Release Parcels. Lender agrees that Borrower may cause or permit Mortgage Borrower to obtain the release from the Lien of the applicable Security Instruments and the other Loan Documents non-income producing and unimproved real property (each a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed to be transferred to an unrelated third party upon satisfaction of the following conditions by Borrower: (a) Not more than ninety (90) calendar days and not less than thirty (30) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth (i) the date of the proposed release, (ii) the name of the proposed transferee, (iii) a survey of the Release Parcel in scope and substance that would be satisfactory to a prudent lender acting reasonably, and (iv) an appraisal of the Release Parcel that is (A) executed and delivered to Lender by a qualified MAI appraiser having no direct or indirect interest in such Release Parcel or any loan secured in whole or in part thereby and whose compensation is not affected by the approval or disapproval of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisal; (b) Borrower delivers to Lender evidence (which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of the Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual Property; (c) As of the date Borrower delivers to Lender notice of the proposed release and as of the date of the release, no Event of Default has occurred which is continuing; (d) Borrower delivers to Lender (i) evidence which would be satisfactory to a prudent lender acting reasonably that (A) the Release Parcel has been legally subdivided from the remainder of the related Individual Property, and (B) the Release Parcel (together with any appurtenant easements or other rights with respect to adjacent property) is not necessary for the related Individual Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect to the related Individual Property or for the then current and any contemplated use of the related Individual Property, including without limitation for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property to continue to use the Release Parcel to the extent necessary for such purpose, which reciprocal easement agreement shall be superior to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that after giving effect to such transfer, each of the Release Parcel of the balance of the related Individual Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot; (e) Intentionally omitted; (f) Borrower delivers evidence in the form of a certificate executed by Borrower that Mortgage Borrower and any other applicable Mortgage Loan Party has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower or any Mortgage Loan Party or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered; (g) No release shall be permitted if the aggregate amount of proceeds received by Mortgage Borrower from the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with respect to any one (1) Individual Property (other than relating to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000); (h) Borrower delivers to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel; (i) Borrower shall have paid all reasonable third-party costs and expenses incurred by Lender in connection with any such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignment; and (j) Borrower shall simultaneously with the release of the Release Parcel transfer title to the Release Parcel in an arm’s-length transaction to a Person(s) other than Borrower or any Person owned or controlled by Borrower or which is an Affiliate of Borrower.
Appears in 2 contracts
Sources: Mezzanine Loan Agreement (ESH Hospitality LLC), Mezzanine Loan Agreement (ESH Hospitality LLC)
Release Parcels. Lender agrees that Borrower may cause In connection with the development of one or permit Mortgage Borrower to obtain the release from the Lien more of the applicable Security Instruments and the other Loan Documents non-income producing and unimproved real property parcels or outlots (each each, a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed of real property described on Schedule 7.7 attached hereto, Lender agrees to be transferred either (a) release such Release Parcel from the lien of the Mortgage and other Loan Documents in connection with a subdivision of the Property and transfer such Release Parcel to another entity or (b) permit Borrower to ground lease such Release Parcel to an unrelated third party entity wholly owned and controlled (directly or indirectly) by Borrower Principal (which ground lease shall not restrict Borrower from subsequently seeking a release of such Release Parcel pursuant to subsection (a) above), in each case upon satisfaction of the following conditions by Borrowerconditions:
(I) With respect to subsection (a) Not more than ninety above:
(90i) calendar days no Event of Default has occurred and is continuing;
(ii) not less than thirty sixty (3060) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth (iA) the expected date of the proposed release, (iiB) the name of the proposed transfereetransferee (the “Parcel Transferee”), (iiiC) a legal description of the Release Parcel and (D) a survey of the Release Parcel Parcel;
(iii) Borrower shall deliver to Lender a CLTA 111.3 endorsement to the Title Insurance Policy in scope form and substance that would be satisfactory acceptable to a prudent lender acting reasonably, and Lender;
(iv) Borrower delivers evidence to Lender that ingress to and egress from all portions of the Property remaining after the Permitted Parcel Release (the “Remaining Property”) shall be physically open to (A) fully dedicated public roads or (B) vehicle and pedestrian easements which (1) provide vehicular and pedestrian access to a physically open and fully dedicated public road, (2) are recorded in the chain of title to both the property which is encumbered thereby and the Remaining Property, (3) are irrevocable and non-terminable without the consent of the owner of the Remaining Property; and provided further that, if legally available Borrower delivers to Lender an appraisal endorsement to the Title Insurance Policy, which endorsement shall insure that (x) the benefit of each such easement inures and runs to the benefit of the owner of the Remaining Property, (y) the lien of the Mortgage is a first lien on Borrower’s beneficial interest in such easement, subject to no exceptions other than Permitted Encumbrances and those approved by Lender in its reasonable discretion and (z) no then-existing mortgages, liens, security interest or other encumbrances (other than Permitted Encumbrances) on the Release Parcel that is (A) executed and delivered to Lender burdened by a qualified MAI appraiser having no direct such easement are superior to, or indirect interest in such Release Parcel under any circumstances could terminate, impair or any loan secured in whole or in part thereby and whose compensation is not affected by limit the approval or disapproval terms of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisaleasement;
