Square
New York, New York  10036-8299
Attention:  Andrew Bettwy, Esq.
Telephone:  (212) 969-3180
Email:  abettwy@proskauer.com
Fax:  (212) 969-2900
 

 

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Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is delivered to the facsimile number specified in this Section 12.8 or in the relevant Administrative Questionnaire and a confirmation of such facsimile has been received by the sender, (ii) if given by mail, upon receipt or first refusal of delivery or (iii) if given by any other means, when delivered at the addresses specified in this Section 12.8 or in the relevant Administrative Questionnaire; provided that any notice given pursuant to Section 1 hereof shall be effective only upon receipt.

 

(b)               Electronic Communications. Notices and other communications to the Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or L/C Issuer pursuant to Sections 1.2, 1.3 and 1.6 if such Lender or L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Sections by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

 

(c)               Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

 

(d)               Platform. (i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the L/C Issuers and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).

 

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(ii)              The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower or the other Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or any L/C Issuer by means of electronic communications pursuant to this Section, including through the Platform.

 

Section 12.9.       Counterparts; Integration; Effectiveness. (a) Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 7.2, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. For purposes of determining compliance with the conditions specified in Section 7.2 hereof, each Lender and L/C Issuer that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender or L/C Issuer unless the Administrative Agent shall have received notice from such Lender or L/C Issuer prior to the Closing Date specifying its objection thereto.

 

(b)               Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Legal Requirements, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 12.10.   Successors and Assigns. This Agreement shall be binding upon the Borrower and the Guarantors and their successors and assigns, and shall inure to the benefit of the Administrative Agent, the L/C Issuer, and each of the Lenders, and the benefit of their respective successors and assigns, including any subsequent holder of any of the Obligations. The Borrower and the Guarantors may not assign any of their rights or obligations under any Loan Document without the written consent of all of the Lenders and, with respect to any Letter of Credit or the Application therefor, the L/C Issuer.

 

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Section 12.11.   Participants. Each Lender shall have the right at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Loans made and Reimbursement Obligations and/or Commitments held by such Lender at any time and from time to time to one or more other Persons; provided that no such participation shall relieve any Lender of any of its obligations under this Agreement, and, provided, further that no such participant shall have any rights under this Agreement except as provided in this Section 12.11, and the Administrative Agent shall have no obligation or responsibility to such participant. Any agreement pursuant to which such participation is granted shall provide that the granting Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower under this Agreement and the other Loan Documents including, without limitation, the right to approve any amendment, modification or waiver of any provision of the Loan Documents, except that such agreement may provide that such Lender will not agree to any modification, amendment or waiver of the Loan Documents that would reduce the amount of or postpone any fixed date for payment of any Obligation in which such participant has an interest. Any party to which such a participation has been granted shall have the benefits of Section 1.11 and Section 10.3 hereof. The Borrower and each Guarantor authorizes each Lender to disclose to any participant or prospective participant under this Section 12.11 any financial or other information pertaining to each Guarantor, the Borrower or any Subsidiary, provided that such participant or prospective participant shall be subject to the provisions of Section 12.25.

 

Section 12.12.   Assignments. (a) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)               Minimum Amounts. (A) In the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans and participation interest in L/C Obligations at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in subsection (a)(i)(A) of this Section 12.12, the aggregate amount of the Commitment (which for this purpose includes Loans and participation interest in L/C Obligations outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans and participation interest in L/C Obligations of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent or, if “Effective Date” is specified in the Assignment and Acceptance, as of the Effective Date specified in such Assignment and Acceptance) shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);

 

(ii)              Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitments assigned.

 

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(iii)             Required Consents. No consent shall be required for any assignment except to the extent required by Section 12.12(a)(i)(B) and, in addition:

 

(a)               the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

 

(b)               the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender;

 

(c)               the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and

 

(d)               the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Swing Loans (whether or not then outstanding).

 

(iv)             Assignment and Acceptance. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)               No Assignment to Borrower, Guarantors, Affiliates or Defaulting Lenders. No such assignment shall be made to (A) the Borrower, any Subsidiary or any other Affiliate of the Borrower or (B) to a Defaulting Lender or any of its Subsidiaries or any Person, who, upon becoming a Lender hereunder would constitute any of the foregoing Persons described in this clause (B).

 

(vi)             No Assignment to Natural Persons. No such assignment shall be made to a natural person.

 

(vii)          Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent) to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer, the Swing Line Lender and each other Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Loans in accordance with its Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.12(b) hereof, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 12.6 and 12.15 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.11 hereof.

 

(b)               Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Chicago, Illinois, a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. Each Lender or L/C Issuer that grants a participation as described in Section 12.11 shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans made and Reimbursement Obligations and/or Commitments or other obligations under this Agreement (the “Participant Register”); provided that no Lender or L/C Issuer shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any Loans made and Reimbursement Obligations and/or Commitments or other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Obligation or Commitment is in registered form under Section 5f.103-1(c) of the Treasury Regulations or is otherwise required by this Agreement. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender or L/C Issuer shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

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(c)               Any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or grant to a Federal Reserve Bank, and this Section 12.12 shall not apply to any such pledge or grant of a security interest; provided that no such pledge or grant of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or secured party for such Lender as a party hereto; provided further, however, the right of any such pledgee or grantee (other than any Federal Reserve Bank) to further transfer all or any portion of the rights pledged or granted to it, whether by means of foreclosure or otherwise, shall be at all times subject to the terms of this Agreement.

 

(d)               Notwithstanding anything to the contrary herein, if at any time the Swing Line Lender assigns all of its Commitments and Revolving Loans pursuant to subsection (a) above, the Swing Line Lender may terminate the Swing Line. In the event of such termination of the Swing Line, the Borrower shall be entitled to appoint another Lender to act as the successor Swing Line Lender hereunder (with such Lender’s consent); provided, however, that the failure of the Borrower to appoint a successor shall not affect the resignation of the Swing Line Lender. If the Swing Line Lender terminates the Swing Line, it shall retain all of the rights of the Swing Line Lender provided hereunder with respect to Swing Loans made by it and outstanding as of the effective date of such termination, including the right to require Lenders to make Revolving Loans or fund participations in outstanding Swing Loans pursuant to Section 1.2 hereof.

 

Section 12.13.   Amendments. Subject to Section 10.2, any provision of this Agreement or the other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Required Lenders, and (c) if the rights or duties of the Administrative Agent, the L/C Issuer, or the Swing Line Lender are affected thereby, the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable; provided that:

 

(i)                 no amendment or waiver pursuant to this Section 12.13 shall (A) increase any Commitment of any Lender without the consent of such Lender or (B) reduce the amount of or postpone the date for any scheduled payment of any principal of or interest on any Loan or of any Reimbursement Obligation or of any fee payable hereunder without the consent of the Lender to which such payment is owing or which has committed to make such Loan or Letter of Credit (or participate therein) hereunder, it being agreed and understood that any change in any ratio used in the calculation of any interest or fees due hereunder (including any component definition thereof) shall not constitute a reduction in any rate of interest or fees hereunder; provided, however, that only the consent of the Required Lenders shall be necessary to amend the default rate provided in Section 1.9 or to waive any obligation of the Borrower to pay interest or fees at the default rate as set forth therein;

 

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(ii)              no amendment or waiver pursuant to this Section 12.13 shall, unless signed by each Lender, extend the Termination Date, release the Borrower or any Guarantor (except as provided for in this Agreement or in connection with any disposition permitted pursuant to Section 8.9), change the definition of Required Lenders, change the provisions of this Section 12.13, affect the number of Lenders required to take any action hereunder or under any other Loan Document, or change the application of payments contained in Section 3.1; and

 

(iii)            no amendment to Section 13 hereof shall be made without the consent of the Guarantors affected thereby.

