Common use of Debt Service Reserve Clause in Contracts

Debt Service Reserve. On or before July 1, 2011, a portion of the unused Term Revolving Loan Commitment (in an amount equal to three monthly payments of principal and interest due under the Term Loan) shall be restricted for use as set forth in this Section 2.22, which amount may vary from time to time due to changes in monthly principal and interest payments due on the Term Loan, but shall at no time be less than the next three monthly payments of principal and interest due on the Term Loan (the “Required Debt Service Reserve Amount”). If at any time during the term of this Agreement, the amount of the Term Revolving Loan Commitment restricted for use as the Required Debt Service Reserve Amount is less than the next three monthly payments of principal and interest due under the Term Loan, the Borrowers shall: (A) no later than five (5) Business Days after such non-compliance occurs, prepay the Term Revolving Loan in an amount equal to the amount by which the sum of the Required Debt Service Reserve Amount and all outstanding Term Revolving Loan Advances exceed the Term Revolving Loan Commitment, (B) during the period Borrower has not fulfilled (A) above, make no Distributions, including Distributions or payments otherwise permitted under Sections 5.02(b), 5.02(k) or 5.02(l), and (C) make no other payments to its Affiliates, including accounts payable or other amounts. As and when any Obligation is past due, after any applicable grace or cure periods have expired, the Agent in its sole discretion, may make one or more Advances on the Term Revolving Loan for credit to its own account to be held for the benefit of the Banks in the amount of the then past due Obligation. Notwithstanding the foregoing, Agent shall have no obligation to make any such Advance: (i) if an Event of Default has occurred and is continuing, or (ii) for any purpose other than that for which the Debt Service Reserve was established; provided, however, that if an Event of Default has occurred and is continuing, the Agent in its sole discretion may make Advances on the Term Revolving Loan for the payment of any Obligation then past due in such order and manner as is consistent with the Agent’s obligations set forth in this Agreement. Advances made on the Term Revolving Loan by the Agent under this Section 2.22, may be made without the requirement of any consent by or notice to the Borrowers. Borrowers recognize and acknowledges that its obligation to pay required Obligations are absolute and unconditional and it is not dependent upon the Debt Service Reserve being available to make payment on any Obligation, and nothing herein shall be construed to negate or modify the Borrowers’ absolute and unconditional obligation to pay the Obligations in accordance with the terms and conditions of this Agreement and the other Loan Documents.

Debt Service Reserve. On In the event (A) of the occurrence and continuance of a Sotheby’s Event of Default, (B) that Sotheby’s Guarantor’s long-term unsecured debt rating (or before July 1, 2011its equivalent Private Rating (to the extent applicable)) is downgraded below “B” (or its equivalent) by any of the Rating Agencies or (C) the Sotheby’s Lease is no longer in full force and effect (each, a portion of “Debt Service Reserve Event”), Borrower shall establish an Eligible Account with Lender or Lender’s agent (such account, the unused Term Revolving Loan Commitment (in “Debt Service Reserve Account”) into which Borrower shall deposit an amount equal to three monthly payments of principal and interest due under the Term Loan) shall be restricted for use as set forth in this Section 2.22, which amount may vary from time to time due to changes in monthly principal and interest payments due on the Term Loan, but shall at no time be less than the next three monthly payments of principal and interest due on the Term Loan $7,133,600.88 (the “Required Debt Service Reserve AmountFunds”). If at any time during the term of this Agreement, the amount of the Term Revolving Loan Commitment restricted for use as the Required Debt Service Reserve Amount is less than the next three monthly payments of