OPSB Special Board Meeting February 21, 2013
ORLEANS PARISH SCHOOL BOARD SPECIAL BOARD MEETING 3520 General DeGaulle Drive, Suite 4050 New Orleans, Louisiana 70114 February 21, 2013 12:00PM
CALL TO ORDER - ROLL CALL PLEDGE OF ALLEGIANCE ADOPTION OF THE AGENDA ACTION ITEM(S) The Orleans Parish Board is asked to act upon the following action items:
Action Item No. 1: Wheatley School Leveraged Financing The Public School Facilities Financing Act contained in La. R.S. 17:100.10 (the “PSFFA”) authorizes the School Board and the RSD to create one or more public benefit corporations (a “PBC”) and to enter into financing arrangements with such PBCs and other private parties to leverage additional funds (a “Leveraged Financing”) not otherwise available to the School Board or the RSD to construct or renovate public school properties within the Parish of Orleans. Pursuant to OPSB Resolution No. 23-12, the School Board authorized a cooperative endeavor agreement (the “Leveraged Financing CEA”) with the RSD to implement a leveraged financing transaction for the Phillis Wheatley Elementary School in accordance with the Master Plan. The Leveraged Financing CEA authorized and directed the transfer the Wheatley School initially to the Orleans Schools Facilities Foundation (the “Facilities Foundation” or “PBC Lessee”), a wholly owned public benefit corporation of the School Board pursuant to a Master Lease (the “Master Lease”) as the first step to obtain funds not otherwise available to the School Board or the RSD in order to complete the construction of the Wheatley School. The Master Lease requires the Facilities Foundation to transfer the Wheatley School to the Wheatley School Facility Foundation, Inc. (the “Wheatley QALICB”) through the execution of a Ground Lease (the “Ground Lease”) by and between the Facilities Foundation and the Wheatley QALICB. The Ground Lease requires the Wheatley QALICB obtain debt and equity financing to complete the construction of the Wheatley School. The Master Lease and the Ground Lease contain the statutorily mandated reference to the automatic reversion of the Wheatley School to the School Board if Wheatley School ceases to be used as a public school. The School Board and the RSD approved a Financing Structure Summary for the Leveraged Financing of the Wheatley School (the “Wheatley Financing Structure”) in the Leveraged Financing CEA. The School Board committed to advance through its Facilities Foundation [$23,897,112], of which [$6,947,088] will be loaned to the RSD Wheatley NMTC Investment Fund LLC (the “Investment Fund”) so that the Facilities Foundation will serve as the leveraged 1
OPSB Special Board Meeting February 21, 2013
lender (the “Leveraged Lender”) in the Wheatley Financing Structure and [$16,897,112] will be provided as a grant to be used solely and exclusively by the Wheatley QLICB to pay for the construction costs of the Wheatley School. The construction costs of the Wheatley School exceed [$25,000,000]. All loans and/or guarantees in the Leveraged Financing for the Wheatley School must be determined to be safe and sound by the Interim Superintendent. Recommendation: following: (i) (ii) (iii)
(iv)
That the Orleans Parish School Board authorizes and approves the
Amended and Restated Articles of Facilities Foundation and Board of Directors attached hereto as Exhibit A. Cooperative Endeavor Agreement with the Recovery School District (“RSD”) attached as Exhibit B. Transaction Summary for the Leveraged Financing of the Wheatley Elementary School attached hereto as Exhibit C including the investment of funds in the Facilities Foundation consisting of proceeds of the OPSB’s Qualified School Construction Bond. Execution of documents related to the Leveraged Financing, including: (a) Master Lease attached as Exhibit D-1, Ground Lease attached as Exhibit D-2 and Facility Lease attached as Exhibit D-3. (b) Subordination, Non-Disturbance, Attornment Agreement attached as Exhibit E. (c) Grant Funding Agreement attached as Exhibit F. (d) Environmental Indemnity Agreement attached as Exhibit G. (e) Option Agreement attached as Exhibit H.
RECESS TO ORLEANS SCHOOLS FACILITIES FOUNDATION, INC., MEETING I. Roll Call II. Authorization and approval of the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix)
Bylaws of Facilities Foundation Cooperative Endeavor Agreement Transaction Summary Master Lease Ground Lease Grant Funding Agreement Leverage Loan Documents Subordination, Non-Disturbance, Attornment Agreement Option Agreement
III. Adjourn
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OPSB Special Board Meeting February 21, 2013
RECONVENE ORLEANS PARISH SCHOOL BOARD BUSINESS MEETING/ROLL CALL Action Item No. 2: Ratification of the Proceedings of the Orleans Parish Schools Facilities Foundation, Inc., Held February 21, 2013. Recommendation: That the Orleans Parish School Board ratifies the proceedings of the Orleans Parish Schools Facilities Foundation, Inc., including all authorizations and approvals, undertaken in a duly called meeting of the Foundation held on February 21, 2013. ADJOURNMENT
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STATE OF LOUISIANA PARISH OF ORLEANS AMENDED AND RESTATED ARTICLES OF INCORPORATION OF ORLEANS SCHOOLS FACILITIES FOUNDATION, INC.
Article I Names and Offices Section 1. The name of this nonprofit corporation organized under and pursuant to the provisions of the laws of the State of Louisiana, and particularly LSA R.S. 12:201-269, relative to the organization of nonprofit organizations, and Act 739 of the 2008 Regular Session of the Louisiana State Legislatures is: Orleans Schools Facilities Foundation, Inc. (hereafter “Foundation�). Section 2. The principal office of the Foundation shall be in Orleans Parish, Louisiana, but the Foundation may also have offices at such other places in Orleans Parish as the Board of Directors may from time to time determine to be necessary or convenient to carry out the Foundation purposes.
Article II Purposes and Limitations Section 1.
The purposes for which the Foundation is organized are:
a. To engage exclusively in educational and charitable activities under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future revenue act) which are exempt from Federal income tax, and to act as a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1954 (or corresponding provision of any future revenue act). b. To enter into agreements, including leases, loans or investment agreements, and to engage in such other financing arrangements as may be necessary for the planning, renovation,
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construction, leasing, subleasing, managing, and improving of schools and school property within the Parish of Orleans. c. To serve as a clearinghouse for the exchange of information on such opportunities and financial assistance available for pursuing the same. d. To make loans, grants or other investments in order to facilitate the construction of new schools or the renovation of existing schools within the parish of Orleans. e. To act alone or in partnership with any public or other private entity in order to leverage funds for the planning, renovation, construction, managing and improving of school properties. f. To receive donations, contributions, funds and property from any and all sources and to use the same for its corporate purposes. g. To engage in such other activities as will assists in generally carrying out the purposes of the Foundation. Section 2.
The limitations upon the Foundation shall be as follows:
a. No part of the net earnings of the Foundation shall inure to the benefit of, or be distributable to its members, directors, officers or other private persons, except that the Foundation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in Section 1 above. b. No substantial part of the activities of the Foundation shall be the carrying on of propaganda, or otherwise attempting to influence legislation; and the foundation shall not participate in, or intervene in (including the publication or distribution of statements) any political campaign on behalf of any candidate for public office. c. Notwithstanding any other provision of these articles, the Foundation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code (or the corresponding provisions of any future United States Internal Revenue Law) or (b) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code (or the corresponding provisions of any future United States Internal Revenue Law).
Article III Members Section 1. The Foundation is organized on a nonstock basis and there shall be but one class of membership. The sole member of this corporation shall be the Orleans Parish School Board.
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Article IV Board of Directors Section 1. The powers, affairs and business of the Foundation shall be exercised, its property controlled, and its affairs conducted by the Board of Directors. Section 2.
The Board of Directors shall consist of five (5) members as follows: (i)
President of the Orleans Parish School Board as Ex-Officio Member, 3520 General DeGaulle Drive, Suite 5055, New Orleans, Louisiana 70114;
(ii)
Chairperson of the Orleans Parish School Board Finance Committee as Ex-Officio Member, 3520 General DeGaulle Drive, Suite 5055, New Orleans, Louisiana 70114;
(iii)
Secretary of the Orleans Parish School Board as Ex-Officio Member, 3520 General DeGaulle Drive, Suite 5055, New Orleans, Louisiana 70114;
(iv)
Chief Financial Officer of the Orleans Parish School Board as Ex-Officio Member, 3520 General DeGaulle Drive, Suite 5055, New Orleans, Louisiana 70114; and
(v)
Financial Expert, initially, Damon Burns, until his successor is appointed by the Orleans Parish School Board, 909 Poydras Street, Suite 1300, New Orleans, Louisiana 70112.
Article V Meetings Section 1. Meetings of the Board of Directors shall be held at the Office of the Foundation in New Orleans or at such other places in New Orleans as the Board of Directors may from time to time determine to be necessary or convenient to carry out the corporation purpose. Section 2. At least ten (10) days’ advance written notice shall be given by the Secretary of the annual and other meetings of the Board of Directors, except in the case of an emergency when reasonable notice, including oral notice, shall be given. Section 3. The quorum for transaction of business at meetings of the Board of Directors shall be a majority of the total number of Directors. Where a quorum is not present, the meeting may be adjourned without further notice to another time or date when a quorum is present. Section 4. A meeting of the Board of Directors may be held by conference call or on a holiday with the same force and effect as if on a business day. If a meeting is held by conference call, the Secretary of the Board shall duly record in the records of the Foundation the manner in
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which each member of the Board was given notice and the names of each member participating in the meeting by conference call.
Article VI Officers of the Board of Directors Section 1. The Officers of the Board shall be as follows: Chairman, Vice-Chairman, Secretary and Treasurer. Section 2. Officers of the Board shall be elected by the Board of Directors at its organization meeting and appropriate annual meeting and shall serve for a two (2) year term, extending until each individual successor is elected and qualified by the Board.
Article VII Duties of the Board of Directors Section 1. The Board of Directors shall direct the affairs of the Foundation, and shall have all the powers, duties and responsibilities necessary and proper to carry out its purposes, including, among others the powers: a.
to direct the affairs and determine the policies of the Foundation;
b.
to elect the Officers of the Board of Directors and the Foundation;
c.
to elect non-voting Honorary or Emeritus Directors;
d.
to collect and receive all monies, property or donations paid or transferred;
e. to control the disbursement of funds, handle, invest and reinvest funds as it deems appropriate; and f. Foundation.
to employ personnel to assist in the administration of the affairs of the
Article VIII Duties of Officers Section 1.
Chairman of the Board
The Chairman of the Board of Directors shall preside at all meetings of the Board, and he shall perform the usual duties attendant upon his office.
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Section 2.
Vice-Chairman of the Board
The Vice-Chairman shall perform the usual duties attendant upon his office. In the event of the absence or inability of the Chairman of the Board of Directors for any reason to serve, the Chairman's duties shall be performed by the Vice-Chairman. Section 3.
Secretary of the Board of Directors
The Secretary shall cause to be prepared an agenda for all meetings and shall attend to giving all notices required by the Bylaws. He shall be responsible for keeping and reporting the minutes of the meetings of the Board of Directors. He shall be the custodian of all records and reports of the Foundation. He shall be custodian of the corporate seal of the Foundation. He shall issue all notices required by the Board of Directors, and he shall perform the usual duties attendant upon his office, including those that the Board of Directors, or the President in actions consistent with the Board of Directors, may from time to time prescribe. Section 4.
Treasurer of the Board of Directors
The Treasurer shall receive all funds and shall be the custodian of all securities and intangible assets belonging to the Foundation. He shall perform the usual duties attendant upon his office, including those that the Board of Directors may prescribe. He shall present financial reports as desired and make an annual report to the Board of Directors at its annual meeting. Section 5. The Board of Directors may establish additional officers and elect officers to fill them to perform such duties as they may from time to time direct.
Article IX General Powers of the Foundation Section 1. Without limiting the generality of its powers to act to carry out its Foundation purposes, the Foundation shall have powers to accomplish the following: a.
to sue, complain and defend in its Foundation name;
b. to purchase, take, receive, lease, take by gift, devise or bequest, or otherwise acquire, own, hold, improve, use and otherwise deal in and with, real or personal or mixed property or any interest therein, wherever situated; c. to sell, convey, mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any part of its property and assets; d. to make contracts and incur liabilities, borrow money at such rates of interests as the Foundation may determine, issue its notes, bonds and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property, franchises and income;
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e. to lend money for its Foundation purposes, invest and reinvest its funds, and take and hold title to real and personal property as security for the payment of funds so loaned or invested; f. to conduct its affairs, carry on its operations, hold property, and have offices and exercise the powers granted hereunder; g. to elect or appoint officers and agents of the Foundation and define their duties and fix their compensation; h. to make and alter Bylaws, not inconsistent with its Articles of Incorporation or with laws of the State of Louisiana, for the administration and regulation of the Affairs of the Foundation; i. to have and exercise all powers necessary or convenient to effect any or all of the purposes for which the Foundation is organized, and as provided under the State of Louisiana Non-Profit Corporation Law contained in Chapter 2 of Title 12 of the Louisiana Revised Statutes of 1950, as amended; j. to solicit and raise funds, engage in fund development, and arrange for various forms of giving, and the like; and k. to make contributions, grants, gifts and other transfers of money and property in furtherance of the Foundation purposes.
Article X Execution of Legal Instruments Section 1. The President shall have authority to execute and acknowledge on behalf of the Foundation contracts, legal documents or other instruments where required in connection with the operation of the Foundation. The Secretary shall have authority to attest to same and affix the corporate seal thereto on behalf of the Foundation.
Article XI Conflict of Interest Section 1. No member shall engage in any action which presents any duality of interest, probability of conflict or appearance of impropriety, hereinafter described as “conflict.” The existence of any such conflict shall be disclosed promptly to the other members of the Board. Such conflict shall be made a matter of record (i) through an annual disclosure, and (ii) when the matter underlying the conflict becomes a potential subject of Board action. The member to whom the conflict applies may elect to abstain from the conflicting Foundation activity. Absent such abstention, the majority vote of the Board shall finally determine that member’s participation in the action at issue.
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Section 2. The Board member to whom the conflict applies shall not vote or use his personal influence on the matter at issue, and shall not be counted in determining the quorum for the meeting, even where permitted by law. The minutes of the meeting shall reflect that a disclosure was made, that the applicable member did not vote, and that the applicable member was not counted toward the determination of a quorum. Section 3. The foregoing requirements shall not be construed as preventing the Board member to whom the conflict applies from briefly stating his position on the matter in question, nor from answering pertinent questions of other Board members since his knowledge may be of great assistance. Section 4. Any new member of the Board will be advised promptly of all conflicts arising under this Article.
Article XII General Provisions Section 1.
The fiscal year of the Corporation shall end on December 31st of each year.
Section 2. All checks, drafts, bills of exchange, notes, or other obligations or order for the payment of money, shall require two signatures, including those of the Chairman and the Treasurer or such other officer of officers or persons as the Board of Directors may designate by resolution, except that the Board of Directors may authorize the Chairman alone to sign such instruments up to an amount specified by an appropriate resolution of the Board of Directors, which amount shall be reviewed at least annually.
Article XIII Dissolution Section 1. Upon dissolution of the Foundation, the Board of Directors shall, after paying and making provision for the payment of all of the liabilities of the Foundation, dispose of all the assets of the Foundation exclusively to the Orleans Parish School Board.
Article XIV Donations, Gifts, Earnings and Revenue or Other Payments Section 1. Any gifts, devises, bequests, donations, subscriptions or other payments made by a person or persons to the Foundation without specific direction as to the use thereof, shall upon acceptance be used for the purposes of the Foundation as determined by the Board of Directors; but any such payments and things of value given to the Foundation with specific directions as to the use thereof, shall upon acceptance be received, held and used by the Foundation in conformity with said directions.
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Section 2. The revenue or other payments, earning and surplus derived from the operation of the Foundation, and from gifts, devises, bequests, donations, appropriations, grants or loans and other sources shall be applied to the costs and expenses of such activities or its facilities, equipment, property or the acquiring of the property. Any surplus remaining after the payment of aforesaid costs and expenses shall be subject to such use and disposal by the Board of Directors as may be consistent with the purpose set forth in the Articles of Incorporation and Bylaws.
Article XV Amendment of Bylaws Section 1. The Bylaws may be amended at any meeting of the Board of Directors at which a quorum is present by the affirmative vote of a majority of the Directors present, provided ten (10) days' advance written notice has been give of the language and purpose of the proposed amendment.
Article XVI Seal Section l. The corporate seal of the Foundation shall be circular in form and shall have inscribed thereon the name of the Foundation, Orleans Schools Facilities Foundation, Inc., the year of its incorporation, and the words, "Corporate Seal, State of Louisiana." Said seal may be used by causing it, or a facsimile thereof, to be impressed, affixed, reproduced, or otherwise properly used.
Article XVII Registered Agent and Office Address Section l. The registered agent of this Foundation for service of process and registered office address of Foundation is: Registered Agent Edward Morris General Counsel, Orleans Parish School Board Office Address 3520 General DeGaulle Drive, Suite 5088 New Orleans, Louisiana 70114
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Article XVIII Indemnification Section l. The Foundation shall not be indemnified and hold harmless each Director and Officer now or hereafter serving the Foundation from and against any and all claims and liabilities to which he may be or become subject by reason of his now or hereafter being or heretofore been a Director or Officer of the Foundation and/or by reason of his alleged acts or omissions as such Director or Officer, whether or not he continues to be such Officer or Director at the time when any such claim or liability is asserted, and shall reimburse each such Director and Officer for all legal and other reasonable expenses incurred by him in connection with defending paid or agreed to be paid reasonable settlements and/or adjudication with the approval of the Board of Directors whether or not he continues to be such Director or Officer at the time such expenses are incurred; provided, however, that the Director or Officer shall not be indemnified against any claim or liability arising out of his own negligence or willful misconduct nor shall be indemnified against or reimbursed for any expenses in defending any and all such claims or liability or in settlement of the same unless in the judgment of the Directors of the Foundation the Director or Officer against whom such claim or liability is asserted has not been guilty of negligence or willful misconduct. The foregoing right of indemnification shall not be exclusive of any other rights to which any Director or Officer may be entitled as a matter of law.
Article XIX The full name and street address of the incorporator is: Edward Morris General Counsel, Orleans Parish School Board 3520 General DeGaulle Drive, Suite 5088 New Orleans, Louisiana 70114
Thus done and signed effective the ______ day of January, 2013.
Edward Morris Incorporator
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ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this _____ day of January, 2013, before me, the undersigned Notary Public, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared, Edward Morris, to me known to be the identical person who executed the above and foregoing instrument, who declared and acknowledged to me, Notary Public, in the presence of the undersigned competent witnesses, that he executed the above and foregoing instrument of his own free will and as his own act and deed, for the uses, purposes and benefits therein expressed. WITNESSES:
Name:
Edward Morris
Name:
NOTARY PUBLIC Name: Louisiana Bar No./Notary Number: My commission expires at death.