 

Notwithstanding anything to the contrary herein, (1) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender, (2) if the Administrative Agent and the Borrower have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Loan Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision, and (3) guarantees and related documents executed by the Borrower or any other Loan Party in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be amended, supplemented or waived without the consent of any Lender if such amendment, supplement or waiver is delivered in order to (x) comply with local law or advice of local counsel, (y) cure ambiguities, omissions, mistakes or defects or (z) cause such guarantee or other document to be consistent with this Agreement and the other Loan Documents.

 

Section 12.14.   Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

 

Section 12.15.   Costs and Expenses; Indemnification. (a) The Borrower agrees to pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, due diligence, investigation (including third party expenses) negotiation, syndication, and administration of the Loan Documents, including, without limitation, the reasonable and documented out-of-pocket fees and disbursements of a single counsel to the arranger and Administrative Agent and a single local counsel per jurisdiction necessary to the Administrative Agent), in connection with the preparation and execution of the Loan Documents, and any amendment, waiver or consent related thereto, whether or not the transactions contemplated herein are consummated. The Borrower agrees to pay to the Administrative Agent, the L/C Issuer, each Lender, and any other holder of any Obligations outstanding hereunder, all documented out-of-pocket costs and expenses reasonably incurred or paid by the Administrative Agent, the L/C Issuer, such Lender, or any such holder, including reasonable and documented out-of-pocket attorneys’ fees and disbursements and court costs, in connection with any Default or Event of Default hereunder or in connection with the enforcement of any of the Loan Documents (including all such costs and expenses incurred in connection with any proceeding under the United States Bankruptcy Code involving the Borrower or any Guarantor as a debtor thereunder).

 

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The Borrower further agrees to indemnify the Administrative Agent, the L/C Issuer, each Lender, and any security trustee therefor, and their respective directors, officers, employees, agents, financial advisors, and consultants (each such Person being called an “Indemnitee”) against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable and documented out-of-pocket fees and disbursements of counsel for any such Indemnitee and all reasonable and documented out-of-pocket expenses of litigation or preparation therefor, whether or not the Indemnitee is a party thereto, or any settlement arrangement arising from or relating to any such litigation) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit and any such claim, demand, or liability for any broker’s or finder’s fees alleged to have been incurred by the Borrower in connection herewith or therewith., other than other than (i) those which arise from the gross negligence, bad faith or willful misconduct of the party claiming indemnification, (ii) a material breach of such Indemnitee’s obligations under the Loan Documents, as determined in a final non-appealable judgment of a court of competent jurisdiction or (iii) any dispute solely among Indemnitees (provided, that the Borrower agrees to indemnify the Administrative Agent in any such dispute between the Administrative Agent and any Lender). The Borrower, upon demand by the Administrative Agent, the L/C Issuer, or a Lender at any time, shall reimburse the Administrative Agent, the L/C Issuer, or such Lender for any reasonable legal or other expenses (including, without limitation, all reasonable fees and disbursements of counsel for any such Indemnitee) incurred in connection with investigating or defending against any of the foregoing (including any settlement costs relating to the foregoing) except to the extent the same is due to the gross negligence, bad faith, or willful misconduct of the party to be indemnified. To the extent permitted by applicable Legal Requirements, the Borrower and the Guarantors shall not assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or the other Loan Documents or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. The obligations of the parties under this Section 12.15 shall survive the termination of this Agreement. No Indemnitee referred to in subsection (b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

(b)               The Borrower unconditionally agrees to indemnify, defend and hold harmless, and covenants not to sue for any claim for contribution against, each Indemnitee for any damages, loss or reasonable and documented out-of-pocket costs and expenses, including without limitation, response, remedial or removal costs and all reasonable and documented out-of-pocket fees and disbursements of counsel for any such Indemnitee, arising out of any of the following: (i) any Hazardous Material Activity at any of the Real Properties, (ii) the violation of any Environmental Law by AF REIT, the Borrower or any Subsidiary or otherwise occurring on or with respect to any Real Property, (iii) any claim for personal injury or property damage in connection with AF REIT, the Borrower or any Subsidiary or otherwise occurring on or with respect to any Real Property, and (iv) the inaccuracy or breach of any environmental representation, warranty or covenant by AF REIT, the Borrower or any Subsidiary made herein or in any other Loan Document evidencing or securing any Obligations or setting forth terms and conditions applicable thereto or otherwise relating thereto, except for damages arising from the willful misconduct, bad faith or gross negligence of the relevant Indemnitee. This indemnification shall survive the payment and satisfaction of all Obligations and the termination of this Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim under this indemnification. This indemnification shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of each Indemnitee and its successors and assigns.

 

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(c)               This Section 12.15 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(d)               Reimbursement by Lenders. To the extent that (i) the Loan Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by any of them to the Administrative Agent (or any sub-agent thereof), any L/C Issuer, any Swing Line Lender or any Related Party or (ii) any liabilities, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever are imposed on, incurred by, or asserted against, Administrative Agent, the L/C Issuer, any Swing Line Lender or a Related Party in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by Administrative Agent, the L/C Issuer, any Swing Line Lender or a Related Party in connection therewith, then, in each case, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), such L/C Issuer, such Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); and provided, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), such L/C Issuer or such Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), such L/C Issuer or any such Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (d) are subject to the provisions of Section 12.3.

 

Section 12.16.   Set-off. In addition to any rights now or hereafter granted under the Loan Documents or applicable Legal Requirements and not by way of limitation of any such rights, upon the occurrence of any Event of Default, with the prior written consent of the Administrative Agent, each Lender, the L/C Issuer, each subsequent holder of any Obligation, and each of their respective affiliates, is hereby authorized by the Borrower and each Guarantor at any time or from time to time, without notice to the Borrower or such Guarantor or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, and in whatever currency denominated, but not including trust accounts) and any other indebtedness at any time held or owing by that Lender, L/C Issuer, subsequent holder, or affiliate, to or for the credit or the account of the Borrower or such Guarantor, whether or not matured, against and on account of the Obligations then due to that Lender, L/C Issuer, or subsequent holder under the Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Loan Documents, irrespective of whether or not (a) that Lender, L/C Issuer, or subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans and other amounts due hereunder shall have become due and payable pursuant to Section 9 and although said obligations and liabilities, or any of them, may be contingent or unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set-off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 1.14 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuer and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such L/C Issuer or their respective Affiliates may have. Each Lender and L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

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Section 12.17.   Entire Agreement. The Loan Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby.

 

Section 12.18.   Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 12.19.   Severability of Provisions. Any provision of any Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. All rights, remedies and powers provided in this Agreement and the other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Agreement and other Loan Documents are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement or any of the other Loan Documents invalid or unenforceable.

 

Section 12.20.   Excess Interest. Notwithstanding any provision to the contrary contained herein or in any other Loan Document, no such provision shall require the payment or permit the collection of any amount of interest in excess of the maximum amount of interest permitted by applicable Legal Requirements to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the Loans or other obligations outstanding under this Agreement or any other Loan Document (“Excess Interest”). If any Excess Interest is provided for, or is adjudicated to be provided for, herein or in any other Loan Document, then in such event (a) the provisions of this Section 12.20 shall govern and control, (b) neither the Borrower nor any guarantor or endorser shall be obligated to pay any Excess Interest, (c) any Excess Interest that the Administrative Agent or any Lender may have received hereunder shall, at the option of the Administrative Agent, be (i) applied as a credit against the then outstanding principal amount of Obligations hereunder and accrued and unpaid interest thereon (not to exceed the maximum amount permitted by applicable Legal Requirements), (ii) refunded to the Borrower, or (iii) any combination of the foregoing, (d) the interest rate payable hereunder or under any other Loan Document shall be automatically subject to reduction to the maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in the relevant interest rate, and (e) neither the Borrower nor any guarantor or endorser shall have any action against the Administrative Agent or any Lender for any damages whatsoever arising out of the payment or collection of any Excess Interest. Notwithstanding the foregoing, if for any period of time interest on any of Borrower’s Obligations is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on the Borrower’s Obligations shall remain at the Maximum Rate until the Lenders have received the amount of interest which such Lenders would have received during such period on the Borrower’s Obligations had the rate of interest not been limited to the Maximum Rate during such period.