principal and interest due under the Term Loan, the Borrowers shall: (A) Provided no later than five (5) Business Days after such non-compliance occurs, prepay the Term Revolving Loan in an amount equal to the amount by which the sum of the Required Debt Service Reserve Amount and all outstanding Term Revolving Loan Advances exceed the Term Revolving Loan Commitment, (B) during the period Borrower has not fulfilled (A) above, make no Distributions, including Distributions or payments otherwise permitted under Sections 5.02(b), 5.02(k) or 5.02(l), and (C) make no other payments to its Affiliates, including accounts payable or other amounts. As and when any Obligation is past due, after any applicable grace or cure periods have expired, the Agent in its sole discretion, may make one or more Advances on the Term Revolving Loan for credit to its own account to be held for the benefit of the Banks in the amount of the then past due Obligation. Notwithstanding the foregoing, Agent shall have no obligation to make any such Advance: (i) if an Event of Default has occurred and is continuing, sums on deposit in the Debt Service Reserve Account shall be disbursed to Borrower upon (a) (i) in the event such funds were deposited into the Debt Service Reserve Account pursuant to clause (A) above, the cure by Sotheby’s of such Sotheby’s Event of Default, or (ii) for any purpose other than that for which in the event such funds were deposited into the Debt Service Reserve was established; providedAccount pursuant to clause (B) above, howeverSotheby’s Guarantor achieving a long-term unsecured debt rating (or its equivalent Private Rating (to the extent applicable)) of “B” (or its equivalent) or greater from each of the Rating Agencies, as applicable, and (b) Lender’s receipt of confirmation from each of the Rating Agencies that such disbursement will not result in a downgrade, withdrawal or qualification of the initial, or if an Event higher, then current ratings issued in connection with a Securitization, or if a Securitization has not occurred, any ratings to be Confidential Treatment Requested by BANA XXXX-Xxxx-00147 assigned in connection with a Securitization. Notwithstanding anything to the contrary contained herein, Borrower may, at Borrower’s option, provide a Letter of Default has occurred and is continuing, the Agent Credit in its sole discretion may make Advances on the Term Revolving Loan for the payment lieu of any Obligation of the cash deposits required to be made pursuant to this Section 9.7, provided that (i) such Letter of Credit is in the amount of the cash deposits required thereunder and otherwise meets all applicable requirements related thereto contained herein, and (ii) Borrower gives Lender ten (10) Business Days prior notice thereof and delivers to Lender a revised substantive non-consolidation opinion reflecting the delivery of such Letter of Credit, which opinion shall be in form, scope and substance acceptable in all respects to the Rating Agencies and in form, scope and substance reasonably acceptable in all respects to Lender. In the event that Borrower so chooses to provide any such Letter of Credit, (i) in the event such Letter of Credit is provided to Lender in substitution of any funds then past due held by Lender in the Debt Service Reserve Account, Lender shall, upon receipt of such order Letter of Credit, disburse said funds to Borrower, and manner as is consistent with the Agent(ii) Lender’s obligations “disbursement” of funds set forth in this Agreement. Advances made on the Term Revolving Loan by the Agent under this Section 2.22, may be made without the requirement of any consent by or notice to the Borrowers. Borrowers recognize and acknowledges that its obligation to pay required Obligations are absolute and unconditional and it is not dependent upon the Debt Service Reserve being available to make payment on any Obligation, and nothing herein 9.7 shall be construed deemed to negate or modify the Borrowers’ absolute and unconditional obligation refer to pay the Obligations in accordance with the terms and conditions Lender transferring such Letter of this Agreement and the other Loan DocumentsCredit to Borrower.