(bv) Borrower has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the Property and the Permitted Parcel Release does not violate any of the provisions of such documents in any respect that would result in a termination (or give any other party thereto the right to terminate), extinguishment or other loss of material right of Borrower or in a material increase in Borrower’s obligations under such documents and, to the extent necessary to comply with such documents, the Parcel Transferee has assumed Borrower’s obligations, if any, relating to the Release Parcel under such documents;
(vi) Borrower delivers to Lender evidence (which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of the Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual Property;
(c) As of the date Borrower delivers to Lender notice of the proposed release and as of the date of the release, no Event of Default has occurred which is continuing;
(d) Borrower delivers to Lender (i) evidence which would be satisfactory to a prudent institutional lender acting reasonably that (A) the Release Parcel has been legally split or subdivided from the remainder Remaining Property, (B) after giving effect to such release, each of the related Individual Property, Release Parcel and the Remaining Property conforms and is in compliance in all material respects with applicable Legal Requirements and (BC) the Release Parcel (together with any appurtenant easements or other rights with respect to adjacent property) is not necessary for the related Individual Remaining Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect applicable to the related Individual Property or for the then current and any contemplated use of the related Individual Property, including including, without limitation limitation, for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property (after giving effect to the release) to continue to use the Release Parcel to the extent necessary for such purpose;
(vii) Borrower shall deliver to Lender an opinion of counsel acceptable to a prudent institutional lender and the Rating Agencies (issued by counsel acceptable to a prudent institutional lender and the Rating Agencies) that the Permitted Parcel Release would not constitute a “significant modification” of the Loan under Section 1001 of the Internal Revenue Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC Trust that holds the Note, if any;
(viii) Borrower shall have paid to Lender, concurrently with the closing of such release, all out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred by Lender in connection with the transfer; and
(ix) Borrower delivers to Lender evidence which reciprocal easement agreement shall would be superior satisfactory to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that prudent institutional lender that, after giving effect to such transferrelease, each of the Release Parcel of and the balance of the related Individual Remaining Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot;.
(eII) Intentionally omitted;
(f) Borrower delivers evidence in the form of a certificate executed by Borrower that Mortgage Borrower and any other applicable Mortgage Loan Party has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower or any Mortgage Loan Party or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered;
(g) No release shall be permitted if the aggregate amount of proceeds received by Mortgage Borrower from the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with With respect to any one subsection (1b) Individual Property (other than relating to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000);
(h) Borrower delivers to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel;above:
(i) Borrower shall have paid satisfied the conditions set forth in Section 7.7(I)(i)-(ix) above (other than subsection (vi)(A));
(ii) The ground lease covering the Release Parcel shall satisfy customary criteria and otherwise be in form and substance reasonably acceptable to a prudent institutional lender (except that no minimum ground rent shall be required thereunder);
(iii) Borrower and Borrower Principal shall ratify their obligation with respect to the non-recourse provisions contained in Article 15 herein with respect to the Release Parcel;
(iv) Borrower shall at all reasonable third-party costs and expenses incurred by Lender times maintain compliance with the SPE requirements contained in connection Article 6 herein, provided that acting as ground lessor with any respect to the Release Parcel as to which an affiliate of Borrower is the ground lessee shall not violate such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignmentrequirements; and
(jv) Borrower shall simultaneously with the release of Any improvements made or operations conducted on the Release Parcel transfer title shall not have a material adverse effect upon the value or operations of the Remaining Property (including the breach of a Major Lease or of multiple Leases that would constitute a Major Lease in the aggregate) or Borrower’s ability to repay the Release Parcel Loan or otherwise trigger a Default under the Loan Documents, it being understood that the relocation of parking or demolition, reconstruction and/or expansion of common area and other improvements and structures on the Remaining Property without material interference with the value or operations of the Remaining Property, in an arm’s-length transaction to and of itself, shall not constitute a Person(s“material adverse effect” for purposes of this clause (v) other than Borrower or any Person owned or controlled by Borrower or which is an Affiliate of Borrowerotherwise trigger a Default under the Loan Documents.