 

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Section 12.21.   Construction. The parties acknowledge and agree that the Loan Documents shall not be construed more favorably in favor of any party hereto based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of the Loan Documents. The provisions of this Agreement relating to Subsidiaries shall only apply during such times as the Borrower has one or more Subsidiaries.

 

Section 12.22.   Lender’s and L/C Issuer’s Obligations Several. The obligations of the Lenders and L/C Issuer hereunder are several and not joint. Nothing contained in this Agreement and no action taken by the Lenders or L/C Issuer pursuant hereto shall be deemed to constitute the Lenders and L/C Issuer a partnership, association, joint venture or other entity.

 

Section 12.23.   Governing Law; Jurisdiction; Consent to Service of Process. (a) THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS (EXCEPT AS OTHERWISE SPECIFIED THEREIN), AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

(b)               Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each party hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by applicable Legal Requirements, in such federal court. Each party hereto hereby agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Legal Requirements. Nothing in this Agreement or any other Loan Document or otherwise shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any Guarantor or its respective properties in the courts of any jurisdiction.

 

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(c)               Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirements, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 12.23(b). Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable Legal Requirements, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)               Each party to this Agreement irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopy or e-mail) in Section 12.8. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by applicable Legal Requirements.

 

Section 12.24.   USA Patriot Act. Each Lender and L/C Issuer that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify, and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or L/C Issuer to identify the Borrower in accordance with the Patriot Act.

 

Section 12.25.   Confidentiality. Each of the Administrative Agent, the Lenders, and the L/C Issuer severally agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors to the extent any such Person has a need to know such Information (it being understood that the Persons to whom such disclosure is made will first be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Legal Requirements or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 12.25, to (A) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to AF REIT, the Borrower or any Subsidiary and its obligations, (g) with the prior written consent of the Borrower, (h) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section 12.25 or (B) becomes available to the Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis from a source other than AF REIT, the Borrower or any Subsidiary or any of their directors, officers, employees or agents, including accountants, legal counsel and other advisors; (i) on a confidential basis to rating agencies if requested or required by such agencies in connection with a rating relating to the Loans or the Commitments hereunder, (j) so long as AF REIT’s report on Form 8-K (or its equivalent) has been filed with the SEC, Gold Sheets and other similar bank trade publications (such information to consist solely of deal terms and other information regarding the credit facilities evidenced by this Agreement customarily found in such publications), or (k) so long as AF REIT’s report on Form 8-K (or its equivalent) has been filed with the SEC, to entities which compile and publish information about the syndicated loan market, provided that only basic information about the pricing and structure of the transaction evidenced hereby may be disclosed pursuant to this subsection (k). For purposes of this Section 12.25, “Information” means all information received from AF REIT, the Borrower or any of the Subsidiaries or from any other Person on behalf of AF REIT, the Borrower or any Subsidiary relating to AF REIT, the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis prior to disclosure by AF REIT, the Borrower or any of their Subsidiaries or from any other Person on behalf of AF REIT, the Borrower or any of the Subsidiaries provided that, in the case of information received from a Loan Party or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

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Section 12.26.   No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a) (i) no fiduciary, advisory or agency relationship between any Loan Party and its Subsidiaries and the Administrative Agent, the L/C Issuer, or any Lender is intended to be or has been created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether the Administrative Agent, the L/C Issuer, or any Lender has advised or is advising any Loan Party or any of its Subsidiaries on other matters, (ii) the arranging and other services regarding this Agreement provided by the Administrative Agent, the L/C Issuer, and the Lenders are arm’s-length commercial transactions between such Loan Parties and their Affiliates, on the one hand, and the Administrative Agent, the L/C Issuer, and the Lenders, on the other hand, (iii) each Loan Party has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has deemed appropriate and (iv) each Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; and (b) (i) the Administrative Agent, the L/C Issuer, and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Loan Party or any of its Affiliates, or any other Person; (ii) none of the Administrative Agent, the L/C Issuer, and the Lenders has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the L/C Issuer, and the Lenders and their respective Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of any Loan Party and its Affiliates, and none of the Administrative Agent, the L/C Issuer, and the Lenders has any obligation to disclose any of such interests to any Loan Party or its Affiliates. To the fullest extent permitted by law, each Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, the L/C Issuer, and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

Section 12.27.   Acknowledgement and Consent to Bail-In of EEAAffected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEAAffected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEAthe applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)               the application of any Write-Down and Conversion Powers by an EEAthe applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEAAffected Financial Institution; and

 

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(b)               the effects of any Bail-in Action on any such liability, including, if applicable:

 

(i)                a reduction in full or in part or cancellation of any such liability;

 

(ii)              a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEAAffected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)            the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEAthe applicable Resolution Authority.

 

Section 12.28. Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

 

(a)                In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

 

(b)               As used in this Section, the following terms have the following meanings:

 

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

“Covered Entity” means any of the following:

 

(i)               a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b);

 

(ii)              a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or

 

(iii)             a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b).

 

“Default Rights” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as applicable.

 

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

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SECTION 13.  The Guarantees.

 

Section 13.1.       The Guarantees. To induce the Lenders to provide the credits described herein and in consideration of benefits expected to accrue to the Borrower by reason of the Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Guarantor party hereto (including any Guarantor formed or acquired after the Closing Date executing an separate Guaranty or an Additional Guarantor Supplement in the form attached hereto as Exhibit G or such other form acceptable to the Administrative Agent) hereby unconditionally and irrevocably guarantees, jointly and severally, to the Administrative Agent, the Lenders, and their Affiliates, the due and punctual payment of all present and future Obligations, Hedging Liability and Bank Product Obligations, including, but not limited to, the due and punctual payment of principal of and interest on the Loans, the Reimbursement Obligations, Hedging Liability, and Bank Product Obligations, and the due and punctual payment of all other obligations now or hereafter owed by the Borrower under the Loan Documents as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, according to the terms hereof and thereof (including all interest, costs, fees, and charges after the entry of an order for relief against the Borrower or such other obligor in a case under the United States Bankruptcy Code or any similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim against the Borrower or any such obligor in any such proceeding); provided, however, that with respect to any Guarantor, its Guarantee of Hedging Liability of the Borrower or any Guarantor shall exclude all Excluded Swap Obligations. In case of failure by the Borrower or other obligor punctually to pay any obligations guaranteed hereby, each Guarantor hereby unconditionally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, and as if such payment were made by the Borrower or such obligor.

 

Section 13.2.       Guarantee Unconditional. The obligations of each Guarantor under this Section 13 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged, or otherwise affected by:

 

(a)           any extension, renewal, settlement, compromise, waiver, or release in respect of any obligation of the Borrower or other obligor or of any other guarantor under this Agreement or any other Loan Document or by operation of law or otherwise;

 

(b)          any modification or amendment of or supplement to this Agreement or any other Loan Document or any agreement relating to Hedging Liability or Bank Product Obligations;

 

(c)           any change in the corporate existence, structure, or ownership of, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting, the Borrower or other obligor, any other guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Borrower or other obligor or of any other guarantor contained in any Loan Document;

 

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(d)           the existence of any claim, set-off, or other rights which the Borrower or other obligor or any other guarantor may have at any time against the Administrative Agent, any Lender, or any other Person, whether or not arising in connection herewith;

 

(e)           any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Borrower or other obligor, any other guarantor, or any other Person or Property;

 

(f)            any application of any sums by whomsoever paid or howsoever realized to any obligation of the Borrower or other obligor, regardless of what obligations of the Borrower or other obligor remain unpaid;

 

(g)           any invalidity or unenforceability relating to or against the Borrower or other obligor or any other guarantor for any reason of this Agreement or of any other Loan Document or any agreement relating to Hedging Liability (other than any Excluded Swap Obligation) or Bank Product Obligations, or any provision of applicable Legal Requirements purporting to prohibit the payment by the Borrower or other obligor or any other guarantor of the principal of or interest on any Loan or any Reimbursement Obligation or any other amount payable under the Loan Documents or any agreement relating to Hedging Liability (other than any Excluded Swap Obligation) or Bank Product Obligations; or

 

(h)           any other act or omission to act or delay of any kind by the Administrative Agent, any Lender, or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of any Guarantor under this Section 13.

