Common use of Expense Reserve Clause in Contracts

Expense Reserve. Notwithstanding anything in Section 8.03, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any amounts due to the Purchaser under Section 8.03 hereof would be treated as Nonqualifying Income for such Protected REIT upon the payment of such amounts to the Purchaser, the amount paid to the Purchaser, pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to the Purchaser in such year without causing such Protected REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to such Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which the Person obligated to make payment under Section 8.03 would otherwise be obligated to pay to the Seller or the Purchaser, as the case may be, pursuant to such Section 8.03 of this Agreement (the “Expense Amount”), then: (1) such obligated Person shall place the Expense Amount into an escrow account (the “Expense Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Purchaser and shall not release any portion thereof to the Purchaser, and the Purchaser, shall not be entitled to any such amount, unless and until the Purchaser, delivers to such obligated Person, at the sole option of such Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of such Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from such Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Purchaser, without causing such Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to such Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause such Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the Purchaser, to such obligated Person, the Purchaser, shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) reasonably acceptable to the Purchaser, that (i) requires such obligated Person to lend the Purchaser, immediately available cash proceeds in an amount equal to the Expense Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Purchaser, as the case may be, or any guarantor of the Purchaser, as the case may be, including such Protected REIT, at the time of such Indemnity Loan, and (B) a 15 year maturity with no periodic amortization.

Expense Reserve. Notwithstanding anything in Section 8.03, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any amounts due to the Seller or the Purchaser under Section 8.03 hereof would be treated as Nonqualifying Income for such Protected REIT upon the payment of such amounts to the Seller or the Purchaser, the amount paid to the Seller or the Purchaser, as the case may be, pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to the Seller or the Purchaser in such year without causing such Protected REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to such Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which the Person obligated to make payment under Section 8.03 would otherwise be obligated to pay to the Seller or the Purchaser, as the case may be, pursuant to such Section 8.03 of this Agreement (the “Expense Amount”), then: (1) such obligated Person shall place the Expense Amount into an escrow account (the “Expense Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Purchaser Seller or the Purchaser, as the case may be, and shall not release any portion thereof to the Seller or the Purchaser, as the case may be, and the Seller or the Purchaser, as the case may be, shall not be entitled to any such amount, unless and until the Seller or the Purchaser, as the case may be, delivers to such obligated Person, at the sole option of such Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of such Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from such Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Seller or the Purchaser, as the case may be, without causing such Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to such Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause such Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the Seller or the Purchaser, as the case may be, to such obligated Person, the Seller or the Purchaser, as the case may be, shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) reasonably acceptable to the Seller or the Purchaser, as the case may be, that (i) requires such obligated Person to lend the Seller or the Purchaser, as the case may be, immediately available cash proceeds in an amount equal to the Expense Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Seller or the Purchaser, as the case may be, or any guarantor of the Seller or the Purchaser, as the case may be, including such Protected REIT, at the time of such Indemnity Loan, and (B) a 15 year maturity with no periodic amortization.

Expense Reserve. Notwithstanding anything in Section 8.036.03, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any amounts due to the Seller or the Purchaser under Section 8.03 6.03 hereof would be treated as Nonqualifying Income for such Protected REIT upon the payment of such amounts to the Seller or the Purchaser, the amount paid to the Seller or the Purchaser, as the case may be, pursuant to this Agreement in any tax year shall not exceed the maximum amount that can be paid to the Seller or the Purchaser in such year without causing such Protected REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to such Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which the Person obligated to make payment under Section 8.03 6.03 would otherwise be obligated to pay to the Seller or the Purchaser, as the case may be, pursuant to such Section 8.03 6.03 of this Agreement (the “Expense Amount”), then: (1) such obligated Person shall place the Expense Amount into an escrow account (the “Expense Escrow Account”) using an escrow agent and agreement reasonably acceptable to the Purchaser Seller or the Purchaser, as the case may be, and shall not release any portion thereof to the Seller or the Purchaser, as the case may be, and the Seller or the Purchaser, as the case may be, shall not be entitled to any such amount, unless and until the Seller or the Purchaser, as the case may be, delivers to such obligated Person, at the sole option of such Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of such Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from such Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Seller or the Purchaser, as the case may be, without causing such Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to such Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause such Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the Seller or the Purchaser, as the case may be, to such obligated Person, the Seller or the Purchaser, as the case may be, shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) reasonably acceptable to the Seller or the Purchaser, as the case may be, that (i) requires such obligated Person to lend the Seller or the Purchaser, as the case may be, immediately available cash proceeds in an amount equal to the Expense Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Seller or the Purchaser, as the case may be, or any guarantor of the Seller or the Purchaser, as the case may be, including such Protected REIT, at the time of such Indemnity Loan, and (B) a 15 year maturity with no periodic amortization.