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BYLAWS OF WHEATLEY SCHOOL FACILITY FOUNDATION, INC. ADOPTED BY ITS BOARD OF DIRECTORS
[ ], 2013
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BYLAWS OF WHEATLEY SCHOOL FACILITY FOUNDATION, INC.
ARTICLE I PURPOSE The purposes of Wheatley School Facility Foundation, Inc. (the “Foundation”) are as provided in the Foundation’s articles of incorporation, as amended from time to time (the “Articles of Incorporation”). ARTICLE II ACTIVITIES To the extent consistent with the purposes of the Foundation as provided in the Articles of Incorporation, the Foundation has been organized and shall be operated exclusively for charitable, scientific and educational purposes, all as contemplated and permitted by Sections 170(c)(2) and 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), including for such purposes as combating community deterioration and lessening the burden of government by developing and maintaining programs and activities directed as fully provided in the Articles of Incorporation. In managing its programs and activities, the Foundation shall follow a nondiscrimination policy. The Foundation and any other entity operated by the Foundation shall not discriminate on the basis of race, color, national origin or ethnic origin. ARTICLE III OFFICES The Foundation shall have such offices within or without the State of Louisiana as the Board may from time to time determine. Its registered office is as provided in the Articles of Incorporation. ARTICLE IV MEMBERS OF THE FOUNDATION Section 1. Membership. Pursuant to the Articles of Incorporation, the Foundation shall have no capital stock. The voting members shall consist of the directors of the Foundation (the “Directors”), and the membership of the Foundation is as provided by the Articles of Incorporation. Section 2. Meetings of Directors as Voting Members. Meetings of the Directors as voting members shall be held in accordance with and subject to the provisions of Article V of these Bylaws below.
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ARTICLE V THE BOARD OF DIRECTORS Section 1. Duties and Powers of the Board of Directors. The property, funds, affairs and business of the Foundation shall be managed by the Board of Directors (the “Board” and each member a “Director”). The Board shall have and is vested with the full power and authority of the Foundation, except as may be expressly limited by law, the Articles of Incorporation or these Bylaws. The Board shall have the power to do or cause to be done by delegation to committees, officers or others any and all lawful and ethical things for and on behalf of the Foundation. To the extent provided by resolution of the Board, a committee created and designated by the Board shall have and may exercise the powers of the Board in the management of the affairs and business of the Foundation, and may have power to authorize the seal of the Foundation to be affixed to documents. Such committee(s) shall have such names or names as may be determined, from time to time, by the Board. Unless otherwise provided by resolution of the Board or by committee charter adopted by the Board, if any, each committee and its members shall act in accordance with and shall be procedurally governed by these Bylaws; provided, however, that the Board shall by separate resolution determine the composition of each committee in accordance with the Louisiana Nonprofit Corporation Law (La. R.S. 12:224.E(8)) and no committee shall be required to conduct an annual meeting unless so directed by the Board. Section 2.
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Board Action.
(a)
A quorum of the Board shall be established at a meeting only if a majority of the Directors are present in person or by proxy. Pursuant to the Louisiana Nonprofit Corporation Law (La. R.S. 12:228.B), an interested Director may be counted in determining the presence of a quorum at a meeting of the Board at which a transaction or arrangement involving or concerning such interested Director is considered or acted upon. An interested Director is any Director that would be an “interested person” as defined in the Articles of Incorporation.
(b)
Subject to any limitations in the Articles of Incorporation or these Bylaws, the Board may initiate any corporate action deemed to be in the best interest of the Foundation. Each Director is entitled to one vote, in person or by proxy, upon each matter properly submitted to the vote of the Board. The acts of a majority of Directors present in person or by proxy at any meeting at which a quorum is present shall be the acts of the Board, except as otherwise provided in these Bylaws.
(c)
After a quorum has been established at a meeting of the Board, the subsequent withdrawal of Directors from the meeting so as to reduce the number of Directors present at such meeting to fewer than the number required for a quorum shall not affect the validity of any action taken by the Board at the meeting or at any adjournment thereof. A majority of the Directors present, whether or not a quorum exists, may adjourn any
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meeting to another time and place. Notice of the adjourned meeting shall be given to all Directors. Section 3. Resignation. A Director may resign at any time by tendering his or her resignation in writing to the Chairman of the Board of the Foundation. A Director’s resignation shall be effective upon receipt by the Chairman. Section 4. Removal. Any Director appointed may be removed for cause or without cause by a majority vote of the Directors. Section 5. Vacancies. Any vacant position on the Board shall be filled by a majority vote of the remaining Directors, and the Director chosen to fill such vacancy shall hold office for the balance of the vacating Director’s term until the next annual election of Directors and until his successor is duly elected and shall qualify. Section 6. Composition of the Board. The initial Board will consist of those five (5) individuals designated in the Foundation’s Articles of Incorporation filed with the Louisiana Secretary of State. After being elected, each Director shall hold office for two (2) years and until his successor is chosen and has qualified. Each Director shall be elected or re-elected by a majority vote of the Directors as the voting members cast at the annual meeting of the Board. Section 7. Compensation of Directors. Directors may be reimbursed for out-ofpocket expenses incurred on behalf of the Foundation and may receive such reasonable compensation as determined by the Board for services rendered in their capacity as Directors. Section 8. Regular Meetings of the Board. Regular meetings of the Board shall be held at such time and place as a majority of the Directors or the Chairman of the Board of the Foundation may from time to time designate. Section 9. Annual Meeting of the Board As Annual Meeting of the Voting Members. The annual meeting of the Board shall be held on such date as may be designated by the Board. At least ten (10) days and not more than sixty (60) days prior to the date fixed for the holding of the annual meeting, each Director shall be notified of the time and place of the meeting. Section 10. Notices and Mailing. Notice may be given personally or by telephone, mail, email or telefax. Every notice shall be deemed to have been given when the same has been deposited in the United States mail, with postage fully prepaid, addressed to the Director at his or her last address appearing upon the records of the Foundation, hand delivered to the Director at his or her last address appearing upon the records of the Foundation, or dispatched by email or telefax, or other recognized electronic means to the Director at his or her last applicable number or other address appearing upon the records of the Foundation. Section 11. Waiver of Notice. Notice of the time, place and purpose of any meeting of the Board may be waived by email or telefax, or other recognized electronic means, or in writing, by any Director, either before or after such meeting has been held.
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Section 12. Voting and Proxy. Each Director at every meeting shall be entitled to one vote, in person, upon each subject properly submitted to vote. Any Director absent from a meeting of the Board of Directors or a committee thereof may be represented by proxy by any other Director who may cast the vote of the absent Director according to the written instructions general or special, of the absent Director. Section 13. Presence at Meetings. The Board may hold a meeting by means of telephone conference, facsimile, or similar communication equipment provided that all persons participating in the meeting can communicate with each other. Participating in a meeting pursuant to this Section shall constitute presence in person at such meeting except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 14. Action by Unanimous Written Consent. Any action that may be taken at any meeting of the Board may be taken without a meeting if a consent in writing setting forth the action is signed by all of the Directors, whether collectively or severally, and filed with the records of proceedings of the Board. ARTICLE VI OFFICERS Section 1. Officers. Pursuant to the Louisiana Nonprofit corporation Law (La. R.S. 12:225.A(1)), the officers of the Foundation shall consist of a Chairman, a Vice-Chairman, a Secretary, a Treasurer and such other officers as the Board may determine. All officers of the Foundation shall be elected by the Board. The offices of Secretary and Treasurer may be combined in one person; provided, that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required by law to be signed by two officers. Section 2. Terms of Office. Except as otherwise provided in the Articles of Incorporation and herein, each officer shall hold office for the term of two years and until his successor is elected or appointed and qualified, and may serve an unlimited number of consecutive terms. Section 3. Vacancies. Any vacancy occurring in the offices of Chairman, ViceChairman, Secretary or Treasurer shall be filled by the Board for the unexpired term of such office. Section 4. Resignation or Removal of Officers. An officer of the Foundation may resign, effective immediately, at any time by tendering his resignation in writing to the Board. Such resignation shall be effective upon receipt. The Board, by majority vote, may remove any officer at any time, with or without cause, whenever in the judgment of the Board the best interests of the Foundation will be served thereby. Section 5. Chairman. The Chairman shall preside at all meetings of the Board. The Chairman shall be generally responsible for establishing the meeting date of all meetings of the Board and shall, in conjunction with other Directors, establish the agenda for each meeting. The
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Chairman shall be vested with the same powers of and shall be considered the “president” under the Louisiana Nonprofit Corporation Law. Section 6. Vice-Chairman. The Vice-Chairman shall have such duties and responsibilities as shall be delegated to him by these Bylaws and by the Board from time to time. If a Chairman has not been elected or if the Chairman is unable or unwilling to serve as such, the Vice-Chairman shall have all the duties and powers of Chairman. The Vice-Chairman shall be vested with the same powers of and shall be considered the “vice president” under the Louisiana Nonprofit Corporation Law. Section 7. Secretary. The Secretary shall attend all meetings of Board. The Secretary shall keep or cause to be kept all of the non-financial records of the Foundation, shall record the minutes of the meetings of the Board, send out all notices of meetings, attest to the seal of the Foundation where necessary or required, and perform such other duties as may be prescribed by the Board or the Chairman. The Secretary shall also keep or cause to be kept a register of the names and addresses of each Director and of the dates of expiration of their respective terms of office. The Secretary may be assisted in any of these duties by an Assistant Secretary as provided herein. The Secretary shall be vested with the same powers of and shall be considered the “secretary” under the Louisiana Nonprofit Corporation Law. Section 8. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Foundation, and shall report to, and shall perform such duties as may be assigned by, the Chairman or another officer designated by the Chairman. If required by the Chairman, the Treasurer shall give a bond for the faithful discharge of his duties, with such surety or sureties as the Chairman may determine. The Treasurer shall be vested with the same powers of and shall be considered the “treasurer” under the Louisiana Nonprofit Corporation Law. Section 9. Chief Executive Officer. The Board of Directors may appoint a Chief Executive Officer (“CEO”), who shall, subject to the control of the Board of Directors, have overall responsibility for the routine management of the affairs of the Foundation. The CEO shall report to the Board of Directors. The Board of Directors may approve compensation and benefits for the CEO. Duties of the CEO shall include: (a)
coordinating the activities of the committees, if any;
(b)
representing the Foundation in the community;
(c)
overseeing projects of the Foundation;
(d)
supervising the administrative functions of the Foundation; and
(e)
in general, performing such other duties as may be assigned from time to time by the Board of Directors.
Section 10. Other Officers. The Board, upon the recommendation of the senior officers of the Foundation, may appoint one or more Assistant Secretaries, one or more Assistant
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Treasurers, and such other officers having such duties and responsibilities as the Board deems advisable. ARTICLE VII BOOKS AND RECORDS AND TITLE TO PROPERTY Section 1. Location. The Foundation shall maintain at its principal place of business minutes of the proceedings of the Board and the Board committees and a record of the name and address of each Director. Whenever membership on the Board is terminated, this fact shall be recorded in the membership record together with the date on which the membership ceased. Section 2. Form of Records. The books and records listed in Section 1 of this Article may be in written form or in any other form capable of being converted into written form within a reasonable time. Section 3. Inspection of Books and Records. Any Director may examine in person or by agent or attorney, at any reasonable time, the books and records of the Foundation listed in Section 1 of this Article. Section 4. Title to Property. The title to all property of the Foundation shall be vested in the Foundation, or, if expressly authorized by the Board, in a subsidiary or affiliate of the Foundation. A resolution of the Board or an express provision of these Bylaws may authorize the investment or other disposition of trust funds that are subject to the control of the Foundation. ARTICLE VIII EXECUTION OF INSTRUMENTS Section 1. Checks. All checks, drafts and orders for payment of money shall be signed in the name of the Foundation by one officer, and if required by the Board of Directions, shall be countersigned by such officer(s) or agent(s) as the Board shall from time to time designate for that purpose. Section 2. Contracts and Conveyances. The Board shall have the power to designate one or more officers or agents who shall have the power to execute instruments on behalf of the Foundation. When the execution of any conveyance or other instrument has been authorized without specifying the officers or agents authorized to execute the instrument, either of the Chairman and Secretary shall be authorized to do so. ARTICLE IX FISCAL YEAR The fiscal year of the Foundation shall begin on the first day of January and end on the last day of December in each year. ARTICLE X AMENDMENT TO THE BYLAWS
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Amendments to these Bylaws shall be approved as provided in the Articles of Incorporation. ARTICLE XI SEVERABILITY In the event that any court of competent jurisdiction should find or hold any section or sections of these Bylaws null, void or unenforceable for any reason, then that section or sections shall be considered deleted from these Bylaws and the remaining section or sections shall continue in full force and effect. ARTICLE XII CAPITALIZED TERMS Capitalized terms used in these Bylaws and not otherwise defined shall have the meanings given to those terms in the Articles of Incorporation.
ADOPTED THIS [ ] DAY OF [ ], 2013
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GRANT FUNDING AGREEMENT
BY AND BETWEEN
ORLEANS SCHOOLS FACILITIES FOUNDATION, INC.
AND
WHEATLEY SCHOOL FACILITY FOUNDATION, INC.
DATED FEBRUARY, ___, 2013
Wheatley Grant Funding Agreement
GRANT FUNDING AGREEMENT This GRANT FUNDING AGREEMENT (this “Grant Agreement”) effective ______, __, 2013 is made by and between the WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana nonprofit corporation (“Wheatley QALICB”), and the ORLEANS SCHOOLS FACILITIES FOUNDATION, INC., a Louisiana nonprofit public benefit corporation (“Facilities Foundation”) established by the ORLEANS PARISH SCHOOL BOARD (the “School Board”). WITNESSETH WHEREAS, the Wheatley QALICB is a non-profit corporation that will apply for a 501(c)(3) determination under the Internal Revenue Code of 1986, as amended (the “Code”) and is formed and authorized to do business in the State of Louisiana (the “State”) for the primary purpose of facilitating the funding and construction and renovation of public school facilities at campuses in Orleans Parish; WHEREAS, the Facilities Foundation is a public benefit corporation of the School Board organized under the provisions of the Public School Facilities Financing Act contained in La. R.S. 17:100.10 (the “PSFFA”) and is authorized to do business in the State of Louisiana; WHEREAS, the School Board and the Recovery School District, a instrumentality of the State of Louisiana (“RSD”) administered by the Department of Education, subject to the approval of the State Board of Secondary Education (“BESE”) entered into a Cooperative Endeavor “Leveraged Financing CEA”) in order
pubic body and Louisiana State Elementary and Agreement (the
(i) to provide for the transfer of the Phillis S. Wheatley School (the “Wheatley School”) by the School Board and RSD initially to the Facilities Foundation pursuant to a Master Lease (the “Master Lease”) by and among the School Board, RSD and the Facilities Foundation, (ii) to provide in the Master Lease that the Facilities Foundation shall transfer the Wheatley School to the Wheatley QALICB through the execution of a Ground Lease (the “Ground Lease”) by and between the Facilities Foundation and the Wheatley QALICB and to further provide in the Ground Lease that the Wheatley QALICB obtain financing to complete the construction of the Wheatley School, (iii) to provide for the capitalization of the Facilities Foundation by the School Board in order to implement the Leveraged Financing of the Wheatley School through the Wheatley QALICB, WHEREAS, the Wheatley QALICB will construct the Wheatley School pursuant to a Development Agreement between RSD and the Wheatley QALICB and a fixed price construction contract between the RSD and Gibbs Construction, LLC dated _________, 2012 (the “Wheatley Construction Contract”);
Wheatley Grant Funding Agreement 2
WHEREAS, pursuant to the terms and conditions set forth in the Leveraged Financing CEA, the Facilities Foundation will grant [$16,222,538] (“Grant Funds”) to the Wheatley QALICB on behalf of the School Board solely to pay a portion of the construction costs of the Wheatley Construction Contract; NOW, THEREFORE, in consideration of the mutual benefits hereby conferred, the receipt and sufficiency of which are hereby acknowledged, the Wheatley QALICB and the Facilities Foundation hereby covenant and agree with each other as follows: ARTICLE I GRANT PAYMENT OBLIGATION Section 1.1 Grant. Subject to the Construction Monitoring and Disbursement Agreement made as of February __, 2013 attached hereto as Exhibit A (the Disbursement Agreement”), by and among the Facilities Foundation as leveraged lender (the “Leveraged Lender”), the Wheatley QALICB, GSNMF Sub-CDE 9 LLC, a Delaware limited liability company, having an office at c/o GS New Markets Fund, LLC, 200 West Street, New York, New York 10282 (“GS Sub-CDE”), MBS-UI SUB-CDE XXIV, LLC, a Missouri limited liability company, having an office at c/o MBS Urban Initiatives CDE, LLC, 720 Olive Street, Suite 2500, St. Louis, Missouri 63101 (“MBS Sub-CDE” and, collectively with the Leveraged Lender and the GS Sub-CDE, “Lender”), and Goldman Sachs Bank USA (“Disbursement Agent”), the Facilities Foundation hereby agrees to grant, pledge and donate [$16,222,538] to the Wheatley QALICB on behalf of the School Board in two tranches: $______ on the effective date of this Grant Agreement and $________ on June 30, 2013. The Grant Funds will be held and disbursed on behalf of the Wheatley QALICB in accordance with the Disbursement Agreement. Section 1.2 Nature of Obligation. The Facilities Foundation payment obligation shall be a continuing, absolute and unconditional obligation legally binding upon the Facilities Foundation and shall remain in full force and effect until the sum of [$16,222,538] has been paid in full. Section 1.3 Acknowledgement. The Facilities Foundation hereby acknowledges that the Grant Funds shall be used solely to finance the construction of the Wheatley School in accordance with the Wheatley Construction Contract. The Facilities Foundation acknowledges that the terms and conditions set forth in the Leveraged Financing CEA shall govern the funding and use of the Grant Funds and the obligations of the School Board to make such Grant Funds available for the Wheatley School through the Facilities Foundation. ARTICLE II WHEATLEY QALICB OBLIGATIONS Section 2.1 Funding. The Wheatley QALICB hereby agrees to (a) use the Grant Funds only for construction of the Wheatley School, and (b) if necessary, to use its best efforts to secure additional financing as may be necessary to complete the Wheatley School in accordance with the Construction Contract and the Development Agreement.