 

Section 13.3.       Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor’s obligations under this Section 13 shall remain in full force and effect until the Commitments are terminated, all Letters of Credit have expired, and the principal of and interest on the Loans and all other amounts payable by the Borrower and the Guarantors under this Agreement and all other Loan Documents and, if then outstanding and unpaid, all Hedging Liability (other than any Excluded Swap Obligation) and Bank Product Obligations have been paid in full. If at any time any payment of the principal of or interest on any Loan or any Reimbursement Obligation or any other amount payable by the Borrower or other obligor or any Guarantor under the Loan Documents or any agreement relating to Hedging Liability (other than any Excluded Swap Obligation) or Bank Product Obligations is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of the Borrower or other obligor or of any guarantor, or otherwise, each Guarantor’s obligations under this Section 13 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time.

 

Section 13.4.       Subrogation. Each Guarantor agrees it will not exercise any rights which it may acquire by way of subrogation by any payment made hereunder, or otherwise, until all the obligations guaranteed hereby shall have been paid in full subsequent to the termination of all the Commitments and expiration of all Letters of Credit. If any amount shall be paid to a Guarantor on account of such subrogation rights at any time prior to the later of (x) the payment in full of the Obligations, Bank Product Obligations and Hedging Liability (other than any Excluded Swap Obligation) and all other amounts payable by the Borrower hereunder and under the other Loan Documents and (y) the termination of the Commitments and expiration of all Letters of Credit, such amount shall be held in trust for the benefit of the Administrative Agent and the Lenders (and their Affiliates) and shall forthwith be paid to the Administrative Agent for the benefit of the Lenders (and their Affiliates) or be credited and applied upon the Obligations, Bank Product Obligations (other than any Excluded Swap Obligation) and Hedging Liability, whether matured or unmatured, in accordance with the terms of this Agreement.

 

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Section 13.5.       Waivers. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, and any notice except as specifically provided for herein, as well as any requirement that at any time any action be taken by the Administrative Agent, any Lender, or any other Person against the Borrower or other obligor, another guarantor, or any other Person.

 

Section 13.6.       Limit on Recovery. Notwithstanding any other provision hereof, the right of recovery against each Guarantor under this Section 13 shall not exceed $1.00 less than the lowest amount which would render such Guarantor’s obligations under this Section 13 void or voidable under applicable Legal Requirements, including, without limitation, fraudulent conveyance law.

 

Section 13.7.       Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Borrower or other obligor under this Agreement or any other Loan Document or any agreement relating to Hedging Liability (other than any Excluded Swap Obligation) or Bank Product Obligations, is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or such obligor, all such amounts (other than any Excluded Swap Obligation) otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents or any agreement relating to Hedging Liability or Bank Product Obligations, shall nonetheless be payable by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Required Lenders.

 

Section 13.8.       Benefit to Guarantors. The Borrower and the Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of the Borrower has a direct impact on the success of each Guarantor. Each Guarantor will derive substantial direct and indirect benefit from the extensions of credit hereunder.

 

Section 13.9.       Guarantor Covenants. Each Guarantor shall take such action as the Borrower is required by this Agreement to cause such Guarantor to take, and shall refrain from taking such action as the Borrower is required by this Agreement to prohibit such Guarantor from taking.

 

Section 13.10.   Subordination. Each Guarantor (each referred to herein as a “Subordinated Creditor”) hereby subordinates the payment of all indebtedness, obligations, and liabilities of the Borrower or any other Guarantor owing to such Subordinated Creditor, whether now existing or hereafter arising, to the indefeasible payment in full in cash of all Obligations, Hedging Liability (other than any Excluded Swap Obligation) and Bank Product Obligations. During the continuance of any Event of Default or Default under Sections 9.1 (a), (j) or (k), subject to Section 13.4, any such indebtedness, obligation, or liability of the Borrower or any other Guarantor owing to such Subordinated Creditor shall be enforced and performance received by such Subordinated Creditor as trustee for the benefit of the holders of the Obligations, Hedging Liability (other than any Excluded Swap Obligation) and Bank Product Obligations and, upon the acceleration of the Indebtedness under Section 9.2 or 9.3 hereof, the proceeds thereof shall be paid over to the Administrative Agent for application to the Obligations, Hedging Liability (other than any Excluded Swap Obligation) and Bank Product Obligations (whether or not then due), but without reducing or affecting in any manner the liability of such Guarantor under this Section 13.

 

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Section 13.11.   Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by the Borrower and each other Guarantor to honor all of its obligations in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section as it relates to such Borrower or other Guarantor, voidable under applicable Legal Requirements relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until discharged in accordance with Section 13.3. Each Qualified ECP Guarantor intends that this Section constitute, and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of the Borrower and each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

[Signature Pages to Follow]

 

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This Credit Agreement is entered into between us for the uses and purposes hereinabove set forth as of the date first above written.

 

  Borrower
       
  American Finance Operating Partnership, L.P., a Delaware limited partnership
       
  By:   American Finance Trust, Inc.,
    its general partner
       
  By:  
    Name:                              
    Title:  

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

  Administrative Agent and L/C Issuer
   
  BMO Harris Bank N.A., as L/C Issuer and as Administrative Agent
   
  By:                              
    Name:   Lloyd Baron
    Title: Director

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

  Lenders
   
  BMO Harris Bank N.A., as a Lender
   
  By:    
    Name:                                         
    Title:  

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

  Citizens Bank, N.A., as a Lender
   
  By:    
    Name:                                         
    Title:  

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

 

Truist Bank, as successor by merger to

SunTrust Bank, as a Lender

   
  By:    
    Name:                                          
    Title:  

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

  Société Générale, as a Lender
   
  By:    
    Name:                                 
    Title:  

 

[Signature Page to Credit Agreement (American Finance Operating Partnership, L.P.)]

 

 

 

 

  Comerica Bank, as a Lender
 
  By:  
    Name:  
    Title:  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT (AMERICAN FINANCE OPERATING PARTNERSHIP, L.P.)]

 

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  KeyBank, National Association, as a Lender
 
  By:                  
    Name:    
    Title:  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT (AMERICAN FINANCE OPERATING PARTNERSHIP, L.P.)]

 

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  “Guarantors”

 

  American Finance Trust, Inc.
 
  By                      
    Name             
    Title  
 
  Genie Acquisition, LLC
 
  By  
    Name  
    Title  
 
  ARC CLORFL001, LLC
  ARC CTCHRNC001, LLC
  ARC HCHARTX001, LLC
  ARC NCCHRNC001, LLC
  ARC NWNCHSC001, LLC
  ARC PSFKFKY001, LLC
  ARC PTSCHIL001, LLC
  ARC SRTULOK001, LLC
  ARC SSSDLLA001, LLC
  ARC SWHOUTX001, LLC
  ARC SWWCHOH001, LLC
  ARC SWWMGPA001, LLC
  ARC TMMONPA001, LLC
  ARC WEMPSMN001, LLC
  ARC WLHUMTX001, LLC
   
  By  
    Name  
    Title  

 

[SIGNATURE PAGE TO CREDIT AGREEMENT (AMERICAN FINANCE OPERATING PARTNERSHIP, L.P.)]

 

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Schedule I

 

Commitments

 

Name of Lender Commitment

BMO Harris Bank N.A.

