Common use of Defeasance Option Clause in Contracts

Defeasance Option. This Note, and the Obligations outstanding ----------------- hereunder, may not be prepaid in whole or in part. However, notwithstanding the foregoing: I. So long as no Event of Default shall have occurred and be continuing, at any time during the Defeasance Period, Borrower may cause the release of the Collateral and the Properties from the lien of the Loan Documents upon the satisfaction of the following conditions (such release of the lien and satisfaction of such conditions referred to herein as the "Defeasance Option"): (i) not less than thirty (30) days and not more than sixty (60) days prior written notice shall be given to CSFC specifying a Payment Date on which the Defeasance Collateral (as hereinafter defined) is to be delivered (such Payment Date, the "Release Date"); (ii) all accrued and unpaid interest and all other sums then due under this Note and under the other Loan Documents up to the Release Date, including, without limitation, all costs and expenses incurred by CSFC or its agents in connection with such release (including, without limitation, the fees and expenses incurred by attorneys and accountants in connection with the review of the proposed Defeasance Collateral and the preparation of the Defeasance Loan Agreement (as hereinafter defined) and related documentation and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of this Section 4(I), and all fees, costs and expenses incurred or to be incurred by Lender in the purchase of such U.S. Obligations and the assumption payments referred to herein), shall be paid in full on or prior to the Release Date; and (iii) Borrower shall deliver to CSFC on or prior to the Release Date: (A) an amount (in immediately available funds) equal to the remaining principal amount of this Note and the Yield Maintenance Premium (hereinafter defined), if any, sufficient to purchase direct, non-callable obligations of the United States of America (the "Defeasance Collateral") that provide for payments prior, but as close as possible, to all successive monthly Payment Dates occurring after the Release Date through the Maturity Date (and assuming the Loan is paid in full on the Maturity Date), with each such payment being equal to or greater than the amount of the corresponding installment of principal and interest required to be paid under this Note (the "Defeasance Deposit"). The Defeasance Deposit shall be used to purchase the Defeasance Collateral. Each instrument evidencing such Defeasance Collateral shall be duly endorsed by the holder thereof as directed by CSFC or accompanied by a written instrument of transfer in form and substance wholly satisfactory to CSFC (including, without limitation, such instruments as may be required by the depository institution holding such securities to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to create a first priority security interest therein in favor of CSFC in conformity with all applicable state and federal laws governing granting of such security interests; (B) a pledge and security agreement, in form and substance satisfactory to CSFC in its sole discretion, creating a first priority security interest in favor of CSFC in the Defeasance Deposit and the Defeasance Collateral (the "Defeasance Loan Agreement"), which Defeasance Loan Agreement shall provide, among other things, that any excess payments received by CSFC from the Defeasance Collateral over the amounts payable by Borrower hereunder shall be refunded to Borrower. (C) a certificate of Borrower in form and substance satisfactory to CSFC in its sole discretion certifying that all of the requirements set forth in this Section 4 have been satisfied; (D) an opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to CSFC in its sole discretion stating, among other things, that CFSC has a perfected first priority security interest in the Defeasance Deposit and the Defeasance Collateral purchased on behalf of Borrower and that the Defeasance Loan Agreement is enforceable against Borrower in accordance with its terms; (E) a certificate from a firm of independent public accountants acceptable to CSFC certifying that the Defeasance Collateral is sufficient to satisfy the provisions of Section A above; and (F) evidence in writing from each Rating Agency (as defined hereinafter) selected by CSFC to the effect that such release will not result in a re-qualification, reduction or withdrawal of any rating in effect immediately prior to such defeasance for any Securities (as hereinafter defined); and (G) such other certificates, documents or instruments as CSFC may reasonably request. II. Upon compliance with the requirements of this Section 4 and with the requirements of Section 4 of each of the other Notes, the Collateral and the Properties shall be released from the lien of the Loan Documents and the Defeasance Collateral shall constitute the only collateral which shall secure the Obligations and CSFC will, at Borrower's expense, execute and deliver any agreements reasonably requested by Borrower to release the lien of CSFC on the Collateral and the Properties. Borrower, pursuant to the Defeasance Loan Agreement, shall authorize and direct that the payments received from Defeasance Collateral be made directly to CSFC and applied to satisfy the Obligations. III. Upon the release of the Collateral and the Properties and substitution of the Defeasance Collateral in accordance with this Section 4, Borrower shall, upon the direction of CSFC, assign all of its Obligations, together with the Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and such successor entity shall execute an assignment and assumption agreement in form and substance satisfactory to CSFC in its sole discretion pursuant to which the successor entity shall assume the Obligations in their entirety (including, without limitation, under the Defeasance Loan Agreement). As conditions to the effectiveness of such assignment and assumption, Borrower shall (i) deliver or cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory to CSFC in its sole discretion) in form and substance satisfactory to CSFC in its sole discretion with respect to, among other things, the enforceability of the assignment and assumption agreement, the Obligations and the applicable agreements, instruments and documents (including, without limitation, the Loan Documents) against the successor entity and (ii) pay all costs and expenses incurred by CSFC, its agents and representatives in connection with the foregoing. Upon the effectiveness of the assignment and assumption, Borrower shall be relieved of all Obligations other than those specifically intended to survive the termination, satisfaction or assignment of the Obligations or the exercise by CSFC of it rights and remedies with respect to the Obligations. IV. Upon the release of the Collateral and Properties in accordance with this Section 4, Borrower shall have no further right to prepay this Note pursuant to the other provisions of this Section 4 or otherwise. In connection with the conditions set forth in Subsection I(A) above, Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose of purchasing the Defeasance Collateral with funds provided by the Borrower. Borrower shall pay any and all expenses incurred in the purchase of the Defeasance Collateral and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of this Note or otherwise required to accomplish the agreements of this Section 4. V. For purposes of this Note and the other Loan Documents, the term "Yield Maintenance Premium" shall mean the amount, if any, which, when added to the remaining principal amount of the Note, will be sufficient to purchase the Defeasance Collateral.