Wheatley Grant Funding Agreement 3
ARTICLE III TERM Section 3.1 Term. This Grant Agreement shall commence on the date it is executed by both the appropriate representatives of the parties hereto and shall continue until the payment in full of all of the payments required to be paid by the Facilities Foundation under the terms of this Agreement. ARTICLE IV DEFAULTS AND REMEDIES Section 4.1 Defaults and Remedies. Should either party hereto materially breach this Agreement, the remedy available therefor shall be any remedy available at law or equity under the laws of the State of Louisiana. ARTICLE V ADDITIONAL PROVISIONS Section 5.1 Entire Agreement. This Agreement and the exhibits hereto shall constitute the entire understanding between the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and preliminary agreements. There is no representation or warranty of any kind made in connection with the transactions contemplated hereby that is not expressly contained in this Agreement. Section 5.2 Notices and Requests. All notices, requests, demands and other communications shall be in writing and shall be deemed to be duly given when delivered by a national overnight courier service to the respective official or person named below or four business days after mailing by registered or certified mail, postage prepaid, return receipt requested: If to the Wheatley QALICB:
Wheatley School Facility Foundation, Inc. 1615 Poydras Street, Suite 1400 New Orleans, LA 70112 Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Attention: Amanda Wells
If to the Facilities Foundation:
Edward Morris General Counsel Orleans Parish School Board
Section 5.3 Disputes. In the event of an unresolved dispute hereunder, the parties shall select a disinterested third party to resolve such dispute. Wheatley Grant Funding Agreement 4
Section 5.4 Severability. If any terms or provisions of this Agreement, or the application thereof to any circumstance, shall be invalid or unenforceable, the remainder of this Agreement or the application, term, provision or application to circumstances which is not held invalid or unenforceable shall not be affected thereby and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Section 5.5 Additional Instruments. The parties hereto agree that when called on to do so, each of them will execute such other instruments in writing or do such other things that are required in order to give full effect to the covenants and conditions required of them under this Agreement. Section 5.6 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Louisiana. Section 5.7 Amendments, Supplements and Modifications. This Agreement may not be amended, supplemented or modified, except in writing and executed by the parties hereto. Section 5.8 Captions. The captions or headings in this Agreement are for convenience only and do not define or limit the scope or extent of this Agreement. Section 5.9 Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Wheatley Grant Funding Agreement 5
IN WITNESS WHEREOF, the parties hereto have signed this Grant Funding Agreement effective of the ______ day of _____________, 2013. Witness: ORLEANS SCHOOLS FACILITIES FOUNDATION, INC. By: Print Name:
Print Name: WHEATLEY SCHOOL FACILITY FOUNDATION, INC. By: Print Name: Print Name:
Wheatley Grant Funding Agreement Signature Page
_________________________________
GROUND LEASE _________________________________
between
ORLEANS SCHOOLS FACILITIES FOUNDATION, INC. as Master Lessee and WHEATLEY SCHOOL FACILITY FOUNDATION, INC. As Sub-Lessee
Dated as of February ___, 2013
Wheatley Ground Lease - PBC to QALICB
TABLE OF CONTENTS RECITALS .................................................................................................................................................. 1 AGREEMENT ............................................................................................................................................ 2 SECTION 1. DEFINITIONS. ................................................................................................................... 3 SECTION 2. SUB-LEASE TERM ......................................................................................................... 10 SECTION 3. INITIAL GROUND LEASE PAYMENT AND ADDITIONAL RENT PAYMENTS10 SECTION 4. FINANCING OF THE WHEATLEY SCHOOL FACILITY....................................... 10 SECTION 5. TAXES AND ASSESSMENTS ........................................................................................ 10 SECTION 6. UTILITY SERVICES ....................................................................................................... 11 SECTION 7. PAYMENTS FOR THE MASTER LESSEE. ................................................................ 11 SECTION 8. INTEREST ON UNPAID AMOUNTS............................................................................ 11 SECTION 9. COMPLIANCE BY THE LESSEE WITH LAWS AND ORDINANCES .................. 12 SECTION 10. QUIET ENJOYMENT ................................................................................................... 12 SECTION 11. CONSTRUCTION OF IMPROVEMENTS ................................................................. 12 SECTION 12. OPERATION OF THE WHEATLEY SCHOOL FACILITY ................................... 15 SECTION 13. LESSOR’S OBLIGATIONS .......................................................................................... 15 SECTION 14. MANAGEMENT ............................................................................................................ 16 SECTION 15. ASSIGNMENT OF LEASE ........................................................................................... 16 SECTION 16. ANNUAL BUDGET FOR WHEATLEY SCHOOL FACILITY ............................... 17 SECTION 17. INDEMNIFICATION .................................................................................................... 17 SECTION 18. INSURANCE ................................................................................................................... 17 SECTION 19. DAMAGE AND DESTRUCTION ................................................................................ 19 SECTION 20. CONDEMNATION ........................................................................................................ 23 SECTION 21 ESTOPPEL CERTIFICATES ........................................................................................ 22 SECTION 22. ACCESS TO WHEATLEY SCHOOL FACILITY ..................................................... 22 SECTION 23. EVENTS OF DEFAULT AND REMEDIES ................................................................ 22 SECTION 24. EXPIRATION OR TERMINATION............................................................................ 25 SECTION 25. LEASEHOLD MORTGAGES AND MORTGAGES ................................................. 26 SECTION 26. ENVIRONMENTAL CONDITION OF THE PROPERTY ....................................... 29 SECTION 27. NOTICES......................................................................................................................... 29 SECTION 28. SUBMISSION OF MATTERS TO THE LESSOR FOR APPROVAL ..................... 31 SECTION 29. HOLDING OVER BY THE LESSEE ........................................................................... 31 SECTION 30. REPRESENTATIONS AND WARRANTIES ............................................................. 31 SECTION 31. MISCELLANEOUS........................................................................................................ 34
Wheatley Ground Lease - PBC to QALICB
Ground Lease This Ground Lease (this “Ground Lease ”), made and entered into as of the ___ day of February, 2013 (the “Effective Date”), is by and between the ORLEANS SCHOOLS FACILITIES FOUNDATION, INC., a Louisiana nonprofit and public benefit corporation of the School Board (referred to hereinafter as the “Master Lessee”) and the WHEATLEY SCHOOL FACILITY FOUNDATION, INC. (referred to hereinafter as “Sub-Lessee” or “Wheatley QALICB”) (Master Lessee and Sub-Lessee are each referred to herein singularly as a “Party”, and Master Lessee and Sub-Lessee are referred to hereinafter collectively as the “Parties”). Recitals: WHEREAS, the Orleans Parish School Board (“School Board”) is the record title owner of that approximately 2.2063 acre parcel of property located in the City of New Orleans, Parish of Orleans, with a municipal address of 2300 Dumaine Street, New Orleans, Louisiana 70119, as more particularly described in Exhibit “A” attached hereto and incorporated herein by reference (“Property”); WHEREAS, pursuant to Louisiana Revised Statute §17:10.7, the State of Louisiana Department of Education, Recovery School District, a pubic body and instrumentality of the State of Louisiana (“RSD”, together with the School Board, the “Lessor”)) was given certain control over the operations and management of certain schools in Orleans Parish, including the authority to determine which schools under its jurisdiction should be rebuilt; WHEREAS, the Phillis S. Wheatley School (the “Wheatley School”), formerly located on the Property, was determined by the Board of Elementary and Secondary Education (“BESE”) to be an academically failing school and was transferred to the jurisdiction of the RSD as mandated by Louisiana Revised Statute § 17:10.7; WHEREAS, pursuant to Louisiana Revised Statute § 1900B.(4)(b), the RSD acquires with the transfer of schools transferred to its jurisdiction pursuant to Louisiana Revised Statute § 17:10.7 all the rights and responsibility of ownership regarding all land, buildings, facilities, and other property that is part of the school being transferred, including the right to lease the land, rebuild school buildings, and to dispose of property other than the land as is necessary to properly manage the operation of the schools, but is prohibited from disposing of land through sale, the title to the land remaining vested in the School Board; WHEREAS, the RSD has made the determination that new school facilities should be built on the Property (the “Wheatley School Facility”) and that the Wheatley School should be operated by a charter school operator (a “Charter School Operator”) licensed either by the RSD or by the School Board; WHEREAS, the RSD and the School Board have entered into a Cooperative Endeavor Agreement setting forth the terms and conditions of rebuilding the Wheatley School Facility on the Property (“CEA”), which CEA provides for the transfer of the Wheatley School initially to the Master Lessee as a wholly owned public benefit corporation of the School Board and to provide that the Master Lessee shall transfer the Wheatley School to the Sub-Lessee; WHEREAS, on February _________, 2013 (the “Master Lease Effective Date”), the Lessor and the Master Lessee have entered into a Master Lease (the “Master Lease”) in compliance with the provisions of the Public School Facilities Financing Act (Louisiana Revised Statutes 17:100.10) (“Financing Act”) in order to transfer the Wheatley School initially to the Master Lessee and to authorize Wheatley Ground Leaase – PBC to QALICB
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and direct the Master Lessee to ground lease the Property to the Wheatley QALICB in order for the Wheatley QALICB to arrange equity and debt financing to develop, construct, furnish, equip and operate the Wheatley School Facility on the Property; WHEREAS, the Master Lessee and the Sub-Lessee desire to enter into this Ground Lease to set forth the terms and conditions for the Sub-Lessee to develop and construct an approximately 95,881 square foot elementary school to be called the “Phillis Wheatley Elementary School” in accordance with the Construction Documents (herein defined) on the Property along with associated site development and various related amenities and improvements, including structured and surface parking facilities and a community/amenity center; WHEREAS, to facilitate the operation of the Wheatley School, Sub-Lessee has also agreed to enter into a facilities lease (“Facilities Lease”) with an approved Charter School Operator pursuant to the terms and conditions set forth herein; WHEREAS, the Master Lessee and Sub-Lessee desire that the Wheatley School Facility be developed, constructed and operated primarily for the use and benefit of students, faculty and staff of the Orleans Parish School System and other members of the community attending camps, conferences, events or activities sponsored by the Lessor or the Wheatley School; and WHEREAS, Sub-Lessee will, subject to the terms and conditions hereof, arrange equity and debt financing for the purpose of financing the costs of ground leasing the Property pursuant to this Ground Lease, and will develop, construct, furnish, equip and operate the Wheatley School Facility on the Property. Agreement: NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein set forth by each Party to be kept and performed, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby expressly acknowledged by each Party hereto, the Master Lessee and the Sub-Lessee, intending to be legally bound, do hereby mutually covenant and agree as follows: The Master Lessee and the Sub-Lessee acknowledge the terms of the Master Lease requiring the execution of this Ground Lease by the Master Lessee and the Sub-Lessee. The Master Lessee does hereby sub-lease, demise and let the Property unto the Sub-Lessee, subject only to the “Permitted Encumbrances” (as defined herein), and the Sub-Lessee does hereby take and hire the Property from the Lessee, subject only to the Permitted Encumbrances and the obligations of the SubLessee hereunder TOGETHER WITH all appurtenances, rights, privileges, and easements benefiting, belonging, or pertaining thereto, and together with the buildings, structures, and improvements erected or to be erected thereon. TO HAVE AND TO HOLD the Property for a term of years set forth herein unless this Ground Lease shall be sooner terminated as hereinafter provided. This Ground Lease and all rights of the Parties hereunder are expressly subject to the provisions as hereinafter set forth, all of which the Parties hereto respectively agree to keep, abide by, and perform during the Term (as defined herein) hereof.
Wheatley Ground Leaase – PBC to QALICB
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Section 1. Definitions. The following terms as used in this Ground Lease shall have the meanings set forth below, unless the context indicates otherwise: “Accountants” means Novogradac and Co. or such other firm or independent certified public accountants retained by Sub-Lessee. “Additional Rent Payment” shall have the meaning given in Section 3(b) hereof. “Administrative Expenditures” means the types and categories of administrative fees and expenses of the Leasehold Mortgagee (in all of its/their capacities under the Financing Documents) and of the Sub-Lessee relating to the Wheatley School Facility and allowed as Expenses hereunder, and specifically includes any expenses incurred by the Sub-Lessee in order to preserve and protect the Property. “Annual Budget” means the line-item operating and capital budget for the Wheatley School Facility for each Annual Period prepared by the Sub-Lessee. “Annual Period” means, during the Sub-Lease Term, the twelve (12) month period commencing on August 1 of each calendar year and ending on July 31 of the immediately succeeding calendar year. “Architect” means Holly & Smith Architects, APAC, the licensed architect selected by the SubLessee or the Developer to perform architectural services with respect to the Wheatley School Facility, and its (their) successors and assigns. “Architect's Agreement” means the Contract Between Owner and Designer dated November 20, 2009, entered into between the Developer and the Architect pursuant to which the Architect agrees to provide certain architectural services in connection with the Design and Construction of the Wheatley School Facility or any portion thereof, and any amendments thereof and/or supplements thereto. “Authorized Master Lessee Representative” means [_______________________]. “Authorized Sub-Lessee Representative” means [_______________________].
“Bankruptcy” or “Bankrupt” means for any Person (a) that such Person (i) applies for or consents to the appointment of a receiver or trustee, or the liquidation of such Person or of all or a substantial portion of its assets, (ii) files a voluntary petition in bankruptcy or admits in writing its inability to pay its debts as the same become due, (iii) makes an assignment for the benefit of its creditors, (iv) files a petition or an answer seeking a reorganization or an arrangement with its creditors or seeks to take advantage of any insolvency law; or (b) performs any other act of bankruptcy, or (c) files an answer admitting the material allegations of a petition filed against such Person in any bankruptcy, reorganization or insolvency proceedings; or (d) that an order, judgment or decree is entered by any court having jurisdiction adjudicating such Person as bankrupt or insolvent, approving a petition seeking such a reorganization, or appointing a receiver, trustee or liquidator of such Person or all or a substantial part of its assets and such order, judgment or decree is not stayed or dismissed within sixty (60) days from the entry thereof; or (e) that there is otherwise commenced with respect to such Person, or any of its assets, any proceeding under bankruptcy, reorganization, arrangement, insolvency, readjustment, receivership, or similar legal requirements, and such proceeding is not discharged, stayed or dismissed within sixty (60) days from the entry thereof.
Wheatley Ground Leaase – PBC to QALICB
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“Charter School Operator” means initially, First Line Schools, Inc., a Louisiana non-profit corporation, and thereafter, any other Charter School Operator engaged by the Sub-Lessee to manage the Wheatley School Facility. “Completion”, “Complete” or “Completed” means, in connection with the Construction of the Wheatley School Facility, that the Wheatley School Facility is determined under this Ground Lease to be Substantially Complete. “Construct”, “Constructed” or “Construction” means to develop, improve, install, construct, demolish, renew, restore or perform any other work of similar nature in connection with locating, placing and installing the improvements, equipment or furnishings, comprising the Wheatley School Facility. “Construction Contract” means the Holly & Smith Architects, APAC, the licensed architect selected by the Sub-Lessee or the Developer to perform architectural services with respect to the Wheatley School Facility, and its (their) successors and assigns. “Construction Documents” means, collectively, the Development Agreement, the Construction Contract, the Architect's Agreement, the Engineer’s Agreement, the Plans and Specifications and any and all contracts entered into by the Sub-Lessee, Developer or Contractor for engagement of contractors, materialmen, and laborers from time to time in connection with the Construction of the Wheatley School Facility or the provision of materials or labor in respect thereto, and all those other contracts and/or agreements from any person or firm rendering services or supplying material in connection with the Design, Development, Construction, furnishing and equipping of the Wheatley School Facility. “Contractor” means Gibbs Construction LLC, a Louisiana limited liability company, which is a contractor licensed to do business in the State of Louisiana and selected by the Developer to perform Construction services for the School Facility, and its successors and assigns, or any other Person who has undertaken responsibility for all or any portion of the Construction of the School Facility, and its successors and assigns. “Debt Financing” means the initial construction debt financing arranged by the Sub-Lessee with a Lender to finance the Design, Construction, furnishing and equipping of the Wheatley School Facility pursuant to the Financing Documents. “Design” means any and all design, planning, architectural or engineering activity required in connection with and for the Construction of the Wheatley School Facility. “Developer Representative” means the Person or Persons designated by the Developer from time to time to serve as the Developer's representative(s) in connection with the Design, Development, Construction, furnishing and equipping the Wheatley School Facility. “Developer” means the State of Louisiana Department of Education, Recovery School District, a public body and instrumentality of the State of Louisiana, and its successors and assigns. “Development” or “Develop” means any acts necessary and appropriate to (a) obtain any required land use, environmental or like approvals for the Construction and use of the Wheatley School Facility from the Person having jurisdiction other than those being obtained by the Lessor, (b) obtain any required extension of public and private utility services for the Wheatley School Facility other than those being obtained or provided by the Lessor, (c) obtain any required vehicular or pedestrian rights of way and access from or to the Wheatley School Facility other than those being obtained or provided by the Lessor, (d) satisfy the legal requirements and insurance requirements in connection with the Design or Wheatley Ground Leaase – PBC to QALICB
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Construction of the Wheatley School Facility, (e) create and develop a Wheatley School Facility Development and Construction Schedule, (f) coordinate and oversee the Design process, (g) arrange Wheatley School Facility financing, (h) oversee the Construction of the Wheatley School Facility and (i) oversee the transition of the Wheatley School Facility from Development and Construction to operations. “Development Agreement” means the Development Agreement between the Sub-Lessee and the Developer pertaining to the development of the Wheatley School Facility, and any amendments thereof and/or supplements thereto. “Effective Date” shall have the meaning given in the introductory paragraph of this Ground Lease. “Engineer” means the engineer or engineers licensed to business in the State of Louisiana selected by the Sub-Lessee or Developer to perform engineering services with respect to the Wheatley School Facility, and its (their) successors and assigns. “Engineer's Agreement” means the agreement between Sub-Lessee (or, if applicable, the Developer) and Engineer pursuant to which the Engineer agrees to provide certain engineering services in connection with the Design and Construction of the Wheatley School Facility, related Wheatley School Facility improvements or any portion thereof, and any amendments thereof and/or supplements thereto.] “Environmental Laws” means any federal, state or local statute, law, ordinance, code, common law, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning the protection of the environment, natural resources, health and safety, and/or activities involving any asbestos, asbestos-containing materials, materials presumed by law to contain asbestos, PCBs, petroleum, petroleum byproduct (including but not limited to, crude oil, diesel oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed with other waste, oil sludge, and all other liquid hydrocarbons, regardless of specific gravity), natural or synthetic gas products, radioactive materials, infectious waste, and/or hazardous or toxic substances, chemicals or materials, or any other waste, material, pollutant or contaminant that is regulated to protect the environment, as may now or at any time hereafter be in effect, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act “”CERCLA”, the Resource Conservation and Recovery Act (“RCA”), the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-To-Know Act, and the Occupational Safety and Health Act. “Event of Default” means each of the events specified in Section 23 hereof. “Expenses” for any period, means the aggregate of all expenses relating to the Wheatley School Facility calculated under GAAP, including (i) necessary expenses incurred by the Developer or SubLessee in connection with the inspection thereof, (ii) enforcement of the obligations of other parties to documents executed in connection with the Development, Design, financing, Construction, equipping, furnishing or operation of the Wheatley School Facility, and (iii) the performance of any other obligations of the Developer or Sub-Lessee under this Ground Lease or the Financing Documents, but excluding (a) any extraordinary expenses (including without limitation losses on the sale of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans), (b) losses resulting from any reappraisal, revaluation, or write-down of assets, (c) any expenses paid with proceeds of the Debt Financing and/or Additional Financing, (iv) payments made to the Master Lessee under this Ground Lease, (v) any unrealized loss resulting from changes in the value of investment securities, (vi) any Administrative Expenditures, (vii) any Operating Expenses and (viii) any expenses borne by the Master Lessee under the terms of, or contemplated in, this Ground Lease. Expenses incurred that involve the provision of goods or services by Persons who are affiliates of the Sub-Lessee may be Wheatley Ground Leaase – PBC to QALICB
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included within the definition of "Expenses" only to the extent they are incurred on terms no more favorable to the affiliate of Sub-Lessee than if the goods or services were provided by Persons who are not affiliates of Sub-Lessee. “Facilities Lease” means (i) the sublease of the Wheatley School Facility to be entered into between the Sub-Lessee and the Charter School Operator, as the same may be amended and/or supplemented from time to time, and (ii) any sublease or similar agreement between the Sub-Lessee and any successor Charter School Operator engaged by the Sub-Lessee pursuant to the provisions of this Ground Lease to operate the Wheatley School Facility. “Facilities Lease Commencement Date” means the date on which the Wheatley School Facility is fully constructed and operational and the Charter School Charter School Operator commences operations. “Financial Closing” means the settlement and funding of the initial Debt Financing for the Wheatley School Facility. “Financing Documents” means, collectively, any loan agreement, the Leasehold Mortgage, security agreement, assignment of agreements and/or documents, and all other instruments or agreements executed by the Lender and the Sub-Lessee in connection with the issuance and delivery of the Debt Financing (each, a “Financing Document"). “GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board and its predecessors or pronouncements of the American Institute of Certified Public Accountants or those principles of accounting that have other substantial authoritative support and are applicable in the circumstances as of the date of application, as such principles are from time to time supplemented and amended. “Gross Revenues” means, all rents, receipts, revenues, income, gifts, rental payments, forfeited security deposits and other moneys received by or on behalf of the Sub-Lessee, whether or not in connection with the ownership, operation or disposition of any of the Wheatley School Facility or any part thereof, including all rents received under Tenant Lease Agreements, and all other operating and nonoperating revenues of the Sub-Lessee and all rights to receive the same whether in the form of cash, lease rights, accounts receivable, contract rights, chattel paper, instruments, general intangibles or other rights and the proceeds thereof and of any insurance thereon or condemnation or similar awards, or any gain on the sale or other disposition of property, whether now existing or hereafter coming into existence and whether now owned or held or hereafter acquired by the Sub-Lessee and all amounts received or receivable from the investment or deposit of moneys in any fund, but excluding any monies or funds held as security deposits or otherwise to secure performance of any obligation by any Person. “Ground Lease” means this Ground Lease, as the same may be amended and/or supplemented from time to time in accordance with the provisions hereof. “Ground Lease Payment” shall have the meaning given in Section 3(a) hereof. “Hazardous Materials” means asbestos, asbestos-containing materials, materials presumed by law to contain asbestos, polychlorinated biphenyls (“PCBs”), petroleum, petroleum byproducts (including but not limited to, crude oil, diesel, oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed with other waste, oil sludge, and all other liquid hydrocarbons, regardless of specific gravity), natural or synthetic gas products, infectious wastes, radioactive materials, and/or any hazardous or toxic substance, chemical
Wheatley Ground Leaase – PBC to QALICB
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or material, or any other environmentally regulated substance or material, waste, pollutant or contaminant, defined as such or regulated by any Environmental Laws.