Citizens Bank, National Association

SunTrustTruist Bank

BBVA USA

Société Générale

Comerica Bank

KeyBank, National Association

Synovus Bank

$100,000,000

$100,000,000

$100,000,000

$100,000,000

$50,000,000

$40,000,000

$25,000,000

$25,000,000

Total Commitments $540,000,000

 

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Exhibit E

 

Compliance Certificate

 

To:BMO Harris Bank N.A., as Administrative Agent under, and the Lenders party to, the Credit Agreement described below

 

This Compliance Certificate is furnished to the Administrative Agent and the Lenders pursuant to that certain Credit Agreement dated as of April 26, 2018, among American Finance Operating Partnership, L.P., a Delaware limited partnership, as Borrower, the Guarantors signatory thereto, Citizens Capital Markets and, SunTrust Robinson Humphrey, Inc., and BBVA USA, as Syndication Agents, the Administrative Agent and the Lenders party thereto (the “Credit Agreement”). Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.

The Undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, that:

 

1.          I am the duly elected ____________ of American Finance Operating Partnership, L.P., a Delaware limited partnership.

 

2.          I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and the Subsidiaries during the accounting period covered by the attached financial statements.

 

3.          Except to the extent previously disclosed pursuant to the requirements of Section 8.5(e) of the Credit Agreement, the examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below.

 

4.          [The financial statements required by Section 8.5(c) of the Credit Agreement and being furnished to you concurrently with this Compliance Certificate are true, correct and complete in all material respects as of the date and for the periods covered thereby.]1

 

5.          The Schedule I hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Credit Agreement, all of which data and computations are, to the best of my knowledge, true, complete and correct and have been made in accordance with the relevant Sections of the Credit Agreement.

 

 

1              Only required to be included with respect to quarterly financial reports.

 

 

 

 

6.          The Schedule II hereto sets forth financial data and computations evidencing the Borrower’s calculation of the Ownership Share of each Subsidiary and Unconsolidated Affiliate, all of which data and computations are, to the best of my knowledge, true, complete and correct and have been made in accordance with the relevant Sections of the Credit Agreement.

 

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event:

________________________________________________________________       

________________________________________________________________       

________________________________________________________________       

________________________________________________________________       

 

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ______ day of __________________ 20__.

 

  American Finance Operating Partnership, L.P., a Delaware limited partnership
 
  By: American Finance Trust, Inc., its general partner
 

  By  
    Name  
    Title  

 

-2- 

 

 

Schedule I

to Compliance Certificate

_________________________________________________

 

Compliance Calculations

for Credit Agreement dated as of April 26, 2018

 

Calculations with respect to the [Fiscal Year] [Fiscal Quarter] ending

_____________, _______

A.           Maximum Consolidated Leverage Ratio (Section 8.20(a))  
1. Total Indebtedness of AF REIT and its Subsidiaries on a consolidated basis $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________
3. Ratio of Line A1 to Line A2 ____:1.0
4. Line A3 must not exceed 0.60:1.0
5. The Borrower is in compliance (circle yes or no) yes/no
B.            Minimum Fixed Charge Coverage Ratio (Section 8.20(b))  
1. Net income (or loss) $___________
2. Depreciation and amortization expense ___________
3. Interest Expense ___________
4. Franchise, excise and income tax expense (including any interest or penalties related to the foregoing) ___________
5. Extraordinary, unrealized, non-recurring or unusual losses, including impairment charges and reserves and losses on sales of assets outside of the ordinary course of business and costs and expenses incurred during such period with respect to acquisitions consummated ___________
6. Amortization of intangibles (including goodwill) and organization costs ___________
7. Any other non-cash charges ___________
8. All commissions, guaranty fees, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and the net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP ___________

 

 

 

 

9. Fees, expenses and charges incurred during such period, directly relating to the negotiation of and entry into of (A) the Credit Agreement, the other Loan Documents and any amendments thereto or any agreement entered into in connection therewith, (B) any investment, acquisition, equity issuance or incurrence of indebtedness permitted under the Credit Agreement, any associated financings or any other asset purchase permitted under the Credit Agreement, (C) the merger of Retail Centers of America and American Finance Trust or (D) arrangements in connection with the listing of the Stock of AF REIT on a national securities exchange, the issuance of the Incentive Listing Note and the entry into the Outperformance Agreement, and any tender offer or share repurchase program consummated in connection with, or after, such listing ___________
10. Any loss in connection with extinguishment or modification of debt ___________
11. To the extent required to be treated as an expense under GAAP, reasonable transaction costs and expenses incurred during such period in connection with acquisitions permitted under the Credit Agreement (whether or not consummated) ___________
12. Sum of Lines B2 through B11 ___________
13. Funds received by the Borrower or a Subsidiary as rent but which are reserved for capital expenses ___________
14. Unrealized gains on the sale of assets ___________
15. Income tax benefits ___________
16. Interest income ___________
17. Any extraordinary, unusual or non-recurring income or gains (including, whether or not included as a separate item in the statement of net income for such period, gains on the sales of assets outside of the ordinary course of business) ___________
18. Any other non-cash income ___________
19. Any cash payment made during such period described in Line B7 above subsequent to the Fiscal Quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of net income ___________
20. Sum of Lines B13 through B19 ___________
21. Line B1 plus Line B12 minus Line B20 (“EBITDA”) ___________
22. EBITDA computed on an annualized basis ___________
23. Capital Reserve ___________

 

-2

 

 

24. Line B22 minus Line B23 (“Adjusted EBITDA”) ___________
25. Interest Expense ___________
26. The greater of (i) zero or (ii) scheduled principal amortization paid on Total Indebtedness (exclusive of any balloon payments or prepayments of principal paid on such Total Indebtedness) ___________
27. Line B25 plus Line B26 (“Debt Service”) ___________
28. Cash dividends to preferred equity holders and required cash distributions (other than distributions by the Borrower to holders of operating partnership units, distributions by AF REIT to common equity holders, and distributions made under the Incentive Listing Note) made or to be made during such period ___________
29. Cash payments of base rent under Ground Leases made or to be made during such period, unless such payments are deducted from Property NOI and EBITDA ___________
30. Sum of Lines B27, B28 and B29 (“Fixed Charges”) ___________
31. Fixed Charges computed on an annualized basis ___________
32. Ratio of Line B24 to Line B31 ____:1.0
33. Line B32 shall not be less than 1.65:1.0[1.25]2[1.65]:1.0
34. The Borrower is in compliance (circle yes or no) yes/no
C.            Maximum Other Recourse Debt to Total Asset Value Ratio (Section 8.20(c))  
1. Other Recourse Debt $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________
3. Ratio of Line C1 to Line C2 ____:1.0
4. Line C3 shall not exceed 0.10:1.0
5. The Borrower is in compliance (circle yes or no) yes/no
D.            Maintenance of Net Worth (Section 8.20(d))  
1. Net Worth $___________

 

2 Applicable during the Adjustment Period

 

-3

 

 

2. Aggregate net cash proceeds received by AF REIT after December 31, 2017 in connection with any offering of Stock or Stock Equivalents ___________
3. 80% of Line D2 ___________
4. Required Net Worth ($1,375,000,000 plus Line D3) ___________
5. Line D1 shall not be less than Line D4 ___________
6. The Borrower is in compliance (circle yes or no) yes/no
E.            Maximum Consolidated Secured Leverage Ratio (Section 8.20(e))  
1. Total Secured Indebtedness of AF REIT and its Subsidiaries on a consolidated basis $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________
3. Ratio of Line E1 to Line E2 ____:1.0
4. Line E3 must not exceed 0.50:1.0
5. The Borrower is in compliance (circle yes or no) yes/no
F.             Investments (Unconsolidated Affiliates) (Section 8.8(i))3  
1. Cash investments in Unconsolidated Affiliates $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________
3. Line F1 divided by Line F2 ___________
4. Line F3 shall not exceed 20%  
5. The Borrower is in compliance (circle yes or no) yes/no
G.            Investments (Assets Under Development) (Section 8.8(j))  
1. Investments in Assets Under Development $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________
3. Line G1 divided by Line G2 ___________
4. Line G3 shall not exceed 10%  
5. The Borrower is in compliance (circle yes or no) yes/no
H.            Investments (Land Assets) (Section 8.8(k))  
1. Investments in Land Assets $___________
2. Total Asset Value as calculated on Exhibit A hereto ___________

 

 

3 During the Adjustment Period the Borrower shall not, nor shall it permit AF REIT or any Subsidiary to make an investment in or acquisition of any multi-tenant Real Property or of the type described in Sections 8.8(i), (j), or (k).