Appears in 1 contract
Release Parcels. Lender agrees that Borrower may cause or permit Mortgage Borrower shall have the right, exercisable from time to time, to obtain the a release of either 1920 Main Property or 2010 Main Property from the Lien of the applicable Security Instruments Mortgage and the other release of Borrower’s obligations under the Loan Documents non-income producing and unimproved real property with respect to such Property (other than those expressly stated to survive), upon the satisfaction of each a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed to be transferred to an unrelated third party upon satisfaction of the following conditions by Borrowerconditions:
(a) Not more than ninety (90) calendar days No Event of Default shall have occurred and not less than thirty (30) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth (i) the date of the proposed release, (ii) the name of the proposed transferee, (iii) a survey of the Release Parcel in scope and substance that would be satisfactory to a prudent lender acting reasonably, and (iv) an appraisal of the Release Parcel that is (A) executed and delivered to Lender by a qualified MAI appraiser having no direct or indirect interest in such Release Parcel or any loan secured in whole or in part thereby and whose compensation is not affected by the approval or disapproval of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisalcontinuing;
(b) Borrower delivers to shall have given Lender evidence at least thirty (30) days prior written notice of the date on which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of is expected to occur (the date on which the release occurs is referred to herein as the "Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual PropertyDate" which date shall be a Payment Date);
(c) As Borrower shall have paid, or caused to be paid, to Lender (i) an amount equal to 105% of the date Borrower delivers allocated loan amount relating to Lender notice the applicable parcel as set forth on Schedule VI, attached hereto and incorporated herein, and which amount shall be applied as a prepayment of the proposed release and as of Debt in accordance with Section 2.4.1, together with (ii) the date of the release, no Event of Default has occurred which is continuingRequired Yield Maintenance applicable to such prepayment;
(d) Borrower delivers shall have paid all costs associated with the release of the applicable Property, including escrow costs, recording fees, and Lender's actual out-of-pocket attorneys fees and costs incurred in connection with preparing, reviewing, processing and delivering the Release;
(e) All accrued and unpaid interest and any unpaid or unreimbursed amounts due in respect of the Loan and any other sum then due hereunder or under any of the other Loan Documents shall have been paid in full or shall have been arranged to be paid in full contemporaneously with the Release;
(f) In the event the Release Date is not a Payment Date, Borrower shall pay to Lender, in addition to all other amounts required to be paid pursuant to this Section 2.6.3, the amount of interest that would have been due and payable if prepayment of the Permitted Prepayment Amount were being made on the next succeeding Payment Date;
(g) Borrower shall have executed all other documentation Lender reasonably requires to be delivered by Borrower reasonably related to such partial release, including, if requested by Lender, a reaffirmation of any guaranties or indemnities related to the Loan, together with an Officer’s Certificate certifying that such documentation (i) evidence which would be satisfactory to a prudent lender acting reasonably that is in compliance with all Legal Requirements, (Aii) will effect such release in accordance with the Release Parcel has been legally subdivided from the remainder terms of the related Individual Propertythis Agreement, and (Biii) will not impair or otherwise adversely affect the Release Parcel (together with any appurtenant easements or Liens, security interests and other rights with respect of Lender under the Loan Documents not being released (or as to adjacent propertythe parties to the Loan Documents and Properties subject to the Loan Documents not being released); provided, however, that such other documentation shall not diminish the rights or increase the obligations of Borrower under the Loan Documents; and
(h) is not necessary The Debt Service Coverage Ratio for the related Individual Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect that will remain subject to the related Individual Property or for the then current and any contemplated use Lien of the related Individual Property, including without limitation for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property to continue to use the Release Parcel to the extent necessary for such purpose, which reciprocal easement agreement shall be superior to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that Mortgage after giving effect to such transfer, each of the Release Parcel of the balance of the related Individual Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot;
(e) Intentionally omitted;
(f) Borrower delivers evidence in the form of a certificate executed by Borrower that Mortgage Borrower and any other applicable Mortgage Loan Party has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower or any Mortgage Loan Party or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered;
(g) No release shall be permitted equal to or greater than the Debt Service Coverage Ratio for the Properties immediately prior to such release; provided, however, if the aggregate amount of proceeds received by Mortgage Borrower from Debt Service Coverage Ratio for the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with respect Properties immediately prior to any one (1) Individual such release is greater than 1.35:1.00, then the Debt Service Coverage Ratio for the Property (other than relating that remains subject to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds Lien of the Mortgage after such release shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000);
(h) Borrower delivers to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel;
(i) Borrower shall have paid all reasonable third-party costs and expenses incurred by Lender in connection with any such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignment; and
(j) Borrower shall simultaneously with the release of the Release Parcel transfer title to the Release Parcel in an arm’s-length transaction to a Person(s) other less than Borrower or any Person owned or controlled by Borrower or which is an Affiliate of Borrower1.20:1.00.