“Lease” shall have the meaning given in Section 2. “Leasehold Mortgage” means the mortgage or mortgages, and any other encumbrance of the Sub-Lessee’s interest in this Ground Lease or the Premises provided by the Sub-Lessee to the Lender as security for the Debt Financing and/or Additional Financing, or any obligations to the Lender under the Financing Documents, as the same may be amended and/or supplemented from time to time, and any other encumbrance of the Sub-Lessee’s interest in this Ground Lease as security for the indebtedness the Sub-Lessee may incur, whether by deed to secure the debt, mortgage, deed of trust or other security instrument. “Leasehold Mortgagee” means the holder of the indebtedness secured by any Leasehold Mortgage or any agent or fiduciary therefor and any designee therefor for the purpose of taking title to the Sub-Lessee’s interest in this Ground Lease or the Premises. “Lender” means the lender or lenders, not affiliated with Sub-Lessee, providing the Debt Financing to the Sub-Lessee on arms-length, commercially available terms and conditions. “Lessor” means collectively the Orleans Parish School Board, a political subdivision of the State of Louisiana, and the Recovery School District, a public body and instrumentality of the State of Louisiana, and each of their successors and assigns. “Lessor Representative” means the Person or Persons designated by the Lessor to serve as the Lessor's representatives hereunder. “Memorandum of Ground Lease” means the agreement of even date herewith executed by the Parties which sets forth certain of the basic terms of this Ground Lease, and is in recordable form. “Master Lease” means that certain Master Lease dated the Effective date between the Lessor and the Master Lessee pursuant to which the Lessor conveyed a leasehold interest in the Premises to the Master Lessee. “Master Lessee” means the Orleans Schools Facilities Foundation, Inc., a wholly owned Louisiana nonprofit public benefit corporation of the School Board, and its successors and assigns. “Master Lessee Bylaws” shall mean the bylaws of Master Lessee, as amended or amended and restated from time-to-time. “Notice of Commencement” shall have the meaning given in Section 11(j) hereof. “Notice of Termination” means notice to be given by the Master Lessee to any permitted Leasehold Mortgagee upon an Event of Default hereunder. “Operating Expenses” means (a) all expenses actually paid by the Sub-Lessee or the Charter School Operator for operation, maintenance and repair of the Wheatley School Facility and any expenses incurred by or for the Sub-Lessee or the Charter School Operator to preserve and protect the Wheatley School Facility and Property; (b) all reasonable costs and expenses, including reasonable attorney’s fees, Wheatley Ground Leaase – PBC to QALICB
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paid by or for the Lessee in connection with the enforcement by the Sub-Lessee of this Ground Lease, the Facilities Lease, the Construction Documents and/or any other contractual arrangements to which the Sub-Lessee or Charter School Operator may be a party; (d) all Administrative Expenditures; and (e) all expenses otherwise identified as an Operating Expense in this Ground Lease. “Permitted Encumbrances” means, as of any particular time, (i) liens for ad valorem taxes, special assessments, and other charges not then delinquent or for taxes, assessments, and other charges being contested in accordance with the terms of this Ground Lease, (ii) the Financing Documents, (iii) currently existing utility, access, and other easements and rights of way, restrictions, liens or other encumbrances of record, and exceptions consented to in writing by the Master Lessee, (iv) inchoate mechanics' and materialmen's liens that arise by operation of law, but that have not been perfected by the required filing of record, for work done or materials delivered after the date of recording this Ground Lease, (v) any mechanics' and materialmen's liens permitted by the Financing Documents, (vi) liens or encumbrances securing the Debt Financing and/or any Additional Financing, (vii) this Ground Lease, (viii) statutory restrictions imposed on the use of real property owned by or for the benefit of the Lessor, and (ix) any additional exceptions or encumbrances created or consented to by the mutual consent of Master Lessee and Sub-Lessee. “Person” means natural persons, firms, joint ventures, associations, trusts, partnerships, corporations, limited liability companies, public bodies, and similar entities. “Personalty” means all machinery, equipment, fixtures, appliances, furniture, and any other personal property of any kind or description owned by the Sub-Lessee and used in connection with the Wheatley School Facility. “Plans and Specifications” means the plans and specifications for the Construction of the Wheatley School Facility identifying and describing the primary structural, mechanical, electrical, and plumbing systems, materials, signage and design prepared by the Architect or by architects and engineers acceptable to the Architect. “Premises” means collectively the Wheatley School Facility and the Property. “Prime Rate” means the rate designated as the “prime rate” as published each business day in the Wall Street Journal. “Property” shall have the meaning given in the recitals of this Ground Lease. “Rent” means the Ground Lease Payment payable under this Ground Lease, as defined and described in Section 3 hereof. “State” means the State of Louisiana. “Sub-Lease” shall have the meaning given in Section 2. “Sub-Term” shall have the meaning given in Section 2. “Sub-Lessee” means the Wheatley School Facility Foundation, Inc., a Louisiana nonprofit corporation and its successors and assigns. “Sub-Lessee Bylaws” shall mean the bylaws of Sub-Lessee, as amended or amended and restated from time-to-time. Wheatley Ground Leaase – PBC to QALICB
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“Substantial Completion” or “Substantially Complete” shall mean certificates of occupancy (either temporary or permanent) have been issued with respect to all portions of the Wheatley School Facility, all applicable life safety systems shall be operational and have been approved by the appropriate permitting authorities, and the portions of the Wheatley School Facility necessary to conduct the operation of the school shall otherwise be ready for immediate occupancy and use; provided however, the failure of various aspects of the Construction of the Wheatley School Facility to be complete, which shall not prohibit immediate use of the Wheatley School Facility for school purposes (including, without limitation, punch list items, landscaping and the like), shall not be required in order for Wheatley School Facility to be Substantially Complete. “Termination Date” means the date on which the Sub-Lease Term ends by termination or expiration of this Ground Lease. “Wheatley School Facility” means (i) the approximately 95,881 square foot elementary school and related facilities that will be Designed, Developed, Constructed, furnished and equipped on the Property with the proceeds of the Debt Financing, (ii) the leasehold interest in the Property on which the same will be located, and (iii) any Personalty that is or will be located therein or thereon or used in connection therewith.
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Section 2.
Sub-Lease Term.
(a) The term of the sub-leasehold estate (the “Sub-Lease”) of the Sub-Lessee in the Property created hereunder shall begin on the Effective Date, and shall expire at 12:00 midnight on the [forty-fifth (45th)] annual anniversary of the Effective Date, unless otherwise extended by a written agreement of the Parties or sooner expired or terminated in accordance with this Ground Lease or by operation of law (the “Sub-Lease Term”). (b) The Master Lessee and the Sub-Lessee, within thirty (30) days after request of the other, shall confirm the then current Termination Date in writing, and if so requested, by an instrument in recordable form. Section 3. Ground Lease Payment. Sub-Lessee shall pay to Lessee on the Effective Date and each anniversary of the Effective Date throughout the Sub-Lease Term the sum of ______________________ Dollars ($_______________) (the “Ground Lease Payment”). Section 4.
Financing of the Wheatley School Facility.
(a) Debt Financing. Upon the Sub-Lessee obtaining the Debt Financing required for the Design, Development, Construction, furnishing, equipping, and operation of the Wheatley School Facility, as a courtesy but not for the purpose of seeking any approval thereof, the Sub-Lessee agrees to provide the Lessor and the Master Lessee with copies of the Financing Documents. The Parties acknowledge and agree that, as contemplated in Sections 11 and 25 hereof, and in connection with the Debt Financing, SubLessee shall be required to execute and deliver to the Lender the Leasehold Mortgage. However, neither Lessor nor Master Lessee shall be an obligor with respect to any Debt Financing and, pursuant to the terms of the Debt Financing, Sub-Lessee shall pay off the Debt Financing over the Sub-Lease Term. (b) Additional Financing. Sub-Lessee may, subject to the terms of the Financing Documents, at any time during the Sub-Lease Term subsequent to the Financial Closing of the Debt Financing, incur additional financing provided that (i) such additional financing is reasonably necessary to maintain the quality and/or competitiveness of the Wheatley School Facility in the marketplace (as demonstrated by Sub-Lessee to the Master Lessee prior to incurring the additional financing) and (ii) the additional financing is retired and repaid in its entirety by Sub-Lessee prior to the expiration of the Sub-Lease Term under the terms of the Financing Documents. Section 5.
Taxes and Assessments.
(a) The Master Lessee and the Sub-Lessee intend to pursue a determination by the appropriate local or state authorities that the Wheatley School Facility will be immune or exempt from ad valorem property taxes. The Master Lessee and the Sub-Lessee will work together cooperatively and in good faith in pursuing the immunity or exemption, and also to reduce and/or eliminate any governmental assessments or charges regarding the Wheatley School Facility or the Property which would not be payable by the Master Lessee or Sub-Lessee if this Ground Lease were not in effect or which would not be payable relative to other similar school facilities owned or operated by Master Lessee. In the event that additional ad valorem taxes or assessments or rental sales taxes with respect to the Wheatley School Facility are levied (or levy is attempted) in the future, the Sub-Lessee and the Master Lessee shall cooperate in good faith to defend, as an Operating Expense, such immunity or exemption from the levy of taxes or assessments. In the event that, despite the Sub- Lessee’s and the Master Lessee’s cooperation in good faith to defend against the levy of ad valorem taxes or assessments, ad valorem or assessments are levied against the Sub- Lessee’s sub-leasehold interest in the Wheatley School Facility, the Sub-Lessee, shall pay, as an Operating Expense, such taxes or assessments, and Sub-Lessee shall bear sole liability, in Wheatley Ground Leaase – PBC to QALICB
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addition to the payments described in Section 3 above, for payment of (i) all rental sales taxes, and (ii) any documentary stamp tax or intangibles tax payable upon this Ground Lease, upon any assignment or transfer of this Ground Lease by Sub-Lessee, upon recording of any memorandum of this Ground Lease, and upon the Leasehold Mortgage. (b) The Sub-Lessee shall pay, as an Operating Expense, any and all real property, personal property or other taxes, municipal service fees or other assessments or charges which are levied against the Wheatley School Facility, the sub-leasehold estate or the rents collected therefrom and are payable with respect to any calendar or tax year or other period falling wholly or partly within the Sub-Lease Term (all of which are hereinafter referred to collectively as “Taxes”), except that if any such tax, charge or assessment is levied with respect to a period beginning before the Effective Date or ending after the Termination Date, the Master Lessee shall pay only that percentage thereof equaling the percentage of such period falling within the Sub-Lease Term. The Sub-Lessee shall pay the Taxes when due and payable and before any penalty is incurred for late payment thereof. (c) If the imposition of any Tax shall be deemed by the Sub-Lessee to be improper, illegal, or excessive, the Sub-Lessee may, as an Operating Expense, dispute and contest the same and, in such event and to the extent permitted by law, any such Tax need not be paid until adjudged to be valid; provided, however, the Sub-Lessee shall in writing first notify the Master Lessee of such dispute and contest and shall comply with the requirements of the Financing Documents or any other Leasehold Mortgage permitted hereunder and related documents concerning the contest of taxes. Master Lessee agrees to work in good faith with Sub-Lessee to make or support the case for a lower tax appraisal if the Master Lessee agrees that any appraisal of the Wheatley School Facility is excessive. Unless so contested, any Tax shall be paid by the Sub-Lessee within the time provided by law, and if contested, any such Tax shall be paid before the imposition of a lien on the Wheatley School Facility or Property with respect thereto. Section 6. Utility Services. The Sub-Lessee shall make application for, obtain and pay for, and be solely responsible for, as an Operating Expense, all utilities required, used, or consumed on the Wheatley School Facility, including, but not limited to gas, water (including water for domestic uses and for fire protection), telephone, electricity, cable TV (or its equivalent), sewer service, garbage collection services, or any similar service. Section 7. Payments for the Sub-Lessee. If the Sub-Lessee fails to procure the insurance required to be procured by the Lessee under this Ground Lease or fails to pay any premium of insurance, Tax, or any other sum in this Ground Lease required to be paid by the Sub-Lessee, the Master Lessee, may, after expiration of the applicable notice and cure period and the occurrence of an “Event of Default” and after notifying the Lender, at the option of the Master Lessee, elect to follow one of the options provided in Section 23(b) of this Ground Lease or may, without declaring an Event of Default, procure on behalf of the Sub-Lessee any such insurance, and pay on behalf of the Sub-Lessee any such payment or payments as may be necessary. Any sum(s) so paid or expended by the Master Lessee shall be immediately due and payable without demand and shall be reimbursed and paid by the Sub-Lessee to Master Lessee not more than thirty (30) days after demand by the Master Lessee. Section 8. Interest on Unpaid Amounts. Any sums that are payable by the Sub-Lessee or Master Lessee to the Master Lessee under this Ground Lease (including any Rent) and that are not paid to the Master Lessee within thirty (30) days after the due date thereof shall bear interest at the lower of (a) Prime Rate plus five percent (5%) per annum, or (b) the highest permissible interest rate under applicable law, from the due date thereof through the date payment of the same is made. If it becomes necessary for the Master Lessee to bring suit for collection of any sum(s) herein stipulated to be paid by the SubLessee, the Sub-Lessee agrees to pay any and all such reasonable expenses and costs as the Master Lessee may incur, including, but not limited to, reasonable attorneys' fees actually incurred. Wheatley Ground Leaase – PBC to QALICB
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Section 9. Compliance by the Sub-Lessee with Laws and Ordinances. At all times during the Sub-Lease Term of this Ground Lease, and as an Operating Expense of the Wheatley School Facility, the Sub-Lessee shall conform to, obey, and comply in all material respects with, all present and future laws, ordinances, and regulations of all legally constituted authorities existing at the commencement of the Sub-Lease Term of this Ground Lease or at any time during the continuance of the Sub-Lease Term hereof which in any way are applicable to this Ground Lease or the use of the Premises or any repair, replacement, demolition, renovation, Construction, restoration, or excavation being done on or to the Premises. The Sub-Lessee, in its own name and as an Operating Expense, shall have the right to contest the validity of any law, ordinance, rule, regulation, or requirement contemplated under this Section 9. Section 10. Quiet Enjoyment/Police Service. Pursuant to the provisions of the Master Lease, the School Board and the Master Lessee represented that as of the Effective Date the School Board owned the Property subject to no restrictions, liens, or other encumbrances other than Permitted Encumbrances. The RSD represented that it had received the authority to control the lease of the Property to the Master Lessee, and to authorize the construction and development of the School Facilities pursuant to Louisiana law and this Ground Lease. Collectively, Lessor and Master Lessee further covenanted and agreed pursuant to the Master Lease that, throughout the Sub-Lease Term of this Ground Lease, the SubLessee may peaceably and quietly enjoy the Premises without interference from any party claiming by or through Lessor or Master Lessee, subject, however, to Permitted Encumbrances, Lessor’s and Master Lessee’s rights under the Master Lease and hereunder, and the Sub-Lessee's fulfillment of the covenants and agreements contained in this Ground Lease. Notwithstanding anything to the contrary contained in this Ground Lease, the Premises shall be subject, at all times during the Sub-Lease Term of this Ground Lease, to the jurisdiction of the City of New Orleans police and fire departments, and Sub-Lessee has accepted a sub-leasehold interest to the Premises "AS IS". Section 11.
Construction of Improvements.