 

-4

 

 

 

  3. Line H1 divided by Line G2 ___________
       
  4. Line H3 shall not exceed 10%  
       
  5. The Borrower is in compliance (circle yes or no) yes/no
       
I. Investments in Mortgages, Mezzanine Loans, CMBS and Governmental Affiliated Loan Corporations (Section 8.8(q))  
     
  1. Investments in mortgages and mezzanine loans, commercial mortgage-backed securities and Governmental Affiliated Loan Corporations $___________
       
  2. Total Asset Value as calculated on Exhibit A hereto ___________
       
  3. Line I1 divided by Line I2 ___________
       
  4. Line I3 shall not exceed 10%  
       
  5. The Borrower is in compliance (circle yes or no) yes/no
       
J. Investments in Publicly-Traded Equity Interests (Section 8.8(s))  
     
  1. Investments permitted under applicable law in the publicly-traded equity interests of REITs or other real estate companies conducting business, services or activities substantially similar or related to those engaged by AF REIT, the Borrower and their Subsidiaries as of the Closing Date $___________
       
  2. Total Asset Value as calculated on Exhibit A hereto ___________
       
  3. Line J1 divided by Line J2 ___________
       
  4. Line J3 shall not exceed 10%  
       
  5. The Borrower is in compliance (circle yes or no) yes/no
       
K. Other Investments (Section 8.8(t))  
     
  1. Other investments not otherwise permitted under Section 8.8 of the Credit Agreement $___________
       
  2. Line K1 shall not exceed $3,000,000  
       
  3. The Borrower is in compliance (circle yes or no) yes/no
       
L. Aggregate Investment Limitation to Total Asset Value (Section 8.8)  
     
  1. Sum of Lines F1, G1, H1, II, J1 and K1 $___________
       
  2. Total Asset Value as calculated on Exhibit A hereto ____________
       
  3. Line L1 divided by Line L2 ___________
       
  4. Line L3 shall not exceed 35%  

 

5-

 

 

  5.             The Borrower is in compliance (circle yes or no) yes/no
     
M. Distributions to MFFO (Section 8.24(a))  
     
  1.             Aggregate amount of cash distributions (excluding cash distributions permitted pursuant to the other clauses of Section 8.24) made by the Borrower to its equity holders during the period of [four]2 consecutive Fiscal Quarters ending with the Fiscal Quarter for which this Compliance Certificate is delivered $___________
     
  2.             Has the Borrower made an election under Section 8.24(a)(ii) or 8.24(a)(iii), and if yes, which one? ___________
     
  3.             If the Borrower made an election under Section 8.24(a)(ii) or 8.24(a)(iii), which Fiscal Quarter was the “Specified Quarter”? yes under Section 8.24(a)[(ii) or (iii)] / no
     
  42.           AF REIT’s MFFO [for the most recently ended period of four Fiscal Quarters] / [for such Fiscal Quarter] / [for such period of two consecutive Fiscal Quarters] / [for such period of three consecutive Fiscal Quarters]] $___________
     
 

5.             [95] 3.   [For Fiscal Quarters ending June 30, 2020 and September 30, 2020: $0.85 per common share of AF REIT per annum, pro-rated on a daily basis for the applicable Fiscal Quarter multiplied by the number of common shares of AF REIT at the end of such Fiscal Quarter plus the amount of any dividends required to be paid in accordance with AF REIT’s 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value]

 

[For the period of two consecutive Fiscal Quarters ending December 31, 2020: [105%]/[95%] of Line M2 (refer to Section 8.24(a)) multiplied by 2]

 

[For the period of three consecutive Fiscal Quarters ending March 31, 2020: [105%]/ [11095%]% of Line M42 (refer to Section 8.24(a)) multiplied by four-thirds (4/3)]

 

[For Fiscal Quarter ending June 30, 2021 and thereafter: [95%]/[105%] of Line M2 (refer to Section 8.24(a))]

$____________
     

 

 

 

 2 If the Compliance Certificate is being delivered after Borrower’s election pursuant to Section 8.24(a)(ii) or (iii), cash distributions shall be measured on the basis of one, two, three or four Fiscal Quarters, as directed by the Credit Agreement.

 

6-

 

 

  64.         Amount necessary for AF REIT to be able to make distributions required to maintain its status as a REIT (i.e., to satisfy the distribution requirements set forth in Section 857(a) of the Code) ___________
     
  75.         Greater Line M53 and Line M64 ___________
     
  8.           Line M1 shall not exceed Line M75  
     
  9.           The Borrower is in compliance (circle yes or no) yes/no
     
  N.          Tender offers and share repurchases prior to the listing of the Stock of AF REIT on a national securities exchange (Section 8.24(j))  
     
  1.           Did the Borrower make a Restricted Payment pursuant to Section 8.24(j) during such Fiscal Quarter? yes/no
     
  2.           Did the Borrower have on a pro forma basis after giving effect to any such Restricted Payment and any Borrowing under the Credit Agreement in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)) a Consolidated Leverage Ratio of not greater than 0.55 to 1.00? yes/no
     
  3.           Was the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing under the Credit Agreement in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n)) and cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date not less than $40,000,000? yes/no
     
  4.           Aggregate amount of tender offers and share repurchases consummated and of Restricted Payments made to fund the consideration therefor from the Closing Date through the end of such Fiscal Quarter $___________
     
  5.           Line N4 shall not exceed $30,000,000
     
  6.           The Borrower is in compliance (circle yes or no) yes/no
     
  ON.       Tender offers and share repurchases in connection with the listing of the Stock of AF REIT on a national securities exchange after the date of such listing (Section 8.24(k))4  
     
  1.             Did the Borrower make a Restricted Payment pursuant to Section 8.24(k) during such Fiscal Quarter? yes/no

 

 

4 During the Adjustment Period, the Borrower may not make Restricted Payments under Section 8.24(k).

 

7-

 

 

2.           Did the Borrower have on a pro forma basis after giving effect to any such Restricted Payment and any Borrowing under the Credit Agreement in connection therewith (calculated as of the last day of the Fiscal Quarter of the Borrower for which financial statements were required to be delivered under Section 8.5(a) and (c)) a Consolidated Leverage Ratio of not greater than 0.55 to 1.00? yes/no
3.           Was the sum of the Available Amount calculated on a pro forma basis after giving effect to any Borrowing under the Credit Agreement in connection therewith (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n)) and cash and cash equivalents of AF REIT, the Borrower and its Subsidiaries as of such date not less than $40,000,000? yes/no
O.           Minimum Liquidity (Section 8.20(f))5
1.              Available Amount (as of the most recent Available Amount Certificate delivered in accordance with Section 7.3, Section 8.5(d) or Section 8.5(n)) $___________
2.              Unrestricted cash and cash equivalents $___________
3.              Line O1 plus Line O2 _________
4.              Line O3 must not be less than $100,000,000
5.              The Borrower is in compliance (circle yes or no) yes/no

 

 

5 Include this calculation during the Adjustment Period. 

 

8-

 

 

Exhibit A to Schedule I

to Compliance Certificate

of American Finance Operating Partnership, L.P.