Debt Service Reserve. On or before July 1the Payment Date occurring in January 11, 20112004, and each Payment Date thereafter, Borrowers shall pay to Lender a monthly amount determined as follows: $0.00 per month for each Payment Date in calendar year 2005; $66,808.55 per month for each Payment Date in calendar year 2006; $0.00 per month for each Payment Date in calendar year 2007; $0.00 per month for each Payment Date in calendar year 2008; $0.00 per month for each Payment Date in calendar year 2009; $26,228.28 per month for each Payment Date in calendar year 2010; and $41,074.98 per month for each Payment Date in calendar year 2011 and in each calendar year thereafter (each such required payment, a portion "MONTHLY DEBT SERVICE RESERVE DEPOSIT") and Lender shall transfer such amounts into a Subaccount (the "DEBT SERVICE SUBACCOUNT"). In the event that remaining Available Cash on any Payment Date, after applications under clauses (i) through (v) of Section 3.11 above, is not sufficient to make the unused Term Revolving Loan Commitment Monthly Debt Service Reserve Deposit and fund the amounts indicated in clause (vii) of Section 3.11 above, and Borrower does not deposit the amount of such insufficiency into the Deposit Account, then unless and until Lender declares an Event of Default as a result thereof, and notwithstanding the provisions of Section 3.11 above, Available Cash, after applications under clauses (i) through (v) of Section 3.11 above, shall be applied first in an the amount equal indicated in clause (vii) above and then to three monthly payments of principal the Monthly Debt Service Reserve Deposit, a "CASH SWEEP CONDITION" shall exist and interest due under the Term Loanamount by which the Monthly Debt Service Reserve Deposit is underfunded (together with any such underfunded amounts from prior Payment Dates which have not yet been funded by Accrued Debt Service Reserve Deposits, the "ACCRUED DEBT SERVICE RESERVE AMOUNT") shall be restricted for use funded from excess Available Cash on subsequent Payment Dates as set forth provided in this Section 2.22, which amount may vary from time to time due to changes in monthly principal and interest payments due on 3.11 above until the Term Loan, but shall at no time be less than the next three monthly payments of principal and interest due on the Term Loan (the “Required Debt Service Reserve Amount”). If at any time during the term of this Agreement, the amount of the Term Revolving Loan Commitment restricted for use as the Required Accrued Debt Service Reserve Amount is less than reduced to zero, as which time the next three monthly payments of principal Cash Sweep Condition shall no longer exist and interest due under the Term LoanCash Sweep Period shall end, the Borrowers shall: (A) no later than five (5) Business Days after such non-compliance occurs, prepay the Term Revolving Loan in an amount equal to the amount by which the sum of the Required Debt Service Reserve Amount unless and all outstanding Term Revolving Loan Advances exceed the Term Revolving Loan Commitment, (B) during the period Borrower has until a subsequent deficiency occurs and is not fulfilled (A) above, make no Distributions, including Distributions or payments otherwise permitted under Sections 5.02(b), 5.02(k) or 5.02(l), and (C) make no other payments to its Affiliates, including accounts payable or other amounts. As and when any Obligation is past due, after any applicable grace or cure periods have expired, the Agent in its sole discretion, may make one or more Advances fully funded on the Term Revolving Loan for credit to its own account to be held for require Payment Date, in which event the benefit of the Banks in the amount of the then past due Obligationforegoing provisions shall again apply. Notwithstanding the foregoing, Agent shall have Provided that no obligation to make any such Advance: (i) if an Event of Default has occurred and is continuing, or (ii) for any purpose other than that for which Lender shall disburse funds held in the Debt Service Reserve was established; provided, however, that if an Event of Default has occurred Subaccount to Borrowers for Approved Capital Expenses subject and is continuing, the Agent in its sole discretion may make Advances on the Term Revolving Loan pursuant to Section 3.4 and for the payment of any Obligation then past due in such order Approved Leasing Expenses subject and manner as is consistent with the Agent’s obligations set forth in this Agreement. Advances made on the Term Revolving Loan by the Agent under this pursuant to Section 2.22, may be made without the requirement of any consent by or notice to the Borrowers. Borrowers recognize and acknowledges that its obligation to pay required Obligations are absolute and unconditional and it is not dependent upon the Debt Service Reserve being available to make payment on any Obligation3.5, and nothing herein shall be construed also, within 15 days after the delivery by Borrowers to negate or modify Lender of a request therefor (but not more often than once per month), and provided funds available in the Borrowers’ absolute and unconditional obligation Deposit Account on a Payment Date are not sufficient to pay the Obligations in accordance with Monthly Interest Payment Amount or Monthly Debt Service Payment Amount due on such Payment Date, to pay (to the terms and conditions extent of this Agreement and the other Loan Documentsany such insufficiency) such Monthly Interest Payment Amount or Monthly Debt Service Payment Amount.

