EXHIBIT 10.4
LOAN CONTRIBUTION
AGREEMENT
T HIS L OAN C ONTRIBUTION A GREEMENT ,
dated as of January 31, 2000 (this “ Agreement
”), is by and between Bank of America, N.A. (“
Bank ”) and Capital Lease Funding, L.P. (“
CLF ”).
Recitals
A. Bank, CLF and one of CLF’s
general partners have entered into that certain Purchase and Sale
Agreement, of even date herewith (the “ P & S
Agreement ”) whereby Bank may purchase certain Commercial
Mortgage Loans (as such term is defined in the P & S Agreement)
from CLF. Capitalized terms used but not defined herein shall have
the meanings set forth in the P & S Agreement.
B. Bank, CLF and CLF HPII Inc., one
of CLF’s general partners, also have entered into that
certain Call Option Agreement, of even date herewith (the “
Option Agreement ”), whereby Bank has sold CLF an
option to purchase from Bank certain Commercial Mortgage
Loans.
C. Bank and CLF desire that Bank
make certain Commercial Mortgage Loans, including Construction Perm
Loans, to third parties, and CLF desires to have the option to
purchase certain of these Loans from Bank upon CLF’s exercise
of the Call Option.
Agreement
NOW THEREFORE, in consideration of
the foregoing and for additional valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged
by each of Bank and CLF, Bank and CLF hereby agree as
follows:
Article I
Statement of
Intent
1.1 Contribution of Certain Loans
to the Facility . From time to time, Bank, in its sole business
judgment, may originate or make certain Commercial Mortgage Loans,
including Construction Perm Loans, to third-party Mortgagors which
would be substantially similar to Loans made by CLF to third
parties. Subject to the terms and conditions of this Agreement, CLF
may purchase such Loans from Bank upon CLF’s exercise of its
Call Option.
1.2 Loans Subject to Prior
Confirmation by CLF . Prior to committing to make any
Commercial Mortgage Loan that would be subject to the terms of this
Agreement, Bank shall obtain CLF’s consent, as evidenced by
Bank’s receipt of a completed Funding Confirmation, the form
of which is attached hereto as Exhibit A , executed by CLF.
If Bank makes a Commercial Mortgage Loan to a Mortgagor without
first receiving a completed Funding Confirmation executed by CLF,
then such Loan shall not be a Pool Asset.
1.3 Construction Perm Loans .
No Construction Perm Loan shall become a Pool Asset unless the
conditions set forth in Section 1.2 hereof have been satisfied
and , on the date on
which such Loan is to become a Converted Loan,
the Credit Rating of the Tenant shall not have (i) declined by more
than two rating levels or (ii) declined beneath an Investment
Grade.
Article II
Eligibility
Criteria
2.1 Eligible Loans . The only
Loans that are eligible to be subject to the terms of this
Agreement are Commercial Mortgage Loans, including Construction
Perm Loans, for which the Mortgagor is constructing commercial
improvements to real property to be leased by a Tenant that has an
Investment Grade Credit Rating. Such Loans shall be documented on
forms that are reasonably acceptable to Bank and CLF and shall, as
appropriate, be supported by one or more Lease Enhancement
Policies.
2.2 Confirmation of Loans .
Prior to committing to a Mortgagor to fund any Loan that would
otherwise be subject to the terms of this Agreement, Bank shall
obtain the prior written consent of CLF to the inclusion of such
Loan in the Facility, as evidenced by Bank’s receipt of a
Funding Confirmation executed by CLF.
a. Preparation of Funding
Confirmations . After discussing with a potential Mortgagor the
possibility of making a Loan that meets the eligibility criteria
set forth in this Agreement, or such other criteria as subsequently
may be agreed upon by the parties hereto, Bank shall prepare and
send to CLF by telecopy a completed Funding Confirmation regarding
the prospective Loan.
b. Execution of Funding
Confirmation by CLF . CLF may, in its sole discretion, execute
a Funding Confirmation submitted to it by Bank to indicate
CLF’s desire to include the prospective Commercial Mortgage
Loan in the Facility. After receipt of a Funding Confirmation, CLF
will have three Business Days to review the Funding Confirmation.
If CLF has not returned to Bank a properly executed Funding
Confirmation by the end of the third Business Day following the
date on which Bank sent CLF such Funding Confirmation, CLF shall be
deemed to have declined the prospective Commercial Mortgage Loan
and neither party shall have any obligation to the other party with
respect to such Loan. Subject only to the provisions of Section
2.3.c, below, CLF shall timely pay Bank the Contribution Fee, as
set forth in Section 2.3.a or 2.3.b, whichever is
appropriate.
c. Execution by Telecopy .
The parties may deliver executed Funding Confirmations by telecopy,
and the party receiving an executed Funding Confirmation by
telecopy may rely on such telecopy to the same extent as if it had
received an original Funding Confirmation executed by an authorized
officer of Bank or CLF, as may be appropriate. Any such telecopy of
an executed Funding Confirmation shall be admissible for all
purposes and in all actions and proceedings to the same extent that
an executed original of such Funding Confirmation would be
admissible.
d. No Obligation to Fund .