Appears in 1 contract
Release Parcels. Lender agrees that Borrower may cause or permit Mortgage Borrower to obtain the release from the Lien of the applicable Security Instruments and the other Loan Documents non-income producing and unimproved real property (each a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed to be transferred to an unrelated third party upon satisfaction of the following conditions by Borrower:
(a) Not more than ninety (90) calendar days and not less than thirty (30) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth (i) the date of the proposed release, (ii) the name of the proposed transferee, (iii) a survey of the Release Parcel in scope and substance that would be satisfactory to a prudent lender acting reasonably, and (iv) an appraisal of the Release Parcel that is (A) executed and delivered to Lender by a qualified MAI appraiser having no direct or indirect interest in such Release Parcel or any loan secured in whole or in part thereby and whose compensation is not affected by the approval or disapproval of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisal;
(b) Borrower delivers to Lender evidence (which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of the Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual Property;
(c) As of the date Borrower delivers to Lender notice of the proposed release and as of the date of the release, no Event of Default has occurred which is continuing;
(d) Borrower delivers to Lender (i) evidence which would be satisfactory to a prudent lender acting reasonably that (A) the Release Parcel has been legally subdivided from the remainder of the related Individual Property, and (B) the Release Parcel (together with any appurtenant easements or other rights with respect to adjacent property) is not necessary for the related Individual Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect to the related Individual Property or for the then current and any contemplated use of the related Individual Property, including without limitation for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property to continue to use the Release Parcel to the extent necessary for such purpose, which reciprocal easement agreement shall be superior to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that after giving effect to such transfer, each of the Release Parcel of the balance of the related Individual Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot;
(e) Intentionally omittedBorrower shall deliver to Lender an endorsement to the Title Policy insuring the applicable Security Instrument or an updated Title Policy or similar coverage where such endorsement is not available, which endorsement or updated Title Policy (i) extends the effective date of such Title Policy to the effective date of the release, (ii) confirms no change in the priority of the Security Instrument on the balance of the related Individual Property (exclusive of the Release Parcel) and (iii) insures the rights and benefits under any new or amended reciprocal easement agreement or such other agreement required pursuant to Section 2.5.4(d)(i) above that has been executed and recorded, if any;
(f) Borrower delivers and Property Owner deliver evidence in the form of a certificate executed by Borrower and Property Owner that Mortgage Borrower and any other applicable Mortgage Loan Party has Property Owner have complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower Borrower, Property Owner or any Mortgage Loan Party Operating Lessee or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered;
(g) No release shall be permitted if the aggregate amount of proceeds received by Mortgage Borrower from the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with respect to any one (1) Individual Property (other than relating to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000);
(h) Borrower delivers and Property Owner deliver to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel;
(i) Borrower shall have paid all reasonable third-party costs and expenses incurred by Lender in connection with any such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignment; and;
(j) Borrower shall simultaneously with the release of the Release Parcel transfer title to the Release Parcel in an arm’s-length transaction to a Person(s) other than Borrower or any other Loan Party or any Person owned or controlled by Borrower or any other Loan Party or which is an Affiliate of BorrowerBorrower or any other Loan Party; and
(k) 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 determined by Lender in its reasonable discretion using any commercially reasonable method permitted to a REMIC Trust in accordance with Section 1.860(G)-2(b)(7) of the Treasury Regulations) exceeds 125% immediately after the release of the applicable Release Parcel, no release will be permitted unless the principal balance of the Loan is paid down by a “qualified amount” as that term is defined in the IRS Revenue Procedure 2010-30, as the same may be amended, supplemented or modified from time to time, unless the 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 related release of the applicable Release Parcel.