Debt Service Reserve. On or before July 1the Closing Date, 2011, a portion proceeds of the unused Term Revolving Loan Commitment (in an amount equal to three monthly payments two (2) months of Debt Service based on the original principal and interest due under amount of the Term LoanInitial Advance (the “Initial Debt Service Deposit”) shall be restricted for use as set forth in this together with each Additional Advance Debt Service Deposit disbursed pursuant to Section 2.22, which amount may vary 3.02(h) above (together with any other funds deposited by Borrower from time to time due to changes in monthly principal and interest payments due on the Term Loantime, but shall at no time be less than the next three monthly payments of principal and interest due on the Term Loan (collectively, the “Required Debt Service Reserve”), which funds in the Debt Service Reserve Amount”). If or so much of same as shall be necessary, may be used by Lender in its sole and absolute discretion (provided that at the time of any time during advance from the term of this Agreement, the amount of the Term Revolving Loan Commitment restricted for use as the Required Debt Service Reserve Amount there then exists no Event of Default) to apply towards any delinquent or partial Debt Service payments due and owing from Borrower under the Note. Any time the funds remaining in the Debt Service Reserve is less than the next three monthly payments of principal and interest due under the Term Loan, the Borrowers shall: (A) no later than five (5) Business Days after such non-compliance occurs, prepay the Term Revolving Loan in an amount sum equal to two (2) months of Debt Service based on the original principal amount by which of each and every Advance (excluding any Advance repaid in full), Borrower shall within thirty (30) days’ written notice from Lender replenish the sum of the Required Debt Service Reserve Amount and all outstanding Term Revolving Loan Advances exceed the Term Revolving Loan Commitment, (B) during the period Borrower has not fulfilled (A) above, make no Distributions, including Distributions or payments otherwise permitted under Sections 5.02(b), 5.02(k) or 5.02(l), and (C) make no other payments to its Affiliates, including accounts payable or other amounts. As and when any Obligation is past due, after any applicable grace or cure periods have expired, the Agent in its sole discretion, may make one or more Advances on the Term Revolving Loan for credit to its own account to be held for the benefit of the Banks in the amount of the then past due Obligationsuch deficiency and any failure to comply shall be deemed an Event of Default under this Loan. Notwithstanding the foregoing, Agent Borrower acknowledges and agrees that Lender shall have no obligation to make any such Advance: (i) if an Event of Default has occurred and is continuing, or (ii) for any purpose other than that for which advances from the Debt Service Reserve was established; providedand Borrower remains responsible for all payment obligations under the Note. The Debt Service Reserve may be held by Lender in a separate account or may be co-mingled by Lender with other funds belonging to Lender, howeverin Lender’s sole and absolute discretion. No interest shall be payable by Lender to Borrower on the Debt Service Reserve. The Debt Service Reserve shall at all times constitute additional collateral security for the Loan, that if and from and after the occurrence of an Event of Default has occurred and is continuingDefault, the Agent in its sole discretion Lender may make Advances on the Term Revolving Loan for the payment of any Obligation then past due in such order and manner as is consistent with the Agent’s obligations set forth in this Agreement. Advances made on the Term Revolving Loan by the Agent under this Section 2.22, may be made without the requirement of any consent by or notice to the Borrowers. Borrowers recognize and acknowledges that its obligation to pay required Obligations are absolute and unconditional and it is not dependent upon apply the Debt Service Reserve being available to make payment on the outstanding indebtedness under the Loan (including, but not limited to, any Obligationfees due Lender, principal, interest or any protective advances made by Lender), in its sole and nothing herein shall be construed to negate or modify the Borrowers’ absolute and unconditional obligation to pay the Obligations in accordance with the terms and conditions of this Agreement and the other Loan Documentsdiscretion.