(a) Construction Documents. Upon the date of Financial Closing, the Sub-Lessee shall enter into the Development Agreement which provides that the Developer shall develop the School Facilities in accordance with the Construction Contract and the Architect's Agreement. (b) Commencement of Construction. Upon the date of Financial Closing, the Sub-Lessee shall pursue to Completion the Construction of the Wheatley School Facility on the Property and associated site development within the boundaries of the Property, in accordance with the Construction Documents. (c) Construction Approvals by the Maser Lessee. The Sub-Lessee and the Developer have delivered to the Master Lessee a set of the Plans and Specifications which the Lessor and Master Lessee have determined is not inconsistent with the image, reputation and overall objectives of Lessor and Master Lessee for the Wheatley School Facility. Any repairs, modifications or alterations to the Wheatley School Facility that Sub-Lessee wishes to perform throughout the Sub-Lease Term are subject to the prior written approval of the Lessor and Master Lessee; provided, however, that such written approval shall not be unreasonably withheld.. (d) Construction According to Approved Plans and Specifications. The Wheatley School Facility shall be Constructed generally in accordance with the Plans and Specifications subject to change orders initiated as part of the Construction process. All building materials for the Wheatley School Facility must be new and of good quality in accordance with the Construction Documents. The Lessor and Master Lessee shall be permitted to monitor the Sub-Lessee's Construction of the Wheatley School Facility from its inception to its Completion, including participation in Lessor/Lessee-Developer Wheatley Ground Leaase – PBC to QALICB
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Construction meetings to be scheduled not less than once a month during the Construction of the Wheatley School Facility. Notwithstanding the foregoing, neither Lessor nor Master Lessee shall interfere with the orderly progression of Construction, and each must observe all safety procedures reasonably imposed by the Sub-Lessee or Developer, and shall provide reasonable notice of all site visits. (e) Right of Sub-Lessee to allow a Leasehold Mortgage to be placed on the Property/Objection of Master Lessee to execute and deliver a Mortgage to be placed on the Property. The Parties acknowledge and agree that the Sub-Lessee has the right to allow the Lender to place a Leasehold Mortgage on the Property as one form of Lender’s security for the Debt Financing. The Master Lessee expressly agrees to allow such Leasehold Mortgage in favor of the Lender and acknowledge that the Leasehold Mortgage shall be on terms and conditions required by the Lender in the exercise of its sole discretion. Except for the rights of Lender under the Leasehold Mortgage and Financing Documents and/or another permitted Leasehold Mortgagee, the Sub-Lessee's rights, as well as the rights of anyone else, including, but not limited to, any mortgagee, architect, independent contractor, assignee, sublessee, sub-contractor, prime or general contractor, mechanic, laborer, materialman, or other lien or claim holder, shall always be and remain subordinate, inferior, and junior to the Lessor's title, interest, and estate in the Property. (f) Payment of Bills for Construction. As a Construction expense, the Sub-Lessee covenants and agrees to pay or cause to be paid, currently as they become due and payable in accordance with the terms of the Construction Documents and the Financing Documents, all bills for labor, materials, insurance, and bonds, and all fees of architects, engineers, contractors, and subcontractors and all other costs and expenses incident to any construction in or on the Wheatley School Facility; provided, however, that the Sub-Lessee may, in good faith, on its own behalf, dispute and contest any such bill, fee, cost, or expense, and in such event, any such item need not be paid until adjudged to be valid. Unless so contested by the Sub-Lessee, all such items shall be paid by the Sub-Lessee within the time provided by law, and if contested, any such item shall be paid before the issuance of an execution on a final judgment with respect thereto. (g) Ownership of the Wheatley School Facility. After the Effective Date, the Wheatley School Facility and all other improvements now or hereafter located on the Property, including those to be Constructed in accordance with the Plans and Specifications and the Construction Documents, shall be vested in the Sub-Lessee until the Termination Date, at which time all title to and ownership of the Wheatley School Facility and all other improvements to or upon the Property or related to the Wheatley School Facility shall automatically and immediately vest (without the necessity of any further action being taken by the Sub-Lessee or the Master Lessee or any instrument being executed and delivered by the Sub-Lessee to the Master Lessee), in the Master Lessee. Notwithstanding the foregoing, the SubLessee shall execute, acknowledge and deliver such deeds, bills of sale, termination statements or other instruments as may be reasonably requested by the Lessor or Master Lessee (i) to acknowledge the Termination Date of this Ground Lease with respect to the Sub-Lessee, all in recordable form or (ii) to convey ownership of the Wheatley School Facility, and all other improvements to or upon the Property or related to the Wheatley School Facility (at the Sub-Lessee’s cost) to such entities as may be designated by the Master Lessee. (h) Architects, Engineers, Contractors, Specialists, and Consultants. The Sub-Lessee shall require any architects, engineers, contractors, subcontractors, specialists, and consultants engaged in connection with the Construction of the Wheatley School Facility to perform their respective obligations under the terms of the Construction Documents to be licensed in accordance with State law and to obtain and maintain for a period of two (2) years after the Substantial Completion of the Wheatley School Facility errors and omissions insurance and payment and performance bonds as contemplated herein.
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(i) Permits, Laws, and Ordinances. The Sub-Lessee shall, as a Construction expense, comply and cause its contractors and subcontractors to comply in all material respects with all building codes, ordinances, rules, regulations, orders, directives, and statutes of all governmental authorities which may now or hereafter, from time to time, be established and which are or shall be applicable to the Sub-Lessee and the Wheatley School Facility, including without limitation, the Americans With Disabilities Act of 1990, the Occupational Safety and Health Standards of the State and the United States, and shall take, as otherwise provided herein, all action necessary to cause the Wheatley School Facility to comply in all material respects with all provisions of the Construction Documents, the Financing Documents and this Ground Lease applicable to the Sub-Lessee. (j) Payment and Performance Bonds/Liens. The Sub-Lessee shall cause the Contractor and, if and as it deems appropriate, certain subcontractors, to provide payment and performance bonds in a form and from a surety reasonably approved by the Lender. Sub-Lessee shall take commercially reasonable steps to keep the Wheatley School Facility free from any lien, encumbrance, or charge levied on account of any mechanic's, laborer's, or materialman's lien, or any security agreement, conditional bill of sale, title retention agreement, chattel mortgage, other obligations incurred by Sub-Lessee or otherwise (a "Lien") that might or does constitute a lien, encumbrance, or charge upon the Premises, or any part thereof, or the income therefrom, except for a Leasehold Mortgage as described in this Ground Lease that is required in connection with Debt Financing. In the event that Sub-Lessee fails, within thirty (30) days following the imposition of any Lien, to either cause the same to be released of record or provide Master Lessee with insurance against the same issued by a major title insurance company or such other protection against the same as is reasonably satisfactory to Master Lessee and Master Lessee shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Master Lessee and all expenses incurred by it in connection therewith shall be payable to it by Master Lessee within five (5) days of Master Lessee’s demand. Except for the Leasehold Mortgage or as required by the Lender as a condition to providing Debt Financing, the interest of Master Lessee in and to the Premises shall not be subject to liens for improvements made, or caused to be made, by Sub-Lessee. Sub-Lessee will not permit any construction liens to be placed upon the Property, and nothing in this Lease shall be deemed or construed in any way as giving Sub-Lessee any right, power, or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to any construction, mechanic's or other liens against the Property, except as to Sub-Lessee's leasehold interest. (k) Reports and Information. The Sub-Lessee shall provide the Master Lessee with monthly progress reports regarding the Construction of the Wheatley School Facility. The Sub-Lessee shall also deliver or cause to be delivered to the Master Lessee copies of all soil reports, surveys, hazardous wastes or toxic materials reports, feasibility studies, and other similar written materials prepared for the SubLessee pursuant to the Construction Documents with respect to the Property. (l) Substantial Completion of Wheatley School Facility. As soon as practicable after Substantial Completion, the Sub-Lessee shall furnish to the Master Lessee: (i) one complete set of final "as-built" plans and specifications of the completed Wheatley School Facility improvements in auto-CAD format; (ii) a current, accurate, properly labeled, and certified (by the applicable surveyor or Engineer), "as-built" plat of survey prepared by a State registered land surveyor or professional engineer depicting to scale the location of the completed Wheatley School Facility improvements, as the same have been Constructed;
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(iii) one complete set of operations and maintenance manuals for all systems, equipment, furniture, and fixtures relating to the School Facility; and (iv) Contractor's final affidavit, release of lien, and other commercially reasonable and customary documentation demonstrating full payment for construction of the Wheatley School Facility. (m) Sub-Lessee Access. Notwithstanding anything to the contrary herein, Sub-Lessee shall have unfettered access to the Property, beginning on the Effective Date and throughout the Sub-Lease Term, twenty-four (24) hours a day, seven (7) days a week, three hundred sixty-five (365) days a year. Section 12.
Operation of the Wheatley School Facility.
(a) Sub-Lessee’s Obligation to Operate. Upon Completion of the Wheatley School Facility, the Sub-Lessee shall continuously operate the Wheatley School Facility or cause the Wheatley School Facility to be continuously operated as the Phillis Wheatley Elementary School throughout the Sub-Lease Term. (b) Permitted Uses of the Wheatley School Facility Generally. The Sub-Lessee shall use the Wheatley School Facility for school purposes, together with related facilities and ancillary supporting uses, such as (without limitation) Wheatley School Facility offices, interior and exterior amenities and amenity spaces, including but not limited to common areas, recreational rooms, meeting rooms, workout rooms, gymnasium facilities, utility rooms, lobbies, and parking areas. (c) Operation of the Wheatley School Facility. The Sub-Lessee will directly operate or lease the Wheatley School Facility to a third party Charter School Operator and assure that the Wheatley School Facility has the necessary staff to comply with the requirements under Louisiana law to be operated for school purposes, and to ensure that all operations (business administration, provision of services, and maintenance) are successfully implemented. Sub-Lessee shall provide or cause each Charter School Operator to provide all staffing and operations necessary to meet all governmental regulations related to school operation. The terms of the Facilities Lease related to operations shall be subject to the approval of Lessor and Master Lessee. Sub-Lessee acknowledges and agrees that any Charter School Operator must be qualified to operate public charter schools under all applicable state and federal law, and must have executed a valid and binding Charter School Contract with either the School Board or the RSD prior to operation of the Wheatley School Facility, which contract may contain additional and/or conflicting provisions from the Facilities Lease (in which case the Charter School Contract will govern). A list of qualified Charter School Operators may be requested from the RSD or the School Board. RSD and the School Board agree to cooperate with the Sub-Lessee to select a Charter School Operator that complies with all governmental requirements.
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Section 13. Application of the Public School Facilities Financing Act. The Master Lessee and Sub-Lessee acknowledge and agree that the development and construction of the Wheatley School Facility is being facilitated by the provisions of the Public School Facilities Financing Act (Louisiana Revised Statutes 17:100.10) (“Financing Act”). The Financing Act requires that any arrangement, such as this Ground Lease, for the construction of new schools or the renovation of existing schools must specifically provide that title and control of the Wheatley School Facility shall automatically and immediately, by operation of law, revert to the School Board if the property is used for purposes other than school purposes. The Master Lessee and Sub-Lessee acknowledge and agree that all Financing Documents shall contain a specific acknowledgement that the provisions of the Financing Act apply, including the automatic reversion of the Wheatley School Facility to the School Board if the Wheatley School Facility is no longer used for school purposes. Section 14. Management. The Sub-Lessee shall engage and oversee, throughout that portion of the Sub-Lease Term following the Facilities Lease Commencement Date, a Charter School Operator that is qualified and experienced in the management, operation, maintenance, financial recordkeeping and reporting of elementary schools as required by any governing authority with jurisdiction over the Wheatley School. The parties acknowledge that the initial Charter School Operator and Facilities Lease will be with First Line Schools, Inc. Sub-Lessee agrees to notify and seek the input of Lessor and Master Lessee at any time there is to be a change in Charter School Operator, though the selection and engagement of a replacement Charter School Operator shall be within the sole discretion of the SubLessee.
Section 15.
Assignment of Lease; Sublease Approved.
(a) Written Consent. Except as otherwise provided in this Ground Lease (including, without limitation, the Facilities Lease, this Section 15 and Section 25 hereof), the Sub-Lessee, and its successors and assigns, shall not have the right to assign or transfer this Ground Lease or any interest herein or any right or privilege appurtenant hereto or to ground lease the Property or any portion thereof, without the written consent of the Master Lessee. Any assignment or transfer for which consent is required but which is nevertheless made without such written consent shall be void ab initio. (b) Assignment to Leasehold Mortgagee. Any other provisions of this Ground Lease to the contrary notwithstanding, subject to the Financing Act, the Sub-Lessee, and its successors and assigns, shall have the right without the consent or approval of the Master Lessee to assign or transfer the SubLease or any interest herein or any right or privilege appurtenant hereto which the Sub-Lessee desires to assign or transfer to a Leasehold Mortgagee to the extent permitted in Section 25 hereof. The Master Lessee agrees to recognize any assignee or transferee of an assignment or transfer for which the Master Lessee’s consent is not required as lessee for the performance of all duties and obligations arising by reason of the interest of this Ground Lease being so assigned or transferred; provided, however, it is hereby agreed and acknowledged by Master Lessee and the Sub-Lessee that the Sub-Lessee, its successors and assigns, shall not be relieved of its liability for the performance of such duties or obligations by any such assignment or transfer. (c) Sublease to Wheatley School Facilities Foundation, Inc. Approved. Pursuant to the provisions of the Master Lease, Lessor and Master Lessee acknowledged and agreed that in order to facilitate the development and construction of the Wheatley School Facility, Master Lessee has been authorized and directed to enter into this Ground Lease to sub-lease the Premises for the Sub-Lease Term. Lessor has been provided a copy of this Ground Lease and has specifically approved its terms and has acknowledged that the Ground Lease is an approved sublease. Pursuant to the terms of the Master Lease, Lessor and Master Lessee have consented to the Sub-Lease and have agreed to accept performance from Wheatley Ground Leaase – PBC to QALICB
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the Sub-Lessee pursuant to this Ground Lease. However, nothing shall serve to eliminate or reduce SubLessee’s obligations to Lessor or Master Lessee hereunder. The Sub-Lease may not be altered or amended without the prior written consent of Lessor or Master Lessee. Section 16. Annual Budget for Wheatley School Facility. Prior to or upon the occurrence of the Facilities Lease Commencement Date, the Sub-Lessee shall establish an Annual Budget for the first Annual Period. Commencing with the second Annual Period and for each Annual Period thereafter, the Sub-Lessee shall establish an Annual Budget not later than ninety (90) days prior to the commencement of each Annual Period. The Sub-Lessee shall adopt the Annual Budget, in such a form and content that complies with the requirements contained in the Financing Documents. The Sub-Lessee shall use commercially reasonable efforts to operate the Wheatley School Facility and make capital improvements and expenditures in connection with the Wheatley School Facility in accordance with the Annual Budget. Section 17. Indemnification. The Sub-Lessee hereby agrees to indemnify and hold harmless the Lessor and Master Lessee and all of their trustees, officers, employees, directors, agents, and consultants (hereinafter collectively referred to as the “Lessor/Master Lessee Indemnitees”) of and from any and all claims, demands, liabilities, losses, costs, or expenses for any loss including but not limited to bodily injury (including death), personal injury, property damage, expenses, and reasonable attorneys' fees, caused by, growing out of, or otherwise happening in connection with this Ground Lease, arising from any intentional misconduct or grossly negligent act or omission on the part of the Sub-Lessee, its agents, employees, or others working at the direction of the Sub-Lessee or on its behalf, or due to the application or violation of any pertinent federal, State, or local law, rule, or regulation. This indemnification survives the expiration or termination of this Ground Lease. This indemnification does not extend beyond the scope of this Ground Lease and does not extend to claims exclusively between the Parties arising from the terms or regarding the interpretation of this Ground Lease, and shall not be applicable to the extent of any gross negligence or intentional misconduct of any of the Lessor or Master Lessee Indemnitees. Section 18.
Insurance.
The Sub-Lessee shall provide the following insurance coverages: (a) General. It is the intent of the parties that all risk of loss for the Wheatley School Facility be shifted to insurance to the maximum extent practicable. Accordingly, unless Lessor, Master Lessee and Lender otherwise agree in their sole discretion, Sub-Lessee shall maintain, or cause to be maintained, insurance covering the risks enumerated below. Such insurance shall be written on an occurrence basis unless Lessor, Master Lessee and Lender otherwise consent in writing, which consent of Lessor and/or Master Lessee shall not be unreasonably withheld or delayed, but for errors and omissions insurance issued on a claims made basis, Lessor, Master Lessee and/or Lender may condition such consent on the purchase of a tail policy with such term and limits as Lessor and/or the Lender may reasonably determine appropriate. The policy shall provide that such insurance shall be primary coverage without reduction or right of offset or contribution on account of any insurance provided by Lessor or Master Lessee to itself or its officers, officials, or employees, that such insurance shall not be altered or cancelled without thirty (30) days' written notice to Lessor or Master Lessee, and that such insurance shall name Lessor, Master Lessee and Lender as additional insureds (in reference to items b, d, e and g listed below). The insurance policies purchased by Sub-Lessee, or provided on behalf of Sub-Lessee, must be issued by a company authorized to conduct business in the State of Louisiana or by a company acceptable to Lessor and Master Lessee and Lender and which has a rating of A-VIII or better by the latest Best Insurance Report. (b) Property. [Pursuant to Louisiana Revised Statute §1900.B(4)(b)(iii), the RSD has the exclusive authority to receive, manage, and expend any and all insurance proceeds attributable to Wheatley Ground Leaase – PBC to QALICB
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damage done to any property under its authority. Because of this right, the RSD has agreed to provide property insurance coverage to Lessee under the State of Louisiana’s blanket insurance coverage, with the pro rata costs assumed by Sub-Lessee. Sub-Lessee is obligated to provide for repairs at all times during the Sub-Lease Term of this Ground Lease, and the Sub-Lessee shall maintain, or cause Developer and/or its contractors to maintain All Risk and Builder's Risk Completed Value Form Property Insurance covering all physical loss or damage to the Wheatley School Facility covered by the extended coverage endorsement then in use in the State of Louisiana (including vandalism and malicious mischief) in an amount not less than full replacement value.] (c) Public Liability. At all times during the Sub-Lease Term, Sub-Lessee shall maintain or cause to be maintained a primary Commercial General Liability insurance policy, ISO Form 1992 or later, ("CGL") covering all claims for bodily injury and property damage, including loss of use thereof, in an amount not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate, with deductible provisions not to exceed Twenty-Five Thousand Dollars ($25,000) per occurrence, to include personal and advertising injury, general aggregate, products and completed operations aggregate insurance beginning at the Completion of each Wheatley School Facility component, and contract liability to cover all insurable obligations in this Ground Lease. The policy or policies must be on an "occurrence" basis unless waived by Lessor or Master Lessee. The CGL policy shall include contractual liability coverage. (d) Errors and Omissions. Sub-Lessee shall obtain and maintain or cause to be obtained and maintained Professional Errors and Omissions Insurance covering all architects, engineers, specialists, and consultants in an amount and with coverage subject to the reasonable approval of Lessor and Master Lessee. Sub-Lessee, on behalf of itself and its insurers, hereby waives all rights of subrogation and recovery against Lessor or Master Lessee for any loss insured by the insurance coverages required under this Section 18. Sub-Lessee shall obtain any special endorsements required by its insurers to evidence compliance with the aforementioned waiver, and further agrees to furnish complete copies of such policies and endorsements to Lessor and Lessee within ninety (90) days after Lessor's or Master Lessee’s written request. Section 19.