Appears in 1 contract
Sources: Loan Agreement (ESH Hospitality LLC)
Release Parcels. Lender agrees that Borrower may cause or permit Mortgage Borrower to obtain the release from the Lien of the applicable Security Instruments and the other Loan Documents non-income producing and unimproved real property (each a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed to be transferred to an unrelated third party upon satisfaction of the following conditions by Borrower:
(a) Not more than ninety (90) calendar days and not less than thirty (30) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth forth
(i) the date of the proposed release, (ii) the name of the proposed transferee, (iii) a survey of the Release Parcel in scope and substance that would be satisfactory to a prudent lender acting reasonably, and (iv) an appraisal of the Release Parcel that is (A) executed and delivered to Lender by a qualified MAI appraiser having no direct or indirect interest in such Release Parcel or any loan secured in whole or in part thereby and whose compensation is not affected by the approval or disapproval of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisal;
(b) Borrower delivers to Lender evidence (which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of the Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual Property;
(c) As of the date Borrower delivers to Lender notice of the proposed release and as of the date of the release, no Event of Default has occurred which is continuing;
(d) Borrower delivers to Lender (i) evidence which would be satisfactory to a prudent lender acting reasonably that (A) the Release Parcel has been legally subdivided from the remainder of the related Individual Property, and (B) the Release Parcel (together with any appurtenant easements or other rights with respect to adjacent property) is not necessary for the related Individual Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect to the related Individual Property or for the then current and any contemplated use of the related Individual Property, including without limitation for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property to continue to use the Release Parcel to the extent necessary for such purpose, which reciprocal easement agreement shall be superior to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that after giving effect to such transfer, each of the Release Parcel of the balance of the related Individual Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot;
(e) Intentionally omitted;
(f) Borrower delivers evidence in the form of a certificate executed by Borrower that Mortgage Borrower and any other applicable Mortgage Loan Party has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower or any Mortgage Loan Party or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered;
(g) No release shall be permitted if the aggregate amount of proceeds received by Mortgage Borrower from the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with respect to any one (1) Individual Property (other than relating to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000);
(h) Borrower delivers to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel;
(i) Borrower shall have paid all reasonable third-party costs and expenses incurred by Lender in connection with any such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignment; and
(j) Borrower shall simultaneously with the release of the Release Parcel transfer title to the Release Parcel in an arm’s-length transaction to a Person(s) other than Borrower or any Person owned or controlled by Borrower or which is an Affiliate of Borrower.
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Release Parcels. Lender agrees that Borrower may cause In connection with the development of one or permit Mortgage Borrower to obtain the release from the Lien more of the applicable Security Instruments and the other Loan Documents non-income producing and unimproved real property parcels or outlots (each each, a “Release Parcel” and, collectively, the “Release Parcels”) that is proposed of real property described on Schedule 7.7 attached hereto, Lender agrees to be transferred either (a) release such Release Parcel from the lien of the Mortgage and other Loan Documents in connection with a subdivision of the Property and transfer such Release Parcel to another entity or (b) permit Borrower to ground lease such Release Parcel to an unrelated third party entity wholly owned and controlled (directly or indirectly) by Borrower Principal (which ground lease shall not restrict Borrower from subsequently seeking a release of such Release Parcel pursuant to subsection (a) above), in each case upon satisfaction of the following conditions by Borrowerconditions:
(I) With respect to subsection (a) Not more than ninety above:
(90i) calendar days no Event of Default has occurred and is continuing;
(ii) not less than thirty sixty (3060) calendar days prior to the date of the release, Borrower delivers to Lender a notice setting forth (iA) the expected date of the proposed release, (iiB) the name of the proposed transfereetransferee (the “Parcel Transferee”), (iiiC) a legal description of the Release Parcel and (D) a survey of the Release Parcel Parcel;
(iii) Borrower shall deliver to Lender a CLTA 111.3 endorsement to the Title Insurance Policy in scope form and substance that would be satisfactory acceptable to a prudent lender acting reasonably, and Lender;
