LENDER, WHICH SHALL NOT
BE UNREASONABLY WITHHELD OR DELAYED; PROVIDED, HOWEVER, THAT, EXCEPT DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, LENDER'S CONSENT SHALL NOT BE REQUIRED WITH
RESPECT TO THE ADJUSTMENT, COMPROMISING OR SETTLEMENT OF ANY CLAIM FOR INSURANCE
PROCEEDS IN AN AMOUNT NO MORE THAN THE LESSER OF (I) FIVE PERCENT (5%) OF THE
ALLOCATED LOAN AMOUNT FOR THE APPLICABLE PROJECT, AND (II) $1,000,000.00. IN
ADDITION, IF DAMAGE TO A PROPERTY COVERED BY ANY OF THE POLICIES REQUIRED TO BE
MAINTAINED UNDER THIS AGREEMENT OCCURS WHERE THE LOSS DOES NOT EXCEED
$500,000.00, PROVIDED NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, BORROWER IS HEREBY AUTHORIZED TO COLLECT AND RECEIPT FOR THE
INSURANCE PROCEEDS AND AGREES TO UTILIZE THE SAME FOR REPAIR AND RESTORATION AS
REQUIRED UNDER THIS AGREEMENT.
56
(III)
SUBJECT TO SECTION 3.04(A)(IV), LENDER SHALL APPLY ANY INSURANCE
PROCEEDS WHICH IT MAY RECEIVE TOWARDS THE WORK IN ACCORDANCE WITH
SECTION 3.04(B) AND THE OTHER APPLICABLE SECTIONS OF THIS ARTICLE III.
(IV)
IF (A) AN EVENT OF DEFAULT SHALL EXIST, (B) LENDER IS NOT REASONABLY
SATISFIED THAT THE DEBT SERVICE COVERAGE RATIO, AFTER SUBSTANTIAL COMPLETION OF
THE WORK AND A REASONABLE AMOUNT OF TIME TO EFFECT THE LEASING UP OF THE
PROJECT, WILL BE AT LEAST EQUAL TO THE GREATER OF (X) THE DEBT SERVICE COVERAGE
RATIO AS OF THE DAY IMMEDIATELY PRIOR TO THE OCCURRENCE OF SUCH CASUALTY AND
(Y) THE DEBT SERVICE COVERAGE RATIO AS OF THE DATE HEREOF, (C) MORE THAN THIRTY
PERCENT (30%) OF THE REASONABLY ESTIMATED FAIR MARKET VALUE OF THE AFFECTED
PROJECT IS DAMAGED OR DESTROYED, (D) ONE OR MORE MAJOR LEASES CONSTITUTING IN
EXCESS OF TWENTY-FIVE PERCENT (25%) OF THE LEASEABLE SQUARE FOOTAGE OF THE
PROJECT THAT IS PHYSICALLY AFFECTED BY SUCH DESTRUCTION SHALL NOT CONTINUE IN
FULL FORCE AND EFFECT OR ARE NOT REASONABLY LIKELY (AS REASONABLY DETERMINED BY
LENDER) TO BE REPLACED WITHIN SIX (6) MONTHS FOLLOWING COMPLETION OF THE WORK
WITH SPACE LEASE(S) ACCEPTABLE TO LENDER, (E) LENDER IS NOT REASONABLY SATISFIED
THAT THE WORK CAN BE SUBSTANTIALLY COMPLETED (SUBJECT ONLY TO MINOR PUNCHLIST
ITEMS) SIX (6) MONTHS PRIOR TO MATURITY OR (F) LENDER SHALL BE SATISFIED THAT
ANY OPERATING DEFICITS, INCLUDING ALL SCHEDULED PAYMENTS OF PRINCIPAL AND
INTEREST UNDER THE NOTE, WHICH WILL BE INCURRED WITH RESPECT TO THE PROJECT AS A
RESULT OF THE OCCURRENCE OF ANY SUCH CASUALTY OR CONDEMNATION, WHICHEVER THE
CASE MAY BE, WILL BE COVERED OUT OF THE INSURANCE COVERAGE REFERRED TO IN
SECTION 3.01(A)(III) ABOVE (EACH, A "SUBSTANTIAL CASUALTY"), LENDER SHALL HAVE
THE OPTION, IN ITS SOLE DISCRETION TO APPLY THE APPLICABLE INSURANCE PROCEEDS IT
MAY RECEIVE PURSUANT TO THIS AGREEMENT (LESS ANY OUT-OF-POCKET COST TO LENDER OF
RECOVERING AND PAYING OUT SUCH PROCEEDS INCURRED PURSUANT TO THE TERMS HEREOF
AND NOT OTHERWISE REIMBURSED TO LENDER, INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES) TO THE PAYMENT OF THE DEBT, WITHOUT ANY
PREPAYMENT FEE OR CHARGE OF ANY KIND, OR TO ALLOW SUCH PROCEEDS TO BE USED