 

This Exhibit A is attached to Schedule I to the Compliance Certificate of American Finance Operating Partnership, L.P., a Delaware limited partnership, dated ___________, 20__ and delivered to BMO Harris Bank N.A., as Administrative Agent, and the Lenders party to the Credit Agreement referred to therein. The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, to the best of his or her knowledge, that the following is a true, correct and complete calculation of Total Asset Value as of the last day of the Fiscal Quarter most recently ended:

 

[Use the immediate below for calculations during the Adjustment Period]6

 

1.Single Tenant Real Properties owned for less than Six (6) full Fiscal Quarters:

 

Property A. Appraised Value
(if available)
B.  Aggregate
Acquisition Cost
Lesser of A or B
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
Total: $_________________

 

All Other Single Tenant Real Properties:

 

Property A. Adjusted
Property NOI (as
calculated on
Exhibit B)
B.  Capitalization
Rate
A divided by B
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
Total: $_________________

 

 

6 During the Adjustment Period, Adjusted Property NOI from Real Properties sold or otherwise transferred during the applicable Fiscal Quarter shall be excluded. 

 

9-

 

 

2.Multi-Tenant Real Properties owned on March 31, 2020

 

Property A.  Appraised value, aggregate
acquisition cost or consolidated
Adjusted Property NOI divided by the
Capitalization Rate, in each case as of
3/31/20
B.  90% multiplied by A
  $_________________  
  $_________________  
  $_________________  
  $_________________  
Total:

 

Multi-Tenant Real Properties purchased from April 1, 2020 through June 30, 2020

 

Property A. Appraised Value
(if available)
B.  Aggregate
Acquisition Cost
90% of the Lesser of A
or B
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
Total: $_________________

 

Multi-Tenant Real Properties purchased from July 1, 2020 through March 31, 2021

 

Property A. Appraised Value
(if available)
B.  Aggregate
Acquisition Cost
Lesser of A or B
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
Total: $_________________

 

3.Aggregate Unrestricted Cash and Cash Equivalents Equals:
$____________________.

[Use the immediate below for calculations after the Adjustment Period]

 

1.Real Properties owned for less than Six (6) full Fiscal Quarters:

 

Property A. Appraised Value B.  Aggregate
Acquisition Cost
Lesser of A or B
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
  $_________________ $_________________ $_________________
Total: $_________________

 

10-

 

 

2.All other Real Properties

 

Property A. Adjusted
Property NOI (as
calculated on
Exhibit B)
B.  Capitalization
Rate
A divided by B
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
  $_________________ [7.00] / [7.50]% $_________________
Total: $_________________

 

3.Aggregate Unrestricted Cash and Cash Equivalents Equals:
$____________________.

 

Total Asset Value (sum of 1, 2, and 3) equals: $____________________.37

 

  American Finance Operating Partnership, L.P.,
a Delaware limited partnership
   
  By: American Finance Trust, Inc., its general partner
     
  By  
    Name  
    Title  

 

 

37 The Borrower’s Ownership Share of assets held by Unconsolidated Affiliates shall be included in the calculation of Total Asset Value consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

11-

 

 

Exhibit B to Schedule I

to Compliance Certificate

of American Finance Operating Partnership, L.P.

 

This Exhibit B is attached to Schedule I to the Compliance Certificate of American Finance Operating Partnership, L.P., a Delaware limited partnership, dated _____________, 20__ and delivered to BMO Harris Bank N.A., as Administrative Agent, and the Lenders party to the Credit Agreement referred to therein. The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, to the best of his or her knowledge, that the following is a true, correct and complete calculation of Adjusted Property NOI for all Properties for the Rolling Period most recently ended:

 

Property Most recent quarter
Property Income
Minus Most recent quarter
Property Expenses
Quarterly Property
NOI
Quarterly Property NOI
annualized
  $__________________ - $__________________    
  $__________________ - $__________________    
  $__________________ - $__________________    
  $__________________ - $__________________    

 

annualized
property NOI
(from above)
Minus Capital Reserve Minus Greater of 3% of annualized
Property Income of most recent
fiscal quarter or annualized
actual management fees paid in
cash during most recent fiscal
quarter
equals Adjusted
Property NOI
             
             
             
             

 

Total Adjusted Property NOI for all Properties: $___________.48

 

 

 

48 Adjusted Property NOI from Real Properties sold or otherwise transferred during the applicable Fiscal Quarter shall be excluded. The Borrower’s Ownership Share of management fees received by, Property Income from and Capital Reserves held by Unconsolidated Affiliates shall be included in the calculation of Adjusted Property NOI consistent with the above described treatment for assets owned by AF REIT or a Subsidiary. 

 

12-

 

 

 

  American Finance Operating Partnership, L.P.,
a Delaware limited partnership
  By: American Finance Trust, Inc., Its General Partner
  By  
    Name  
    Title  
   

 

-2-

 

 

Schedule II

to
Compliance Certificate

_________________________________________________

Ownership Share Calculations

for Credit Agreement dated as of April 26, 2018

 

Calculations as of _____________, _______

 

 

 

 

 

Exhibit I

 

Available Amount Certificate

 

To:BMO Harris Bank N.A., as Administrative Agent under, and the Lenders party to, the Credit Agreement described below

 

Pursuant to the terms of the Credit Agreement dated as of April 26, 2018 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), among American Finance Operating Partnership, L.P., a Delaware limited partnership, the Guarantors from time to time party thereto, certain Lenders party thereto, Citizens Capital Markets and, SunTrust Robinson Humphrey, Inc., as BBVA USA, as Syndication Agents, and BMO Harris Bank N.A., as Administrative Agent, the undersigned hereby submits this Available Amount Certificate to you and certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, to the best of his or her knowledge, that the calculation of the Available Amount set forth below and on any Exhibits or attachments to this Certificate is true, correct and complete as of the Unencumbered Pool Determination Date set forth below. Capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

 

[Signature Page Follows]

 

 

 

 

The foregoing certifications, together with the computations set forth in Schedule I hereto are made and delivered this ______ day of __________________ 20__.

 

  American Finance Operating Partnership,
L.P., a Delaware limited partnership
  By: American Finance Trust, Inc., its general partner
  By  
    Name  
    Title  
   

 

 

 

Schedule I
to Available Amount Certificate

_________________________________________________

 

Calculation of Available Amount and Revolving Credit Availability

 

                   A. Unencumbered Pool Determination Date: __________________ ____, 20__.

 

[Use the immediate below for calculations after the Adjustment Period.

 

                    B. The Available Amount and Revolving Credit Availability as of the Unencumbered Pool Determination Date is calculated as:

1. Unencumbered Pool Value as calculated on Exhibit A $_________________
2. 60% of Line 1 $_________________
3. Maximum amount of Debt Service Indebtedness that could be incurred without causing the Implied Debt Service Coverage Ratio to be less than 1.50 to 1.00 $_________________
4. Lesser of Line 2 and Line 3 (the “Available Amount”) $_________________
5. Revolving Credit Commitments $_________________
6. Lesser of Line 4 and Line 5 $_________________
7. Aggregate principal amount of outstanding Loans and L/C Obligations $_________________
8. Line 6 minus Line 7 (the “Revolving Credit Availability”) $_________________

]

 

 

 

 

[Use the immediate below for calculations during the Adjustment Period.

 

                    B. The Available Amount and Revolving Credit Availability as of the Unencumbered Pool Determination Date is calculated as:

1. Unencumbered Pool Value as calculated on Exhibit A $_________________
2. 60% of Line 1 $_________________

3. Maximum amount of Total Unsecured Indebtedness that could be incurred without causing the Implied Unsecured Interest Coverage Ratio to be less than [1.35][2.00][2.50] to 1.00 $_________________
4. Lesser of Line 2 and Line 3 (the “Available Amount”) $_________________
5. Revolving Credit Commitments $_________________
6. Lesser of Line 4 and Line 5 $_________________
7. Aggregate principal amount of outstanding Loans and L/C Obligations $_________________
8. Line 6 minus Line 7 (the “Revolving Credit Availability”) $_________________

]

 

 

 

 

Exhibit A
to Schedule I to Available Amount Certificate

of American Finance Operating Partnership, L.P.