(iv) with respect to the portion of the Property where the office building occupied by Bank of America is located as of the date hereof, Borrower shall establish an appraisal Eligible Account with Lender or Lender’s agent into which Borrower shall deposit the amount of $10,000,000.00, which shall be held as additional collateral for the Loan;
(v) Borrower delivers evidence to Lender that ingress to and egress from all portions of the Property remaining after the Permitted Parcel Release (the “Remaining Property”) shall be physically open to (A) fully dedicated public roads or (B) vehicle and pedestrian easements which (1) provide vehicular and pedestrian access to a physically open and fully dedicated public road, (2) are recorded in the chain of title to both the property which is encumbered thereby and the Remaining Property, (3) are irrevocable and non-terminable without the consent of the owner of the Remaining Property; and provided further that, if legally available Borrower delivers to Lender an endorsement to the Title Insurance Policy, which endorsement shall insure that (x) the benefit of each such easement inures and runs to the benefit of the owner of the Remaining Property, (y) the lien of the Mortgage is a first lien on Borrower’s beneficial interest in such easement, subject to no exceptions other than Permitted Encumbrances and those approved by Lender in its reasonable discretion and (z) no then-existing mortgages, liens, security interest or other encumbrances (other than Permitted Encumbrances) on the Release Parcel that is (A) executed and delivered to Lender burdened by a qualified MAI appraiser having no direct such easement are superior to, or indirect interest in such Release Parcel under any circumstances could terminate, impair or any loan secured in whole or in part thereby and whose compensation is not affected by limit the approval or disapproval terms of such appraisal by Lender, (B) addressed to Lender and its successors and assigns and (C) satisfies the requirements of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date of such calculation, with respect to such appraisal and the appraiser making such appraisaleasement;
(bvi) Borrower has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the Property and the Permitted Parcel Release does not violate any of the provisions of such documents in any respect that would result in a termination (or give any other party thereto the right to terminate), extinguishment or other loss of material right of Borrower or in a material increase in Borrower’s obligations under such documents and, to the extent necessary to comply with such documents, the Parcel Transferee has assumed Borrower’s obligations, if any, relating to the Release Parcel under such documents;
(vii) Borrower delivers to Lender evidence (which may include a statement in the appraisal) that would be acceptable to a prudent lender acting reasonably that the release of the Release Parcel will not adversely affect the economic value of, or the revenue produced by, the Improvements located on the related Individual Property;
(c) As of the date Borrower delivers to Lender notice of the proposed release and as of the date of the release, no Event of Default has occurred which is continuing;
(d) Borrower delivers to Lender (i) evidence which would be satisfactory to a prudent institutional lender acting reasonably that (A) the Release Parcel has been legally split or subdivided from the remainder Remaining Property, (B) after giving effect to such release, each of the related Individual Property, Release Parcel and the Remaining Property conforms and is in compliance in all material respects with applicable Legal Requirements and (BC) the Release Parcel (together with any appurtenant easements or other rights with respect to adjacent property) is not necessary for the related Individual Remaining Property to comply with any zoning, building, land use or parking or other similar Legal Requirements with respect applicable to the related Individual Property or for the then current and any contemplated use of the related Individual Property, including including, without limitation limitation, for access, driveways, parking, utilities or drainage or, to the extent that the Release Parcel is necessary for any such purpose, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the related Individual Property (after giving effect to the release) to continue to use the Release Parcel to the extent necessary for such purpose;
(viii) Borrower shall deliver to Lender an opinion of counsel acceptable to a prudent institutional lender and the Rating Agencies (issued by counsel acceptable to a prudent institutional lender and the Rating Agencies) that the Permitted Parcel Release would not constitute a “significant modification” of the Loan under Section 1001 of the Internal Revenue Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC Trust that holds the Note, if any;
(ix) Borrower shall have paid to Lender, concurrently with the closing of such release, all out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred by Lender in connection with the transfer; and
(x) Borrower delivers to Lender evidence which reciprocal easement agreement shall would be superior satisfactory to the Security Instruments and (ii) a certificate executed by an officer of Borrower stating that prudent institutional lender that, after giving effect to such transferrelease, each of the Release Parcel of and the balance of the related Individual Remaining Property (together with any appurtenant easements or other rights with respect to adjacent property) conforms to and is in compliance in all material respects with applicable Legal Requirements and constitutes or will constitute a separate tax lot;.