Bank may, but shall not be obligated to, extend financing to a
Mortgagor after CLF has executed a Funding Confirmation in respect
of a
2
prospective Commercial Mortgage Loan
to such Mortgagor. The decision whether to extend financing to such
a Mortgagor shall be in the Bank’s sole
discretion.
2.3 Contribution Fee . Each
Funding Confirmation sent by Bank to CLF shall set forth the amount
of the projected Contribution Fee for the prospective Confirmed
Loan. Promptly upon completion of underwriting, Bank shall notify
CLF of the actual amount of the Contribution Fee by sending a
Contribution Fee Notice to CLF. CLF shall pay Bank such
Contribution Fee for each Loan as follows:
a. Construction Perm Loans .
For a Construction Perm Loan, CLF shall pay Bank the Contribution
Fee within five Business Days of the date on which Bank notifies
CLF of the occurrence of the Conversion Date for such Loan,
provided that CLF shall not be obligated to pay Bank a Contribution
Fee for a Construction Perm Loan before the Conversion Date for
such Loan.
b. Other Commercial Mortgage
Loans . For all Commercial Mortgage Loans other than
Construction Perm Loans, CLF shall pay Bank the Contribution Fee
within five Business Days of the date on which Bank notifies CLF of
the amount of the Contribution Fee.
c. No Obligation to Pay
Contribution Fee; Refund . Notwithstanding the provisions of
sub-sections (a) and (b) of this Section 2.3, CLF shall not be
obligated to pay Bank a Contribution Fee if a Material Adverse
Change occurs in respect of the applicable Loan before the date on
which the Contribution Fee for such Loan is due, unless CLF has
previously agreed otherwise. Bank shall refund to CLF any
Contribution Fee, or portion thereof, received by Bank for any
Confirmed Loan in respect of which (i) a Material Adverse Change
occurs before such Loan becomes a Pool Asset (unless CLF waives in
writing such Material Adverse Change) or (ii) Bank elects not to
extend financing in respect of such Loan.
2.4 Optional Purchase of
Confirmed Loans by CLF . CLF may, but shall not be obligated
to, purchase a Confirmed Loan from Bank by paying Bank an amount
equal to (i) the Loan Value for such Loan less (ii) any principal
received by Bank that results in a permanent reduction of the
commitment to extend financing to the applicable Mortgagor and less
(i) any Contribution Fee received by Bank in respect of such Loan.
CLF shall notify Bank in writing of CLF’s intent to purchase
a Confirmed Loan on or before the date the Contribution Fee, or the
final portion thereof (for Construction Perm Loans), for such Loan
is due. CLF’s purchase of a Confirmed Loan under this Section
2.4 is conditioned on Bank’s receipt of the purchase price
for such Loan on or before the date on which such Confirmed Loan
would otherwise become a Pool Asset under the provisions of Section
3.1 of this Agreement. Any purchase of a Confirmed Loan under the
provisions of this Section 2.4 shall not be deemed to be an
exercise of the Call Option, such Confirmed Loan shall not be a
Pool Asset, and CLF shall pay Bank a Profit Participation Amount in
respect of each such Confirmed Loan upon CLF’s subsequent
sale or Securitization of such Loan.
2.5 Special Provisions for
Construction Perm Loans . Notwithstanding CLF’s prior
execution of a Funding Confirmation, no Construction Perm Loan
shall become a Pool Asset
3
unless, on the date on which such Loan is due to
become a Permanent Loan, the following criteria are
satisfied:
(i) No monetary default shall then
exist under the Loan Documents;
(ii) No receiver, liquidator or
trustee of Mortgager has been appointed; Mortgagor has not been
adjudicated a bankrupt or insolvent; no petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, has been filed by or against,
has been consented to, or acquiesced in by, Mortgagor; no
proceeding for the dissolution or liquidation of Mortgagor has been
instituted; and no appointment, adjudication, petition or
proceeding that was involuntary and not consented to by Mortgagor
has not been discharged, stayed or dismissed;
(iii) There has not been a Material
Adverse Change in respect of the Construction Perm Loan;
(iv) Bank shall have received the
Completion Documents;
(v) With respect to the Completion
Documents:
(A) All changes in reserves
recommended by Bank’s construction consultant in the update
of the engineering report shall have been included in the amounts
deposited by Mortgagor;
(B) The updated environmental report
(if any) shall not reveal any material, detrimental changes in the
environmental condition of the Mortgaged Property from the
environmental condition reflected in any environmental report for
the Mortgaged Property previously prepared in connection with
obtaining a Commercial Mortgage Loan; including any remediation
that is not included in the obligations of Tenant under the related
lease of the Mortgaged Property, or, if not so included, such
remediation is complete and reasonably satisfactory to
CLF;
(C) The complete,
“as-built” ALTA/ACSM survey of the Mortgaged Property
shall not reveal (1) that any improvement constructed on the
Mortgaged Property lies outside of the boundaries of the land
portion of the Mortgaged Property or any improvement located on
adjoining properties materially encroaches upon the land portion of