 

This Exhibit A is attached to the Available Amount Certificate of American Finance Operating Partnership, L.P., a Delaware limited partnership, for the Unencumbered Pool Determination Date of _____________, 20__ and delivered to BMO Harris Bank N.A., as Administrative Agent, and the Lenders party to the Credit Agreement referred to therein. The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, to the best of his or her knowledge, that the following is a true, correct and complete calculation of Unencumbered Pool Value as of the Unencumbered Pool Determination Date set forth above:

 

[Insert Calculation or attach Schedule with exclusions for concentration limits]

 

Unencumbered Pool Value of all Eligible Properties: $ ___________

 

Unencumbered Pool Requirements:

A.        Controlled Affiliates  
1. Unencumbered Pool Value for Unencumbered Pool Properties owned by Controlled Affiliates ___________
2. Line A1 shall not be more than $35,000,000 at any time  
3. The Borrower is in compliance (circle yes or no) yes/no
B.         Average Occupancy Rate  
1. Aggregate Occupancy Rate of all Unencumbered Pool Properties ___________%
2. Line B1 shall not be less than 80% at any time  
3. The Borrower is in compliance (circle yes or no) yes/no
C.         Individual Occupancy Rate  
1. No Unencumbered Pool Property has an Occupancy Rate of less than 70% for two consecutive quarters  
2. The Borrower is in compliance (circle yes or no) yes/no

 

 

 

 

D.        Concentration Limits  

 

1. The percentage of Aggregate Unencumbered Pool Value for each Unencumbered Pool Property is set forth [above or on the attached Schedule] and the largest Unencumbered Pool Value for any Unencumbered Pool Property is $___________ for such ___________ Unencumbered Pool Property  
2. No Unencumbered Pool Value from any Unencumbered Pool Property comprises more than 20% of Aggregate Unencumbered Pool Value  
3. The Borrower is in compliance (circle yes or no) yes/no
4. The percentage of Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value for each Metropolitan Statistical Area is set forth [above or on the attached Schedule] and the largest percentage of Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value for any Metropolitan Statistical Area is ________% for such ___________ Metropolitan Statistical Area  
5. No Metropolitan Statistical Area comprises more than 30% of the Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value  
6. The Borrower is in compliance (circle yes or no) yes/no
7. The percentage of Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value for each Tenant is set forth [above or on the attached Schedule] and the largest percentage of Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value for any Tenant is ________% for such ___________ Tenant  
8. No Tenant comprises more than 20% of the Adjusted Property NOI used to determine the Aggregate Unencumbered Pool Value  
9. The Borrower is in compliance (circle yes or no) yes/no
10. The percentage of Aggregate Unencumbered Pool Value for each Unencumbered Pool Property subject to Qualified Ground Leases is set forth [above or on the attached Schedule]  
11. No more than 20% of the Aggregate Unencumbered Pool Value is comprised of Unencumbered Pool Value from Unencumbered Pool Properties subject to Qualified Ground Leases  
12. The Borrower is in compliance (circle yes or no) yes/no
13. The percentage of Aggregate Unencumbered Pool Value for each Unencumbered Pool Property that is a Specialty Property is set forth [above or on the attached Schedule]  

 

 

 

 

14. No more than 2025% of the Aggregate Unencumbered Pool Value is comprised of Unencumbered Pool Value from Unencumbered Pool Properties that are Specialty Properties; provided that if a Specialty Property is occupied by a Tenant with an investment grade credit rating, the Unencumbered Pool Value from such Specialty Property shall not be included for purposes of this item 14  
15. The Borrower is in compliance (circle yes or no) yes/no

 

 

 

 

Exhibit B
to Schedule I to Available Amount Certificate

of American Finance Operating Partnership, L.P.

 

This Exhibit B is attached to the Available Amount Certificate of American Finance Operating Partnership, L.P., a Delaware limited partnership, for the Unencumbered Pool Determination Date of __________, 20__ and delivered to BMO Harris Bank N.A., as Administrative Agent, and the Lenders party to the Credit Agreement referred to therein. The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Borrower and not in any individual capacity, to the best of his or her knowledge, that the following is a true, correct and complete calculation of Adjusted Property NOI for all Properties for the Rolling Period most recently ended:

 

Property Most recent quarter Property Income Minus Most recent quarter Property Expenses Quarterly Property NOI Quarterly Property NOI annualized
  $__________________ - $__________________    
  $__________________ - $__________________    
  $__________________ - $__________________    
  $__________________ - $__________________    

 

annualized property NOI (from above) Minus Capital Reserve Minus Greater of 3% of annualized Property Income of most recent fiscal quarter or annualized actual management fees paid in cash during most recent fiscal quarter equals Adjusted Property NOI
             
             
             
             

 

Total Adjusted Property NOI for all Properties:                                                                                                                 $___________.59

 

  American Finance Operating Partnership,
L.P., a Delaware limited partnership
  By: American Finance Trust, Inc., its general partner
  By  
    Name  
    Title  

 

 

59   Adjusted Property NOI from Real Properties sold or otherwise transferred during the applicable Fiscal Quarter shall be excluded. The Borrower’s Ownership Share of management fees received by, Property Income from and Capital Reserves held by Unconsolidated Affiliates shall be included in the calculation of Adjusted Property NOI consistent with the above described treatment for assets owned by AF REIT or a Subsidiary.

 

 

 

 

Exhibit 99.1 

 

 

AMERICAN FINANCE COMPLETES $715 MILLION CMBS FINANCING

 

NEW YORK –July 27, 2020 – American Finance Trust, Inc. (Nasdaq: AFIN) (“AFIN” or the “Company”) announced today that the Company entered into a financing transaction with an institutional lender and borrowed $715 million in a commercial mortgage backed security financing (the “CMBS Loan”).

 

“Thanks to the strong underlying assets in AFIN’s portfolio, we were able to complete this financing on what we believe to be very attractive terms,” said Michael Weil, CEO of AFIN. “The CMBS Loan locks in today’s historically low interest rate for five years and extends AFIN’s weighted average debt maturity from 3.5 years to 5.1 years, enhancing value for our Company. I am proud that, despite the challenges of the COVID-19 pandemic, our team was able to work with the underwriters to ensure superior execution and pricing on this financing which converted almost 28% of our total outstanding debt from a 2-month maturity into a new, five-year financing. We believe this transaction de-risked our portfolio, while giving us flexibility in the future to broaden our capital structure.”

 

The CMBS Loan is interest-only at an interest rate of 3.74%, has a five-year term and is secured by 368 single-tenant properties. Of these, 223 properties were previously collateral for a loan that had less than two months of term remaining and an effective interest rate of 4.36%. All but one of the remaining properties were part of the borrowing base for AFIN’s corporate credit facility. At the closing of the CMBS Loan, an aggregate of approximately $499.0 million of proceeds was used to repay the existing mortgage loan in full and the balance was used to repay amounts outstanding under the Company’s corporate credit facility.

 

About American Finance Trust, Inc.

American Finance Trust, Inc. (Nasdaq: AFIN) is a publicly traded real estate investment trust listed on the Nasdaq focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S. Additional information about AFIN can be found on its website at www.americanfinancetrust.com.

 

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “may,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the potential adverse effects of the ongoing global coronavirus pandemic, including actions taken to contain or treat the coronavirus, on the Company, the Company’s tenants and the global economy and financial markets and that the information about second quarter 2020 rent collections includes additional rent collected with respect to April and May as compared to previously reported information due to ongoing collection efforts and second quarter 2020 rent collections may not be indicative of any future period, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 27, 2020, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed on May 7, 2020 and all other filings with the SEC after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, unless required to do so by law.

 

Contacts:

Investor Relations

investorrelations@americanfinancetrust.com

(866) 902-0063


 

 

 

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Cover
Jul. 24, 2020
Document Information [Line Items]  
Document Type 8-K
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Document Period End Date Jul. 24, 2020
Entity File Number 001-38597
Entity Registrant Name American Finance Trust, Inc.
Entity Central Index Key 0001568162
Entity Tax Identification Number 90-0929989
Entity Incorporation, State or Country Code MD
Entity Address, Address Line One 650 Fifth Avenue
Entity Address, Address Line Two 30th Floor
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10019
City Area Code 212
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