(eII) Intentionally omitted;
(f) Borrower delivers evidence in the form of a certificate executed by Borrower that Mortgage Borrower and any other applicable Mortgage Loan Party has complied with any requirements applicable to the release in the Leases, reciprocal easement agreements, operating agreements, parking agreements or other similar agreements affecting the related Individual Property and that the release does not violate any of the provisions of such documents in any respect and that any such release of a Release Parcel shall not result in any right in favor of a third party of offset, abatement or reduction of rent payable to Mortgage Borrower or any Mortgage Loan Party or any right in favor of a third party of termination, cancellation or surrender under any Leases, reciprocal easement agreements or other material agreement by which Mortgage Borrower or the related Individual Property is bound or encumbered;
(g) No release shall be permitted if the aggregate amount of proceeds received by Mortgage Borrower from the sale of Release Parcels shall exceed (i) Two Hundred Fifty Thousand Dollars ($250,000) with With respect to any one subsection (1b) Individual Property (other than relating to the Individual Property in Phoenix, Arizona (ESA #316) which proceeds shall not exceed Four Hundred Fifty Thousand Dollars ($450,000)) and (ii) with respect to all of the Properties, Twenty-Five Million Dollars ($25,000,000);
(h) Borrower delivers to Lender any other information and documents of a ministerial or administrative nature which would be required by a prudent lender acting reasonably relating to the release of the Release Parcel;above:
(i) Borrower shall have paid satisfied the conditions set forth in Section 7.7(I)(i)-(x) above (other than subsection (vii)(A));
(ii) The ground lease covering the Release Parcel shall satisfy customary criteria and otherwise be in form and substance reasonably acceptable to a prudent institutional lender (except that no minimum ground rent shall be required thereunder);
(iii) Borrower and Borrower Principal shall ratify their obligation with respect to the non-recourse provisions contained in Article 15 herein with respect to the Release Parcel;
(iv) Borrower shall at all reasonable third-party costs and expenses incurred by Lender times maintain compliance with the SPE requirements contained in connection Article 6 herein, provided that acting as ground lessor with any respect to the Release Parcel as to which an affiliate of Borrower is the ground lessee shall not violate such release and the current reasonable and customary fee being assessed by the Servicer to effect such release or assignmentrequirements; and
(jv) Any improvements made or operations conducted on the Release Parcel shall not have a material adverse effect upon the value or operations of the Remaining Property (including the breach of a Major Lease or of multiple Leases that would constitute a Major Lease in the aggregate) or Borrower’s ability to repay the Loan or otherwise trigger a Default under the Loan Documents, it being understood that neither (i) the relocation of parking or demolition, reconstruction and/or expansion of common area and other improvements and structures on the Remaining Property without material interference with the value or operations of the Remaining Property nor (ii) the development of improvements of up to approximately 500,000 square feet of new office space and ancillary retail, in and of itself, shall constitute a “material adverse effect” for purposes of this clause (v) or otherwise trigger a Default under the Loan Documents. Without limiting the foregoing, Borrower shall have the right to demolish the existing two-story parking structure located on that certain parcel known as Parcel 1 in the City of Costa Mesa, County of Orange, State of California, as shown on a Map filed in Book 98, Pages 7-8 of Parcel Maps in the Office of the Orange County Recorder (APN: 410-481-04) (the “Garage Parcel”) and construct a new parking structure as required for the Release Parcel as determined by Borrower, upon satisfaction of the following conditions by Borrower:
(i) Borrower shall simultaneously at all times maintain compliance with the release SPE requirements contained in Article 6 herein;
(ii) If, in a prudent institutional lender’s reasonable judgment, the demolition in connection with the Garage Parcel will result in any loss of revenues at the Property, Borrower shall establish an Eligible Account with Lender or Lender’s agent into which Borrower shall deposit an amount to cover such shortfall, as would be reasonably determined by a prudent institutional lender, which shall be held as additional collateral for the Loan (or, in lieu of such Eligible Account, Borrower Principal delivers to Lender a guaranty in the shortfall amount, along with a substantive non-consolidation opinion, if such opinion would be reasonably required by a prudent institutional lender); and
(iii) If required by Lender, Borrower shall deliver to Lender an opinion of counsel acceptable to a prudent institutional lender and the Rating Agencies (issued by counsel acceptable to Lender and the Rating Agencies) that the demolition and construction in connection with the Garage Parcel would not constitute a “significant modification” of the Release Parcel transfer title Loan under Section 1001 of the Internal Revenue Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC Trust that holds the Release Parcel in an arm’s-length transaction to a Person(s) other than Borrower or any Person owned or controlled by Borrower or which is an Affiliate of BorrowerNote.
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