Expense Reserve. Notwithstanding anything in Section 8.03, in the event that counsel or independent accountants for a Protected REIT determine that there exists a material risk that any amounts due (a) Prior to the Purchaser under Section 8.03 hereof would be treated as Nonqualifying Income for such Protected REIT upon making of the payment of such amounts final Facility A Loan to the PurchaserBorrower, the amount paid to the Purchaser, pursuant to this Agreement in any tax year Borrower shall not exceed the maximum amount that can be paid to the Purchaser in such year without causing such Protected REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to such Protected REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which the Person obligated to make payment under Section 8.03 would otherwise be obligated to pay to the Seller or the Purchaser, as the case may be, pursuant to such Section 8.03 of this Agreement (the “Expense Amount”), then: (1) such obligated Person shall place cause the Expense Amount into an escrow account (the “Expense Escrow Account”) using an escrow agent Reserve Account to have been established and agreement reasonably acceptable to the Purchaser and shall not release any portion thereof to the Purchaser, and the Purchaser, shall not be entitled to any such amount, unless and until the Purchaser, delivers to such obligated Person, at the sole option of such Protected REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of such Protected REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from such Protected REIT’s independent accountants indicating the maximum amount that can be paid at that time to the Purchaser, without causing such Protected REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to such Protected REIT indicating that the receipt of any Expense Amount hereunder will not cause such Protected REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the Purchaser, to such obligated Person, the Purchaser, shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) reasonably acceptable to the Purchaser, that (i) requires such obligated Person to lend the Purchaser, immediately available cash proceeds in an amount equal to the Expense Amount Reserve shall have been deposited into the Expense Reserve Account from (i) proceeds from Facility A Loans and an “Indemnity Loan”equity contribution by Borrower made in accordance with Section 12.1(l), or (ii) funds from Borrower (or a combination of (i) and (ii)). (b) provides for (A) a commercially reasonable interest rate Once established and commercially reasonable covenantsfunded pursuant to Section 13.3(a), taking into account the credit standing and profile Expense Reserve shall be maintained until the Debt has been paid in full; provided, however, that upon closing of the Purchasersale of Units to Exclusive Resorts under the terms of the ER Purchase Agreement Borrower may deliver to the Agent projections with respect to the Expense Reserve Items for the three-month period immediately following such sale. If such projections, which shall be in form and substance reasonably satisfactory to the Lenders, show that the aggregate amount of Expense Reserve Items for such three-month period is less than the amount on deposit in the Expense Reserve Account, then the Agent shall withdraw the difference from the Expense Reserve Account and remit such funds to Borrower. From and after such date, the Expense Reserve required to be maintained hereunder shall equal such reduced amount. (c) If Borrower fails to pay when due any of the Expense Reserve Items, the Agent may (and shall at the direction of the Required Lenders) upon not less than two (2) Business Days’ notice to Borrower from the Agent or any Lender withdraw funds in the Expense Reserve Account up to an amount equal to the Expense Reserve to make such payment; provided that so long as the case may beNotes have not been declared due and payable pursuant to Section 20.1, the Required Lenders shall not direct the Agent to withdraw funds from the Expense Reserve Account to pay interest on the Notes unless the amount to be withdrawn is at least equal to the lesser of (i) an amount sufficient to pay accrued and unpaid interest then due on all Notes or any guarantor (ii) the remaining amount of the PurchaserExpense Reserve then available in the Expense Reserve Account; provided further that any such withdrawal to pay interest on the Notes shall be applied pursuant to Section 21.2. If any withdrawal is made, the Agent shall notify Borrower of such withdrawal, and within fifteen (15) Business Days of receipt of such notice Borrower shall deposit into the Expense Reserve Account the amount of such withdrawal. (d) The Agent is hereby authorized and directed with respect to all sums of money and other property and all proceeds thereof held in the Expense Reserve Account to invest in, reinvest or otherwise liquidate Permitted Investments in accordance with instructions of Borrower; provided that no more than fifty percent (50%) of the amount of funds held in the Expense Reserve Account may be invested in Permitted Investments with maturities greater than thirty (30) days from the date of investment and no funds in the Expense Reserve Account shall be invested in Permitted Investments with a maturity greater than one hundred eighty (180) days from the date of investment; provided, further, that upon the occurrence and during the continuance of an Event of Default or after Borrower’s failure to pay when due any Expense Reserve Item Borrower shall not have the right to provide the Agent any such investment instructions. If on the last Business Day of each calendar month the aggregate amount of cash plus the fair market value of Permitted Investments in the Expense Reserve Account exceeds the amount of the Expense Reserve then the Agent shall cause an amount of cash (including cash proceeds from the sale, liquidation or redemption of any Permitted Investments in the Expense Reserve Account) equal to such excess amount (calculated as of the case date of withdrawal), less any penalty or charge applicable to the sale, liquidation or redemption of the Permitted Investment in connection therewith, to be withdrawn from the Expense Reserve Account and paid to Borrower. In addition if on the last Business Day of each calendar month the aggregate amount of cash plus the fair market value of Permitted Investments in the Expense Reserve Account is less than the amount of the Expense Reserve then the Agent shall notify the Borrower of such deficiency and within fifteen (15) Business Days of such notice Borrower shall deposit funds into the Expense Reserve Account equal to such deficiency. The Agent shall not be liable for any loss resulting from any investment in any Permitted Investments or the sale, liquidation or redemption thereof as contemplated by this Section 13.3(c). (e) If thirty (30) or more days have elapsed since the date on which the principal amount of the Notes has been declared due and payable pursuant to Section 20.1, the Agent may be, including such Protected REIT, (and shall at the time direction of such Indemnity Loanthe Required Lenders) apply amounts in the Expense Reserve Account up to an amount equal to the Expense Reserve to the payment of the Debt in accordance with Section 21.1. Upon payment in full of the Debt, and (B) a 15 year maturity with no periodic amortizationall amounts in the Expense Reserve Account shall be immediately transferred by the Agent to Borrower.