the Mortgaged Property, except for such immaterial matters that are
acceptable to mortgage lenders generally or for which an
appropriate endorsement to the title policy has been obtained in
accordance with prudent lending standards, or (2) any material
encroachment of the improvements constructed on the Mortgaged
Property over any building restriction lines that are applicable to
the Mortgaged Property to the extent such building restriction
lines are shown on the survey, other than such immaterial matters
that are acceptable to mortgage lenders generally or for which an
appropriate endorsement to the title policy has been obtained in
accordance with prudent lending standards; and
4
(D) The Tenant Estoppel Certificate
for such Commercial Mortgage Loan shall be completed with all
blanks filled (i) with terms exactly as specified in the applicable
lease or (ii) with such other terms or information reasonably
acceptable to Bank;
(vi) The conditions precedent to the
final advance under the Construction Perm Loan shall have been
satisfied, unless reasonably waived in writing by Bank and CLF, and
the final advance under such Loan shall have been made;
(vii) No partial or full prepayment
of Loan principal shall have been made except for principal
received as a result of the receipt by Mortgagor of fixed rent
payments under the lease before the date on which the Loan becomes
a Converted Loan;
(viii) No arbitration proceeding or
litigation in respect of the Loan shall be ongoing;
(ix) Except as may have been
consented to by CLF (which consent shall not be unreasonably
withheld, delayed or conditioned and provided that CLF’s
consent shall not be required for change orders), such Construction
Perm Loan will be evidenced by documents and instruments that, in
substance, are wholly consistent with the terms specified on the
applicable Funding Confirmation, and no instrument or document
evidencing, or matter relating to, the Loan shall have been
replaced or amended, modified, renewed or extended in any material
way;
(x) Bank shall not have (A) joined
in or consented to the granting of an easement burdening the
Mortgaged Property, (B) subordinated the Mortgage to an easement
burdening the Mortgaged Property, or (C) released any portion of
the Mortgaged Property from the lien of the Mortgage, in each case
without the prior written consent of CLF (which consent shall not
be unreasonably withheld, delayed or conditioned); and
(xi) The Loan shall have become a
Permanent Loan in accordance with the terms specified in the
applicable Confirmation Agreement and the related loan agreement by
and between Bank and the Mortgagor and payments of fixed rent shall
have commenced under the applicable Lease.
Article III
Pool Assets; Call
Option
3.1 Contribution of Confirmed
Loans . If (i) Bank, it its sole discretion, opts to lend money
to a Mortgagor for a Confirmed Loan and (ii) CLF pays Bank the
applicable Contribution Fee in accordance with the provisions of
Section 2.3 hereof, then the resulting Commercial Mortgage Loan
shall become a Pool Asset on the Conversion Date, if such Loan is a
Construction Perm Loan, or on the date on which Bank advances funds
to the Mortgagor, for all other Loans. All Confirmed Loans that are
Pool Assets will be continuously owned by Bank until CLF makes all
required payments to Bank upon exercise of the Call
Option.
5
3.2 Call Option . All
Commercial Mortgage Loans that, under the provisions of Section 3.1
hereof, are Pool Assets shall be subject to the Call Option as soon
as such Loans become Pool Assets.
Article IV
Representations and Warranties;
Covenants
4.1 Representations and
Warranties . Each of the parties represents and warrants to and
for the benefit of the other party as follows: (i) it has full
power and authority, and has taken all action necessary to execute
and deliver this Agreement, and all documents required to be
executed and delivered by it hereunder, and to fulfill its
obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby; (ii) the making and
performance by it of this Agreement, and all documents required to
be executed by it hereunder, and to fulfill its obligations
hereunder and thereunder, does not and will not violate any law or
regulation of the jurisdiction under which it exists, any other law
or regulation applicable to it or any other agreement to which it
is a party or by which it is bound; (iii) this Agreement, and all
documents required to be executed by it hereunder, have been duly
executed and delivered by it and constitute its legal, valid and
binding obligations, enforceable in accordance with the respective
terms hereunder or thereunder; and (iv) all approvals,
authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability
of its obligations under this Agreement, and all documents required
to be executed and delivered by it hereunder have been
obtained.
4.2 Covenants . Each of the
parties covenants to the other party that it will use its best
efforts in connection with the performance of its obligations under
this Agreement, that it will take such further actions as may
desirable or necessary to effectuate the provisions of this
Agreement, and that it will have, at all applicable times, full
authority and right to perform its obligations
hereunder.
Article V
Miscellaneous
Provisions
5.1 No Third-Party
Beneficia