Damage and Destruction.
(a) Repair of Damaged Improvements. Should any building or other structures or improvements constructed and located by the Sub-Lessee on or within the Property be damaged or destroyed by fire or any other casualty whatsoever during the term of this Ground Lease, the Sub-Lessee, except as hereafter provided in this subsection (a), shall, within one hundred twenty (120) days from the date of such damage or destruction, commence the work of repair, reconstruction, restoration, or replacement and shall prosecute the same with all reasonable dispatch until such buildings, other structures or improvements shall have been repaired, reconstructed, or restored as nearly as practicable to the same condition as prior to such damage or destruction. Anything in this Ground Lease to the contrary notwithstanding, the period of time within which the Sub-Lessee is hereinabove obligated to complete the repair, reconstruction, restoration, or replacement of any buildings or other structures or improvements so damaged or destroyed shall be extended for the period of any delay in such completion not within the reasonable control of the Sub-Lessee. The Master Lessee and the Sub-Lessee specifically agree that, except as otherwise provided in this Ground Lease, damage to or destruction of any building or other structures or improvements on or within the Property at any time during the term of this Ground Lease, by fire or any other casualty whatsoever, shall not result in a termination of this Ground Lease or authorize the Sub-Lessee or those claiming by, through or under the Sub-Lessee to quit or surrender possession of the Premises or any part thereof, and shall not release the Sub-Lessee in any way from any of the Wheatley Ground Leaase – PBC to QALICB
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provisions of this Ground Lease. However, if any building or other structures or improvements constructed and located by the Sub-Lessee on or within the Property shall be damaged or destroyed at any time after payment in full of any debt secured by the Master Lessee’s or Master Lessee’s interest under this Ground Lease, the Sub-Lessee may determine in its sole discretion to be relieved of any obligation to repair, reconstruct, restore, or replace the said damaged or destroyed buildings, other structures or improvements upon payment by the Sub-Lessee to the Master Lessee, in a single total payment, of any net proceeds received by the Sub-Lessee from the insurance company or companies insuring the same. The Sub-Lessee may be relieved of any such obligation in the event the Sub-Lessee requests in its sole discretion and the Lender and Leasehold Mortgagee shall elect to apply insurance proceeds to the payment in full of the Sub-Lessee’s outstanding indebtedness under the Financing Documents. The release of the Sub-Lessee from the Master Lessee’s obligation to repair, reconstruct, restore, or replace the said damaged or destroyed building or other structures or improvements shall be conditioned, in addition to the payment by the Sub-Lessee of the sums herein enumerated, upon delivery by the SubLessee to the Master Lessee of an instrument releasing, demising, conveying, and transferring to the Master Lessee all of the Sub-Lessee’s rights, title, and interest in and to the Premises. Notwithstanding the above, the parties recognize that the Financing Documents may contain provisions governing the actions of the Master Lessee upon damage or destruction of all or part of the Premises and agree that so long as the Financing Documents are in effect, then: (i) the compliance by the Sub-Lessee with the provisions of the Financing Documents regarding damage or destruction shall constitute compliance by the SubLessee hereunder; and (ii) this Ground Lease shall be interpreted in a manner consistent with the provisions of the Financing Documents. (b) Damages for Failure to Comply with Repair Obligation. If the repair, reconstruction, restoration, or replacement of damaged or destroyed buildings, other structures or improvements is not substantially completed in accordance with subsection (a) hereof within a reasonable time after the date of such damage or destruction (if such completion date is prior to the end of the term of this Ground Lease and if the Sub-Lessee is under the affirmative requirement of such subsection (a) to commence the repair, reconstruction, restoration, or replacement), the Master Lessee may terminate this Ground Lease immediately upon written notice thereof to the Sub-Lessee and, in such event, the Master Lessee shall receive the proceeds of all insurance obtained in accordance with Section 18 of this Ground Lease to the extent such proceeds have not been expended on or committed to such repairs. (c) Termination Prior to Completion of Repair. In the event of the termination of this Ground Lease before the expenditure of the full amount of such insurance proceeds in the repair, reconstruction, restoration, or replacement of such damaged or destroyed buildings, other structures or improvements, any unexpended balance thereof, including any interest previously earned by such balance, shall inure to and become the sole property of the Master Lessee. (d) Subordination to Financing Documents. Notwithstanding anything else herein contained, subject to applicable State law, the provisions of the Financing Documents shall control in all respects the receipt, handling and application of any and all insurance proceeds, it being acknowledged and agreed that the Financing Documents and any other permitted Leasehold Mortgagee, as their respective interests may appear, shall have a first and prior security interest therein. (e) Lessor’s Obligation for Extensive Repairs. Notwithstanding anything in this Agreement to the contrary, pursuant to Louisiana Revised Statute 17:1900(B)(4)(a), the School Board shall provide for the type of extensive repair to buildings or facilities that would be considered to be a capital expense. Wheatley Ground Leaase – PBC to QALICB
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Therefore, Lessor, Master Lessee and Sub-Lessee agree that upon damage or destruction to the School Facilities after Construction, repairs shall be made: first, from any available insurance proceeds obtained for such purpose; second, from any reserve funds held by Sub-Lessee for capital expenditures; and third, from the School Board pursuant to applicable law. Section 20.
Condemnation.
(a) General. The term “condemnation” as used in this Ground Lease means the taking or appropriation of property, or any interest therein, in exercise of the power or right of eminent domain or such taking for public or quasi-public use or any state of facts relating to the taking or appropriation of property which, without an actual taking or appropriation, shall result in direct or consequential damages to the Property or the leasehold interest herein. Such term shall also be deemed to include to the extent not otherwise defined in this paragraph, a temporary taking of the Property or any part thereof or the improvements thereon for a period of one year or more, and the taking of the leasehold interest created herein. (b) Total Condemnation. If all of the Property (or such substantial portion thereof as shall, in the Sub-Lessee’s sole discretion, make it economically unfeasible to continue to operate the remaining portion for the purpose herein) is so condemned, this Ground Lease shall terminate on the date title to the Property vests in the condemnor; provided, however, that such termination shall be without prejudice to the rights of the Sub-Lessee to recover just and adequate compensation from any such condemnor. If this Ground Lease is terminated as provided in this subsection, the Sub-Lessee shall pay the Rent for the year in which the Property is taken, up to the date of such termination. The Rent shall be payable within sixty (60) days after the date the Ground Lease is terminated. (c) Division of Award - Total Condemnation. Subject to the controlling provisions of the Financing Documents, if the Property is totally condemned as provided in subsection (b) above, the condemnation proceeds shall be paid as follows: (i) the Sub-Lessee first shall be entitled to receive such portion of the condemnation proceeds as shall equal the principal balance and accrued interest on and all other sums owing under or secured by the Leasehold Mortgage which shall be directly paid to such Leasehold Mortgagee, as applicable; and (ii) any remaining and additional proceeds shall be apportioned between Master Lessee and Sub-Lessee pursuant to Louisiana law in accordance with the respective interests of Master Lessee and Sub-Lessee under this Ground Lease. (d) Partial Condemnation. In the event of a taking of less than a total taking as provided in subsection (b) above, this Ground Lease shall terminate as to the condemned portion of the Property on the date title to the condemned portion of the Property vests in the condemnor; provided, however, that such termination shall be without prejudice to the rights of the Sub-Lessee to recover just and adequate compensation from any such condemnor. The provisions of this Ground Lease shall remain in full force and effect as to the portion of the Property not condemned. (e) Division of Award - Partial Condemnation. Subject to the controlling provisions of the Financing Documents, if the property is partially condemned as provided in subsection (d) above, the condemnation proceeds shall be paid as follows: (i) the Sub-Lessee first shall be entitled to receive such portion of the condemnation proceeds as shall equal Leasehold Mortgagee’s equitable portion of the Wheatley Ground Leaase – PBC to QALICB
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principal balance and accrued interest on and all other sums owing under or secured by the Leasehold Mortgage. Such amount shall be directly paid to such Leasehold Mortgagee, as applicable; and (ii) any remaining and additional proceeds shall be apportioned between Master Lessee and Sub-Lessee pursuant to Louisiana law, in accordance with the respective interests of Lessee and Sub-Lessee under this Agreement. Section 21.
Estoppel Certificates.
(a) The Master Lessee and the Sub-Lessee will execute, acknowledge and deliver to the other promptly upon request, a certificate certifying as to the following: (i) Validity of Sub-Lease: that this Ground Lease is unmodified and in full force and effect (or, if there have been modifications, that this Ground Lease is in full force and effect, as modified, and stating the modifications); (ii) Defaults by the Sub-Lessee: that no notice has been given by the Master Lessee to the Sub-Lessee of any failure to comply under this Ground Lease that has not been cured and to the best of its knowledge and belief no Event of Default exists (or, if there has been any notice given or an Event of Default exists, describing the same). (b) Certificates from the Master Lessee and the Sub-Lessee pertaining to the same matters may be relied upon by any prospective Leasehold Mortgagee or by any prospective assignee of an interest under this Ground Lease or by any prospective sublessee as to all or any portion of the Property. Section 22. Access to Premises and Records. The Lessor and Master Lessee, their authorized representatives, agents, employees, and attorneys may, but shall be under no duty to, enter the Premises at reasonable times and hours, subject to the rights of tenants in possession, if any, to inspect the Premises in order to determine whether the Sub-Lessee is complying with its undertakings, duties, and obligations under this Ground Lease. Such entries and inspections as the Lessor or Master Lessee may make of the Premises shall not constitute an eviction of the Sub-Lessee in whole or in part, and the Rent shall in no way abate as a result thereof. The Lessor and/or Master Lessee agree to employ their reasonable efforts to minimize any interruption to the business operations of the Sub-Lessee resulting from the Lessor's or Master Lessee’s (or its designated representatives') entries onto the Premises. Annually, beginning with the first Annual Period occurring after Completion of the Wheatley School Facility, and within thirty (30) days of the receipt by Master Lessee of the certified annual financial statements for the Wheatley School Facility described in Section 3(c) hereof, Lessor, Master Lessee and Sub-Lessee shall schedule a meeting at a mutually convenient location and time to review and discuss such certified annual financial statements, and to otherwise discuss the status of the Wheatley School Facility. Sub-Lessee shall provide to Lessor and Master Lessee copies of all information presented during the course of such annual meetings. In addition, upon commercially reasonable request by Lessor or Master Lessee with reasonable advance notice, within forty-five (45) days after any such annual meeting and not to occur more than one time per Annual Period, Lessor and Master Lessee and their employees and accountants, may inspect and copy the leasing, financing, property management and expense records for the Wheatley School Facility from time to time, and Sub-Lessee agrees to reasonably cooperate with Lessor and Master Lessee in furnishing such records electronically or otherwise making all such records available to Lessor and Master Lessee for review and copying at the Wheatley School Facility or other nearby location reasonably acceptable to Lessor or Master Lessee. Section 23.
Events of Default and Remedies.
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(a) Events of Default Defined. The following shall be "Events of Default" under this Ground Lease, and the terms "Event of Default" or "Default" shall mean, whenever they are used herein, any one or more of the following events: (i) The Sub-Lessee shall fail to perform or cause to be performed any term, covenant, condition, or provision hereof, and to correct such failure within thirty (30) days after written notice specifying such is given to the Sub-Lessee by the Master Lessee. In the case of any such failure that cannot with due diligence be corrected within such thirty (30) day period but can be wholly corrected within a period of time not materially detrimental to the rights of the Master Lessee, it shall not constitute an Event of Default if corrective action is instituted by the Sub-Lessee within the applicable period and diligently pursued until the failure is corrected. (ii)
The Sub-Lessee shall be adjudicated a Bankrupt.
(iii) A permanent receiver shall be appointed for the Sub-Lessee's interest in the Property or Wheatley School Facility and such receiver shall not be removed within ninety (90) days after notice from the Master Lessee to the Sub-Lessee to obtain such removal. (iv)
The Sub-Lessee shall make a general assignment for benefit of creditors.
(v) The Premises or the Sub-Lessee's effects or interests therein shall be levied upon or attached under process against the Sub-Lessee, and the same shall not be satisfied or dissolved within ninety (90) days after notice from the Master Lessee to the Sub-Lessee to obtain satisfaction or dissolution thereof. (vi) Documents.
The Sub-Lessee shall be in material default under the Financing
(vii) The Wheatley School Facility shall cease to be operated for school purposes, and such cessation lasts for a period longer than six (6) consecutive months. (b) Remedies. Upon the occurrence of an Event of Default, the Master Lessee may, subject to the rights of the Lender under the Financing Documents, pursue one of the following remedies: (i) Reenter and repossess any or all of the Premises, subject to the operation, lien and effect of the Financing Documents; (ii) Perform, on behalf and at the expense of the Sub-Lessee, any obligation of the Sub-Lessee under this Ground Lease which the Sub-Lessee has failed to perform, the cost of which performance by the Lessee shall be payable by the Sub-Lessee to the Master Lessee; (iii) Enforce, in the name of and on behalf of the Sub-Lessee, any and all rights and remedies with respect to the Construction Documents and any security therefore; (iv)
Cure such Sub-Lessee Event of Default in any other manner; and
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(v) Pursue any combination of such remedies and/or any other right or remedy available to the Master Lessee in respect to the Sub-Lessee on account of such Sub-Lessee Event of Default under this Ground Lease or at law or in equity, including termination of this Ground Lease. (c) In addition to the rights and remedies set forth in (b) above, but subject to the limitation of the right to exercise such remedy as set forth in (d) below, if an Event of Default occurs and is continuing after the expiration of applicable cure periods, then, the Master Lessee may terminate this Ground Lease by giving written Notice of Termination to the Sub-Lessee and to the Leasehold Mortgagee, which termination shall be effective as of the date given in that notice. (d) The Master Lessee shall not be entitled to terminate this Ground Lease pursuant to subsection (c) above, or to give a Notice of Termination, or to exercise any other remedies of the Master Lessee in subsections (b) or (c) above if (i) the Sub-Lessee or any Leasehold Mortgagee is diligently pursuing the cure of such Event of Default, including (if applicable) diligently taking steps to remove the Charter School Operator, as the Charter School Operator of the Wheatley School Facility, and to engage a replacement Charter School Operator for the Wheatley School Facility, all as the Sub-Lessee or such permitted Leasehold Mortgagee may determine, (ii) the Sub-Lessee or any permitted Leasehold Mortgagee is diligently taking steps to enforce the rights and remedies and/or pursue claims against the Developer, and/or any other Person under the Construction Documents or to remove the Developer, as the developer of the Wheatley School Facility, and to engage a replacement developer to complete Construction of the Wheatley School Facility, all as the Sub-Lessee or such permitted Leasehold Mortgagee may reasonably determine (it being understood and agreed by the Master Lessee that, notwithstanding the Sub-Lessee’s or the permitted Leasehold Mortgagee’s diligence, Completion of the Wheatley School Facility may not require that such replacement developer be a party to this Ground Lease, or that such replacement developer assume all obligations of the Developer under this Ground Lease, or that any immaterial or insubstantial Event of Default be cured), (iii) after Substantial Completion of the Wheatley School Facility, the Wheatley School Facility is being managed, operated and used solely in accordance with this Ground Lease, or (iv) Gross Revenues are used first to pay those Expenses as are reasonably appropriate or necessary to operate and maintain the Wheatley School Facility in such a manner as to prevent material impairment of the value or use of the Wheatley School Facility for its intended purposes (which expenses do not include reserves for replacement of capital items and similar items) and to pay Administrative Expenditures prior to application to any other purpose. The SubLessee or any permitted Leasehold Mortgagee shall be deemed to be diligently pursuing the cure of any Event of Default if all necessary, reasonable and appropriate actions are being taken, or have been taken, to attempt to cure such Event of Default, notwithstanding the fact that such Event of Default may never be cured or be capable of being cured. In addition, if any Event of Default is curable only by the payment of money, then, neither the Sub-Lessee nor any permitted Leasehold Mortgagee shall have failed to have been diligently pursuing a cure if monies available (subject to the limitation set forth in Section 25 hereof) to effect such cure are not sufficient to do so. (e) Without limiting the generality of the foregoing provision of subsection (c) or (d) above, the Master Lessee shall not be deemed to have accepted any abandonment or surrender by the Sub-Lessee of any or all of the Property or the Sub-Lessee’s sub-leasehold estate under this Ground Lease unless Master Lessee has so advised the Sub-Lessee expressly and in writing, regardless of whether the Master Lessee has reentered or relet any or all of the Property or exercised any or all of the Master Lessee’s other rights under this Section 23 or applicable law. No such termination of this Ground Lease, or summary dispossession proceedings, abandonment, reletting, Bankruptcy, re-entry by the Master Lessee or vacancy, shall relieve the Sub-Lessee of any of its liabilities and obligations under this Ground Lease (whether or not any or all of the Property is relet).
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(f) If an Event of Default occurs, the Sub-Lessee, in connection with the failure to perform its respective obligations shall, immediately on its receipt of a written demand therefore from the Master Lessee, reimburse the Master Lessee for all reasonable expenses (including but not limited to any and all repossession costs, management expenses, operating expenses, legal expenses and attorneys’ fees) incurred by the Master Lessee (i) in curing or seeking to cure any such Event of Default and/or (ii) in exercising or seeking to exercise any of the Master Lessee’s rights and remedies under the provisions of this Ground Lease and/or at law or in equity on account of any such Event of Default, and/or (iii) otherwise arising out of any such Event of Default, all of which expenses and interest shall be payable by the Sub-Lessee as an expense of the Wheatley School Facility, immediately on demand therefore by the Master Lessee. (g) If any permitted Leasehold Mortgagee is diligently attempting or has diligently attempted to cure an Event of Default, and such Event of Default cannot be cured, then the Master Lessee shall not exercise its rights or remedies under this Ground Lease as to such Event of Default in a manner which directly conflicts with the cure attempted or being attempted by the permitted Leasehold Mortgagee. Section 24.
Expiration or Termination.
(a) Extinguishment of the Sub-Lessee 's Rights. Upon the termination or expiration of this Ground Lease from any cause other than as contemplated in Section 2(b) hereof, all rights and interests of the Sub-Lessee, and all persons whomsoever claiming by, through or under the Sub-Lessee (with the exception of the rights of a Leasehold Mortgagee arising under Section 25 hereof), shall immediately cease and terminate, and all of the Wheatley School Facility and Property, including all buildings, improvements, engines, machinery, dynamos, generators, boilers, furnaces, elevators, fire escapes, and all lifting, lighting, heating, cooling, refrigerating, air conditioning, ventilating, gas, electric and plumbing apparatus, appliances and fixtures, as well as other fixtures attached to or within the Property, and all personal property located thereon, shall thence forward constitute and belong to and be the absolute property of the Master Lessee or the Master Lessee’s successors and assigns, without further act or conveyance, and without liability to make such compensation to the Sub-Lessee or to anyone whomsoever, and free and discharged from all and every lien, encumbrance, claim and charge of any character created or attempted to be created by the Sub-Lessee at any time. The Sub-Lessee agrees, at the termination of this Ground Lease, to surrender unto the Master Lessee, all and singular the Premises with then existing buildings, other structures and improvements Constructed and located on and in the Property, in the same condition as when the Construction of such buildings, other structures, and improvements was completed, only natural and normal wear and tear excepted, unless the Sub-Lessee shall be relieved of the Sub-Lessee 's obligation to repair, reconstruct, restore or replace damaged or destroyed buildings, other structures or improvements pursuant to Section 19 hereof. Sub-Lessee will reasonably cooperate with Master Lessee, in good faith, to transition operation of the Wheatley School Facility to Master Lessee. (b) Prepaid Items Assigned. Upon the expiration of the Term of this Ground Lease, or upon the prior termination of this Ground Lease from any cause other than as contemplated in Section 2(b) hereof, all expense items prepaid by the Sub-Lessee with respect to Constructing, operating, maintaining, and protecting the Property, including, but not limited to, prepaid insurance premiums, any tax and utility deposits, shall inure to the benefit of and become the property of the Sub-Lessee. (c) Amounts Remaining in Funds and Accounts. Upon the expiration of the Sub-Lease Term of this Ground Lease, or upon the prior termination of this Ground Lease from any cause other than as contemplated in Section 2(b) hereof, any fund, account or reserve created in connection with the Property, any permitted Leasehold Mortgage or any of the Financing Documents shall inure, after application
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pursuant to the Financing Documents, to the benefit of and become the property of the Master Lessee free and clear of any and all liens. Section 25. Leasehold Mortgages. The Sub-Lessee, and every successor and assign of the Sub-Lessee, shall have the right in addition to any other rights granted in this Ground Lease, to encumber its interest in this Ground Lease under any one or more Leasehold Mortgages. If, from time to time, the Sub-Lessee shall encumber this Ground Lease with a Leasehold Mortgage, and if the holder thereof delivers to the Master Lessee an executed counterpart of such Leasehold Mortgage, together with each assignment thereof certified by such holder to be true together with written notice specifying the name and address of such holder and the pertinent recording data with respect to such Leasehold Mortgage, the Master Lessee agrees that, anything in this Ground Lease to the contrary notwithstanding, from and after the date of receipt by the Master Lessee of such notice and for the term (duration) of such Leasehold Mortgage, Master Lessee shall recognize the identified Leasehold Mortgagee as the holder of the Leasehold Mortgage. Notwithstanding the foregoing, Sub-Lessee agrees that under no circumstances shall the Leasehold Mortgage or any Financing Documents secure, or result in payment of, any debts or obligations that are not directly related to the Wheatley School Facility. (a) Consent to Amendment. There shall be no cancellation, surrender or modification of this Ground Lease by the Master Lessee or the Sub-Lessee without the prior written consent of any Leasehold Mortgagee. Notwithstanding the foregoing (but, in any event, subject to a Leasehold Mortgagee's curative rights set forth in subsections (c) and (d) hereof), nothing herein shall be deemed to prohibit the Master Lessee from terminating this Ground Lease in accordance with its terms. (b) Notices. The Master Lessee, upon serving the Sub-Lessee with any notice of an Event of Default, failure to comply, or termination, shall simultaneously serve a copy of such notice on any Leasehold Mortgagee. If the Master Lessee shall serve the Sub-Lessee with a notice of a failure to comply with any term, covenant, condition, or provision hereof, the Leasehold Mortgagee shall then have the same period after service of the notice on it as is given to the Sub-Lessee hereunder to remedy or cause to be remedied such failure, and the Master Lessee shall accept performances by or at the instigation of any Leasehold Mortgagee as if it had been done by the Sub-Lessee. Any notice required to be given to any Leasehold Mortgagee shall be posted in the United States mail, postage prepaid, certified, return receipt requested (and wired by telegraphic means or transmitted by facsimile transmission) and addressed to the Leasehold Mortgagee at the address and to the attention of the person designated to the Master Lessee by such Leasehold Mortgagee to receive copies of such notices and shall be deemed to have been served as of the date the said notice is received or refused by such Leasehold Mortgagee. (c) Curative Rights of Leasehold Mortgagees. In addition to the rights granted to any Leasehold Mortgagee under subsection (b) of this Section 25, a Leasehold Mortgagee shall have an additional period of sixty (60) days to remedy or cause to be remedied any Event of Default of which it shall receive notice. (d) Limitation Upon Termination Rights of the Master Lessee. If the Master Lessee shall elect to terminate this Ground Lease upon the occurrence of an Event of Default, the Leasehold Mortgagee shall also have the right to postpone and extend the date of termination as fixed by the provisions of this Ground Lease for a period of not more than three (3) months from the expiration of the sixty (60) day period specified in subsection (c) hereof, provided that the Leasehold Mortgagee shall diligently perform all of the obligations of Sub-Lessee under the terms of this Ground Lease during such period and pay the Rent and other charges required to be paid under this Ground Lease during such period, and provided further, that the Leasehold Mortgagee of this Ground Lease shall forthwith take steps necessary to acquire the Sub-Lessee's interest and estate in this Ground Lease by foreclosure of its Leasehold Mortgage, or otherwise, and shall prosecute such action to completion with due diligence. If at the end of the three (3) month period, the Leasehold Mortgagee of this Ground Lease shall be actively engaged in diligent steps Wheatley Ground Leaase – PBC to QALICB
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to acquire or sell the Sub-Lessee's interest in the Ground Lease, the time for Leasehold Mortgagee to comply with the provisions of this subsection (d) shall be extended for such period as shall be reasonably necessary to complete these steps with reasonable diligence and continuity. (e) Assignment. The Master Lessee agrees that in the event of any foreclosure under any Leasehold Mortgage, either by judicial proceedings or under power of sale contained therein, or in the event of any conveyance by deed in lieu of foreclosure, all right, title and interest encumbered by such Leasehold Mortgage may, without the consent of the Master Lessee, be assigned to and vested in the purchaser at such foreclosure sale or transferee under such deed in lieu of foreclosure, and may without the consent of the Master Lessee, subsequently be assigned in a bona fide sale by any such purchaser at such foreclosure sale or such transferee of such deed in lieu of foreclosure to any other Person, and, notwithstanding that the Master Lessee’s consent to said assignment shall not have been obtained, any such assignee shall be vested by virtue of such assignment with any and all rights of the party whose estate was encumbered by such Leasehold Mortgage as though the Master Lessee had consented thereto. (f) Limitation on Liability of Leasehold Mortgagee. Notwithstanding any other provision of this Ground Lease, the Master Lessee agree that any Leasehold Mortgagee permitted under this Ground Lease shall in no manner or respect whatsoever be (i) liable or responsible for any of the Sub-Lessee's prior obligations or covenants under this Ground Lease (nor shall any rights of such Leasehold Mortgagee be contingent on the satisfaction of such prior obligations or covenants), or (ii) required to cure any prior Event of Default, provided; however, that if such Leasehold Mortgagee becomes the owner of the leasehold estate created hereunder, then such Leasehold Mortgagee, shall be responsible and liable for all obligations and covenants accruing during such Leasehold Mortgagee's tenure as owner of such leasehold estate. Notwithstanding the foregoing, the liability of a Leasehold Mortgagee with respect to its obligations under this Ground Lease shall be "non-recourse" and, accordingly, the Master Lessee’s source of satisfaction of such obligations shall be limited to the Net Available Cash Flow and Master Lessee shall not seek to obtain payment through any judicial process or otherwise from any person or entity comprising such Leasehold Mortgagee, or from any assets of such Leasehold Mortgagee, other than the Net Available Cash Flow. (g) Rights of the Lender. So long as a Debt Financing remains outstanding in accordance with the terms and conditions of the Financing Documents, then: (i) any provision of this Ground Lease expressly recognizing or granting rights in or to a Leasehold Mortgagee may not be amended in any manner which affects the rights of the Leasehold Mortgagee without the prior written consent of the Leasehold Mortgagee, as applicable; (ii) the Lender's consent shall be required in addition to the consent of the Leasehold Mortgagee, when required, for the execution and delivery of any amendment, supplement or change to or modification of this Ground Lease or for any other action under this Ground Lease requiring the consent of any Leasehold Mortgagee, and no such amendment, supplement, change to or modification of this Ground Lease, and no action hereunder requiring the consent of any Leasehold Mortgagee shall be valid without the consent of the Lender; (iii) anything in this Ground Lease to the contrary notwithstanding, it is understood that the Leasehold Mortgage shall provide that upon the occurrence and continuance of an Event of Default, as defined therein, the Lender shall be entitled to control and direct the enforcement of all rights and remedies granted thereunder, and the Master Lessee does hereby agree to and shall recognize the Lender in such capacity; Wheatley Ground Leaase – PBC to QALICB
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(iv) to the extent that this Ground Lease confers upon or gives or grants to the Lender and any right, remedy or claim under, or by reason of, this Ground Lease, the Lender is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder; (iii)
nothing in this Ground Lease expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any Person, other than the Lessor, the Master Lessee, the Sub-Lessee, the Leasehold Mortgagee and the Lender, any right, remedy or claim under or by reason of this Ground Lease or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises, and agreements contained in this Ground Lease by and on behalf of the Lessor, Master Lessee and the Sub-Lessee shall be for the sole and exclusive benefit of the Master Lessee, the Sub-Lessee, the Leasehold Mortgagee, and the Lender;
(iv)
any provision herein granting the Leasehold Mortgagee any right, including, without limitation, the (A) right to receive or give any notice, (B) the right to receive any financial statements, reports, certifications or other information required to be delivered or disseminated hereunder, (C) the right to give any indemnification, insurance coverage or reimbursement, (D) the right to cure any Event of Default or other failure in performance, or (E) the right to receive any other benefit afforded to a permitted Leasehold Mortgagee under this Ground Lease, shall also hereby grant to the Lender the same such rights;
(v)
whenever the Lender seeks to enforce any right or remedy of the Sub-Lessee under this Ground Lease, whether as a third party beneficiary or in any other capacity under this Ground Lease the Lender shall be subrogated to the SubLessee and shall have the rights and be subject to all the limitations accruing to the Sub-Lessee hereunder;
(vi)
whenever the Lender seeks to enforce any rights or remedy of any Leasehold Mortgagee under this Ground Lease, whether as a third party beneficiary or in any other capacity under this Ground Lease, the Lender shall be subrogated to such Leasehold Mortgagee and shall have all the right and be subject to all the limitation accruing to such Leasehold Mortgagee hereunder;
(vii)
any consent or approval by the Lender shall be effective only if in writing; and
(x) anything in this Ground Lease to the contrary notwithstanding, it is understood that the Leasehold Mortgage will provide that upon the occurrence and continuance of an Event of Default, as defined herein, the Lender shall be entitled to control and direct the enforcement of all rights and remedies granted pursuant to the Leasehold Mortgage, as applicable, and the Master Lessee does hereby agree to and shall recognize the Lender in such capacity.
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Section 26.
Environmental Condition of the Property.
(viii)
The Master Lessee represents to the Sub-Lessee that, to the best of Master Lessee’s actual current knowledge without investigation except as set forth in the Phase I Environmental Report performed by ___________________ and dated ______________:
(ix)
as of the date hereof (1) there are no Hazardous Materials, as defined in subsection (d) of this Section 26, that have been spilled, disposed of, or otherwise released at, on, under, or in the Property, that are or have been migrating onto or from the Property, or otherwise are located at the Property, regardless of source, and (2) there are no Hazardous Materials, that have caused or reasonably threatened to cause any environmental contamination of the Property or otherwise have caused or reasonably threatened to cause any liability under any Environmental Law as to the Property,
(x)
there are no, and to the Master Lessee’s current knowledge without investigation, never have been any underground storage tanks, or above ground storage tanks, for storage of Hazardous Materials at the Property, and
(xi)
there are no activities or conditions that exist, and to Master Lessee’s current knowledge without investigation, have ever existed and remain unresolved at the Property that violate any Environmental Law or are reasonably expected by Master Lessee to result in any claim or liability under any Environmental Law as to the Property.
(b) Sub-Lessee shall satisfy itself concerning the environmental condition of the Property. Sub-Lessee has been provided the opportunity to perform any tests and investigations to determine if any environmental concerns are identifiable through such testing. Master Lessee will provide reasonable information, cooperation, and assistance to Sub-Lessee in connection with Sub-Lessee ‘s environmental evaluation of the Property, but Master Lessee will not be required to pay or incur any cost related thereto or to undertake any clean-up or other remedial actions. Sub-Lessee shall be responsible for any Hazardous Materials that are introduced on the Property during the Sub-Lease Term, that are the result of the actions of Sub-Lessee, its agents, employees, contractors or invitees. Sub-Lessee will indemnify, defend and hold Lessor and Master Lessee harmless from and against any claims, damages and causes of action resulting from (a) introduction of Hazardous Materials to the Property by Sub-Lessee, or its agents, employees, contractors or invitees, or (b) any failure of Sub-Lessee, during the Term, to comply with all Environmental Laws applicable to the Property. This indemnification survives the expiration or termination of this Ground Lease. As of the Effective Date, Master Lessee is not aware of any contamination of the Property by Hazardous Materials. Section 27. Notices. (a) All notices, certificates, demands, requests, or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by certified mail, postage prepaid, return receipt requested, or given when dispatched by facsimile transmission, or by personal delivery addressed as follows: If to the Master Lessee:
Orleans Schools Facilities Foundation, Inc. Attention: Address City, State, Zip
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Telephone: Facsimile: With a copy to:
If to the Lessor:
Orleans Parish School Board Attention: Address City, State, Zip Telephone: Facsimile: Recovery School District Attention: Address City, State, Zip Telephone: Facsimile:
With a copy to:
Amanda S. Wells Jones Walker 8555 United Plaza Blvd., 5th Floor Baton Rouge, LA 70809 Telephone: (225) 248-2018 Facsimile: (225) 248-3118
And a copy to:
Wayne Neveu Foley, Judell One Canal Place, Suite 2600 365 Canal Street New Orleans, LA. 270130
If to the Sub-Lessee:
Wheatley School Facility Foundation, Inc. Attention: Address City, State, Zip Telephone: Facsimile:
If to Lender:
If to Leasehold Mortgagee:
(b) Either party hereto may, by notice given to each of the other, designate any additional or different addresses to which subsequent notices, certificates, demands, requests, or other communications shall be sent.
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(c) Notwithstanding anything contained herein to the contrary, any notice required to be given by the Master Lessee or the Sub-Lessee hereunder shall be deemed to have been given and shall be effective as of the date such notice is received or refused reflected on said notice. All notices, certificates, demands, requests, or other communications made by either party to the other which are required or permitted by the provisions of this Ground Lease shall be in writing. Section 28. Submission of Matters to the Master Lessee for Approval. Any matter which must be submitted to and consented to or approved in writing by the Master Lessee or any matter which must be submitted to the Master Lessee which may become effective if not denied by the Master Lessee, as required under this Ground Lease, shall be submitted to the Master Lessee by hand or mailed by United States certified or registered mail return receipt requested, to the address of the Master Lessee designated for the giving of notice to the Master Lessee under Section 27 hereof and shall either be approved or rejected by the Master Lessee within fifteen (15) days after receipt unless a shorter period of time is expressly stated elsewhere herein. If the Master Lessee should fail so to approve or reject within such fifteen (15) day period as provided for herein, the Master Lessee’s approval shall be assumed to have been unconditionally granted and the Sub-Lessee shall have the right to proceed on such matter so submitted. The Master Lessee shall inform the Sub-Lessee in writing of a rejection or approval of such submitted matter by United States certified or registered mail, return receipt requested, to the address of the Sub-Lessee designated for the giving of notice to the Master Lessee in Section 27 hereof. Section 29. Holding Over by the Sub-Lessee. The Sub-Lessee shall not use or remain in possession of the Property after the termination of this Sub-Lease pursuant to this Ground Lease except as contemplated in Section 2(b) hereof. Any holding over, or continued use or occupancy by the Sub-Lessee after the termination of the Sub-Lease pursuant to this Ground Lease, without the written consent of the Master Lessee, shall not constitute a tenant-at-will interest in behalf of the Sub-Lessee, but the SubLessee shall become a tenant-at-sufferance and liable for Rent and all other expenses, obligations and payments in effect for the immediately preceding year of the Term of this Ground Lease. There shall be no renewal whatsoever of this Ground Lease by operation of law. Section 30.
Representations and Warranties.
(a) The Sub-Lessee makes the following representations and warranties as the basis for the undertakings on its part herein contained: (i) Organization/Power/SPE. The Sub-Lessee is a nonprofit corporation duly organized, validly existing, and in good standing under the laws of the State of Louisiana, is authorized to do business in the State, and has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as it is now being conducted and as it is currently proposed to be conducted. (ii) Pending Litigation and Taxes. There are no actions, suits, proceedings, inquiries, or investigations pending or, to the knowledge of the Sub-Lessee, threatened against or affecting the Sub-Lessee in any court or by or before any governmental authority or arbitration board or tribunal that involve the likelihood of materially and adversely affecting the properties, business, prospects, profits, operations, or condition (financial or otherwise) of the Sub-Lessee, or the ability of the Sub-Lessee to perform its obligations under this Ground Lease, or the transactions contemplated by this Ground Lease or that, in any way, would adversely affect the validity or enforceability of this Ground Lease or any agreement or instrument to which the Sub-Lessee is a party and that is used or contemplated for use in the consummation of the transactions contemplated Wheatley Ground Leaase – PBC to QALICB
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hereby or thereby, nor is the Sub-Lessee aware of any facts or circumstances currently existing that would form the basis for any such action, suit, or proceeding. The SubLessee is not in default with respect to any judgment, order, writ, injunction, decree, demand, rule, or regulation of any court, governmental authority, or arbitration board or tribunal. All tax returns (federal, state, and local) required to be filed by or on behalf of the Sub-Lessee have been duly filed, and all taxes, assessments, and other governmental charges shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Sub-Lessee in good faith, have been paid or adequate reserves have been made for the payment thereof. (iii) Agreements Are Legal and Authorized. The execution and delivery by the Sub-Lessee of this Ground Lease, the consummation of the transactions herein contemplated, and the fulfillment of or the compliance with all of the provisions hereof (1) are within the power, legal right, and authority of the Sub-Lessee, (2) are legal and will not conflict with or constitute on the part of the Sub-Lessee a violation of or a breach of or a default under, or result in the creation or imposition of any lien, charge, restriction, or encumbrance (other than Permitted Encumbrances) upon any property of the Sub-Lessee under the provisions of, any charter instrument, bylaw, indenture, mortgage, deed of trust, pledge, note, lease, or loan, or installment sale agreement, contract, or other agreement or instrument to which the Sub-Lessee is a party or by which the Sub-Lessee or its properties are otherwise subject or bound, or, to its knowledge, any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree, or demand of any court or governmental agency or body having jurisdiction over the Lessee or any of its activities or properties, and (3) have been duly authorized by all necessary and appropriate corporate action on the part of the Sub-Lessee. This Ground Lease is the valid, legal, binding, and enforceable obligations of the Sub-Lessee. The officer or officers of the Sub-Lessee executing this Ground Lease are duly and properly in office and are fully authorized and empowered to execute the same for and on behalf of the Sub-Lessee. (iv) Governmental Consents. Neither the Sub-Lessee nor any of its business or properties, nor any relationship between the Sub-Lessee and any other person or entity, nor any circumstance in connection with the execution, delivery, and performance by the Sub-Lessee of its obligations under this Ground Lease, is such as to require the consent, approval, permission, order, license, or authorization of, or the filing, registration, or qualification with, any governmental authority on the part of the Sub-Lessee in connection with the execution, delivery, and performance of this Ground Lease or the consummation of any transaction herein contemplated, except as shall have been obtained or made and as are in full force and effect. (v) Compliance with Law. To the knowledge of the Sub-Lessee, the SubLessee is not in violation of any laws, ordinances, or governmental rules or regulations to which it is subject and has not failed to obtain any licenses, permits, franchises, or other governmental authorizations (that are currently obtainable) necessary to the ownership of its or their properties or to the conduct of its business, which violation or failure to obtain might materially and adversely affect the properties, business, prospects, profits, or condition (financial or otherwise) of the Sub-Lessee. (b) The Master Lessee makes the following representations as the basis for the undertakings on its part herein contained:
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(i) Organization/Power/SPE. The Master Lessee is a nonprofit public benefit corporation of the School Board duly organized, validly existing, and in good standing under the laws of the State of Louisiana, is authorized to do business in the State, and has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as it is now being conducted and as it is currently proposed to be conducted. (ii) Pending Litigation and Taxes. There are no actions, suits, proceedings, inquiries, or investigations pending or, to the knowledge of the Master Lessee, threatened against or affecting the Lessee in any court or by or before any governmental authority or arbitration board or tribunal that involve the likelihood of materially and adversely affecting the properties, business, prospects, profits, operations, or condition (financial or otherwise) of the Master Lessee, or the ability of the Master Lessee to perform its obligations under this Ground Lease, or the transactions contemplated by this Ground Lease or that, in any way, would adversely affect the validity or enforceability of this Ground Lease or any agreement or instrument to which the Master Lessee is a party and that is used or contemplated for use in the consummation of the transactions contemplated hereby or thereby, nor is the Master Lessee aware of any facts or circumstances currently existing that would form the basis for any such action, suit, or proceeding. The Master Lessee is not in default with respect to any judgment, order, writ, injunction, decree, demand, rule, or regulation of any court, governmental authority, or arbitration board or tribunal. All tax returns (federal, state, and local) required to be filed by or on behalf of the Master Lessee have been duly filed, and all taxes, assessments, and other governmental charges shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Lessee in good faith, have been paid or adequate reserves have been made for the payment thereof. (iii) Agreements Are Legal and Authorized. The execution and delivery by the Master Lessee of this Ground Lease, the consummation of the transactions herein contemplated, and the fulfillment of or the compliance with all of the provisions hereof (1) are within the power, legal right, and authority of the Master Lessee, (2) are legal and will not conflict with or constitute on the part of the Master Lessee a violation of or a breach of or a default under, or result in the creation or imposition of any lien, charge, restriction, or encumbrance (other than Permitted Encumbrances) upon any property of the Master Lessee under the provisions of, any charter instrument, bylaw, indenture, mortgage, deed of trust, pledge, note, lease, or loan, or installment sale agreement, contract, or other agreement or instrument to which the Master Lessee is a party or by which the Master Lessee or its properties are otherwise subject or bound, or, to its knowledge, any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree, or demand of any court or governmental agency or body having jurisdiction over the Master Lessee or any of its activities or properties, and (3) have been duly authorized by all necessary and appropriate corporate action on the part of the Master Lessee. This Ground Lease is the valid, legal, binding, and enforceable obligations of the Master Lessee. The officer or officers of the Lessee executing this Ground Lease are duly and properly in office and are fully authorized and empowered to execute the same for and on behalf of the Master Lessee. (iv) Governmental Consents. Neither the Master Lessee nor any of its business or properties, nor any relationship between the Master Lessee and any other person or entity, nor any circumstance in connection with the execution, delivery, and performance by the Master Lessee of its obligations under this Ground Lease, is such as Wheatley Ground Leaase – PBC to QALICB
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to require the consent, approval, permission, order, license, or authorization of, or the filing, registration, or qualification with, any governmental authority on the part of the Lessee in connection with the execution, delivery, and performance of this Ground Lease or the consummation of any transaction herein contemplated, except as shall have been obtained or made and as are in full force and effect. (v) Compliance with Law. To the knowledge of the Master Lessee, the Master Lessee is not in violation of any laws, ordinances, or governmental rules or regulations to which it is subject and has not failed to obtain any licenses, permits, franchises, or other governmental authorizations (that are currently obtainable) necessary to the ownership of its or their properties or to the conduct of its business, which violation or failure to obtain might materially and adversely affect the properties, business, prospects, profits, or condition (financial or otherwise) of the Lessee.
Section 31.
Miscellaneous.
(a) Rights are Cumulative. All rights, powers, and privileges conferred herein upon both parties hereto shall be cumulative. (b) Provisions are Binding Upon Assigns and are Real Covenants. It is mutually covenanted, understood and agreed by and between the Parties hereto, that each of the provisions of this Ground Lease shall apply to, extend to, be binding upon and inure to the benefit or detriment of not only the parties hereto, but also the legal representatives, successors and assigns of the Master Lessee and the Sub-Lessee hereto, and shall be deemed and treated as real covenants running with the Property during the Term of this Ground Lease. The parties further acknowledge and agree that the Lender and any other Leasehold Mortgagees and their respective successors and assigns shall be deemed third party beneficiaries hereunder. Whenever a reference to the parties hereto is made, such reference shall be deemed to include the legal representatives, successors and assigns of said party, the same as if in each case expressed. (c) Applicable Law. This Ground Lease shall be governed, construed, performed and enforced in accordance with the laws of the State without regard to conflicts of law principles. (d) All Genders and Numbers Included. Whenever the singular or plural number, or masculine, feminine, or neuter gender is used in this Ground Lease, it shall equally apply to, extend to, and include the other. (e) Invalidity of Provision or Part Thereof. In the event any provision, or any portion of any provision of this Ground Lease is held invalid, the other provisions of this Ground Lease and the remaining portion of said provision, shall not be affected thereby and shall continue in full force and effect. (f) Time is of the Essence. All time limits stated in this Ground Lease are of the essence of this Ground Lease. (g) Section Captions are to be Disregarded. The captions of the numbered sections of this Ground Lease are for purposes of identification and convenience only and are to be completely disregarded in construing this Ground Lease. (h) Subordination. Notwithstanding anything else contained herein, the Master Lessee agrees that the financing of the Construction, and furnishing of the Wheatley School Facility will directly benefit Wheatley Ground Leaase – PBC to QALICB
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the Master Lessee’s operations and the Master Lessee agrees that its interests in and to the Property and the Wheatley School Facility, including all improvements and all rents, revenues, issues and profits relating to the operation of the Wheatley School Facility, including, without limitation, Net Available Cash Flow shall be junior and subordinate to the interest of the Lender and/or any other Leasehold Mortgagee as granted or provided in any of the Financing Documents (collectively, the "Financing Collateral"). So long as any of the indebtedness created, evidenced, or secured by any of the Financing Documents remains outstanding and unpaid, the Master Lessee shall not exercise any rights or remedies with respect to the Financing Collateral without obtaining in each instance the prior written consent of the Lender and any other Leasehold Mortgagee. (i) Entire Agreement Contained Herein. This Ground Lease constitutes the full, complete and entire agreement between and among the Parties; no agent, employee, officer, representative or attorney of the Parties has authority to make, or has made, any statement, agreement, representation or contemporaneous agreement, oral or written, in connection herewith modifying, adding to or changing the provisions of this Ground Lease. No amendment of this Ground Lease shall be binding unless such amendment shall be in writing, signed by both parties hereto and approved by the Lender, if any, and attached to, incorporated in and by reference made a part of this Ground Lease. (j) No Partnership or Agency. Except between the School Board and the Master Lessee, nothing in this Ground Lease is intended, or shall in any way be construed, so as to create any form of partnership or agency relationship between the Parties. Except between the School Board and the Master Lessee, the parties hereby expressly disclaim any intention of any kind to create any partnership or agency relationship between themselves. Nothing in this Ground Lease shall be construed to make either Party liable for any of the indebtedness of the other, except as specifically provided herein. (k) Limitation of Liability. Notwithstanding anything herein to the contrary, the liability of the Sub-Lessee hereunder (including, but not limited to its indemnity obligations) under this Ground Lease shall be "non-recourse" and, accordingly, the Master Lessee’s sole source of satisfaction of such obligations shall be limited to the Sub-Lessee's interest in the Property and the Wheatley School Facility and the rents, issues and surplus related thereto, and the Master Lessee shall not seek to obtain payment from any person or entity comprising the Sub-Lessee or from any assets of the Sub-Lessee other than those described herein, notwithstanding the survival of any obligation of the Sub-Lessee beyond the SubLease Term hereof. (l) Recordation of Memorandum of Lease. The Master Lessee and the Sub-Lessee agree that the parties shall execute, seal, acknowledge and deliver simultaneously with the execution of this Ground Lease, the Memorandum of Ground Lease. (m) Counterparts. This Ground Lease may be executed simultaneously in two or more counterparts, each of which shall be deemed original and all of which, when taken together, shall constitute one in the same document. The signature of any party to any counterpart shall be deemed a signature too, and may be appended to, any other counterpart. (n) No Merger. So long as any Leasehold Mortgage is in existence, the fee title to the Property and the leasehold in the Property shall not merge but shall remain separate and distinct, notwithstanding the acquisition of said fee title and said leasehold by the Master Lessee or the Sub-Lessee or by a third party, by purchase or otherwise. (o) Non-Waiver. No waiver by either party of any violation or breach of any of the terms, provisions and covenants contained in this Ground Lease shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants contained in this Wheatley Ground Leaase – PBC to QALICB
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Ground Lease. Forbearance by either party in enforcing one or more of the remedies provided in this Ground Lease upon an Event of Default shall not be deemed or construed to constitute a waiver of such Event of Default or of such party’s right to enforce any such remedies with respect to such Event of Default or any subsequent Event of Default.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the Master Lessee and Sub-Lessee have caused this Ground Lease to be duly executed in duplicate counterparts each of which shall be deemed to be an original, the day and year first above written.
Master Lessee: ORLEANS SCHOOLS FACILITIES FOUNDATION, INC.
By Its TWO WITNESSES:
Name:
Name:
Notary Public My commission expires:
Sub-Lessee: WHEATLEY SCHOOL FACILITY FOUNDATION, INC.
By Its TWO WITNESSES:
Name:
Name:
Notary Public My commission expires:
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EXHIBIT “A” DESCRIPTION OF PROPERTY
{B0838657.2}
LOAN AGREEMENT THIS LOAN AGREEMENT (this “Agreement”), dated as of [February __], 2013 (the “Closing Date”), is by and between WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana nonprofit corporation (“Borrower”), and [GSNMF Sub-CDE 9, LLC / MBS-UI Sub-CDE XXIV, LLC] (“Lender”). RECITALS Borrower proposes to lease certain immovable property from The Orleans Schools Facility Foundation, Inc., a Louisiana public benefit corporation, pursuant to a Ground Lease dated even date herewith, as more fully described on Exhibit A attached hereto (the “Property”), and intends to develop, construct, and operate (or cause to be operated) an approximately 500 student public elementary school facility thereon (the “Project”), which it intends to lease to FirstLine Schools, Inc., a Louisiana nonprofit corporation (“Operator”). The Project is located within United States population census tract number 22071004401 (the “Census Tract”), which area Borrower has found to be characterized by economic distress and inadequate access to capital. Borrower believes that the Project will have a catalytic effect on economic development within the Census Tract and, through the services provided by Borrower, other low-income communities as defined in Section 45D of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (collectively, the “Code”) and the Treasury Regulations and Guidance (the “NMTC Program”). [GS New Markets Fund, LLC / MBS Urban Initiatives CDE, LLC] (the “CDE”), has received an allocation of New Markets Tax Credits (“Tax Credits”) under Section 45D of the Code. [RSD Wheatley NMTC] Investment Fund LLC, a Delaware limited liability company (the “Fund”), will make an equity investment in Lender, which is a subsidiary of the CDE, in the aggregate amount of $[4,000,000/5,745,000] (collectively, the “Investment”), which Investment is intended to constitute a “qualified equity investment” (“QEI”) under the NMTC Program. The proceeds of the Investment will be used by Lender to make a loan (the “Loan”) to Borrower in the aggregate principal amount of $[4,000,000 / 5,745,000] (the “Principal Amount”), which Loan is expected to constitute a “qualified low-income community investment” (“QLICI”) under the NMTC Program and which shall be evidenced by (i) a promissory note in the amount of $[2,830,000 / 4,117,087] (the “Note A”) and (ii) a promissory note in the amount of $[1,170,000 / 1,627,913] (the “Note B”; together with Note A, the “Notes”). The proceeds of the Loan will be used to acquire a leasehold interest in the Property, pay certain fees and expenses of the Borrower, capitalize reserves, pay for construction costs and pay {B0846882.3} 579519.5 200846512.1
for certain other expenses as set forth in the Financial Projections, all in connection with the development of the Project. The availability of Tax Credits with respect to the Loan has enabled Lender to provide the Loan, using terms and conditions that are flexible and non-conventional. Lender believes that the provision of private-sector capital investment as represented by the Loan on such terms will serve to stimulate economic opportunity and create jobs within the Census Tract. NOW, THEREFORE, for and in consideration of the sum of $10.00 cash in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I. DEFINITIONS Section 1.01 Specific Definitions. The following terms have the following definitions (each definition is equally applicable to the singular and plural forms of the terms used, as the context requires): “Account Control Agreement” means that certain Control Agreement (Construction Disbursement Account) by and among Borrower, Lender and Bank, of even date herewith. “Account Pledge Agreement” means that certain Collateral Assignment, Pledge and Security Agreement (Construction Disbursement Account) made by Borrower in favor of Lender, of even date herewith, encumbering Borrower’s interest in the Property. “Affiliate” shall mean any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, another Person. For purposes of this definition, the term “control,” when used with respect to any Person, shall include, without limitation, the direct or indirect beneficial ownership of more than ten percent (10%) of the outstanding voting securities or voting equity of such Person, or the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. “Allocation Agreement” means the New Markets Tax Credit Program Allocation Agreement (Control Number: [ ]), with a Notice of Allocation date of [ ], by and among the CDE, Lender, certain subsidiaries of CDE, and the CDFI Fund, as such agreement may be further amended from time to time. “Architect’s Agreement” means that certain Contract between Owner and Designer by and between RSD (the “Developer”) and Holly & Smith Architects, APAC (the “Architect”) dated as of November 20, 2009, as assigned by Owner to the Borrower pursuant to that certain Reimbursement Agreement and Assignment of Contracts, Intangibles and Warranties by and among the Borrower, Owner, [ ], [ ], and certain other parties, dated as of [____________]. “Assignment Agreement” means that certain Assignment of Construction Documents dated of even date herewith by and between Borrower and Lender.
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“Bank” shall mean [ ]. “Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in New Orleans, Louisiana. “CDFI Fund” means the Community Development Financial Institutions Fund of the United States Treasury Department. “Closing Date” means the date of this Agreement. “Co-Lender” shall mean [MBS-UI Sub-CDE XXIV, LLC / GSNMF Sub-CDE 9, LLC, a _____________________, and its successors and assigns]. “Co-Lender’s Loans” shall mean the $[5,745,000 / 4,000,000] financing provided to Borrower from Co-Lender, pursuant to the terms of certain Loan Agreement by and between Borrower and Co-Lender of event date herewith. “Construction Contract” means that certain AIA Document A101-2007 by and between the Developer and Gibbs Construction, LLC, dated as of September 11, 2012. “Developer” means the State of Louisiana, Department of Education, Recovery School District, acting pursuant to that certain Development Agreement between Developer and Borrower dated ___________, 2013 (“Development Agreement”). “Disbursement Agreement” means that certain Construction Monitoring and Disbursement Agreement dated as of the date hereof by and among Borrower, Lender, Bank and certain other parties. “Financial Projections” means the financial projections, prepared by Novogradac & Co. dated on or about the date hereof. “Flow of Funds Memorandum” will mean that certain Flow of Funds Memorandum dated as of the date hereof by and among Borrower, Lender, et. al. “Fund” has the meaning ascribed to such term in the Recitals. “Ground Lease” means that certain Ground Lease by and between Orleans Schools Facilities Foundation, Inc., as lessor, and Borrower, as lessee, dated of even date herewith. “Guaranty” means that certain Completion Guaranty dated of even date herewith made by [ ] in favor of Lender. “Hazardous Materials Indemnity Agreement” means that certain Indemnity Agreement on Hazardous Materials dated of even date herewith by and between Borrower and Lender.
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“Lease” means that certain Facilities Sublease Agreement by and between the Borrower, as lessor, and Operator, as lessee, dated of even date herewith, in connection with the leasing of the Property. “Loan Documents” means this Agreement, the Notes, the Guaranty, the Assignment Agreement, the Hazardous Materials Indemnity Agreement, the Mortgage, the Disbursement Agreement, and the Account Control Agreement. “Master Lease” means that certain Master Lease by and between The State of Louisiana, Department of Education, Recovery School District and The Orleans Parish School Board, as lessor, and Orleans Schools Facilities Foundation, Inc., as lessee, dated of even date herewith. “Material Adverse Effect” means a material adverse effect on (i) the business, operations, or property of Borrower, (ii) the ability of Borrower to pay and perform its Obligations, or (iii) the validity or enforceability of the Loan Documents or the rights or remedies of Lender thereunder. “Mortgage” means that certain Leasehold Mortgage, Security Agreement, Assignment of Rents and Leases, and Fixture Filing by the Borrower for the benefit of the Lender dated of even date herewith. “NMTC Regulations” shall mean and include any temporary and/or final regulations promulgated under Section 45D of the Code. “NMTC Recapture Event” shall mean those events or conditions that cause or result in a disallowance or recapture of the Tax Credits under Section 45D(g) of the Code and the NMTC Regulations. “NMTC Recapture Period” shall mean the seven (7) year period beginning on the date a capital contribution is made in Lender that is designated a QEI and ending on the day immediately preceding the seventh anniversary of the last date a capital contribution is made in Lender that is designated a QEI. “Obligations” means collectively the obligations of Borrower to pay to Lender: (i) any and all sums due to Lender under or pursuant to the Loan, the Notes, or otherwise under the terms of this Agreement or any accompanying Loan Documents; and (ii) any other indebtedness or liability of Borrower to Lender, whether direct or indirect (by way of endorsement, guaranty, pledge or otherwise), liquidated or unliquidated, joint, several, or solidary, absolute or contingent, contemplated or uncontemplated, or otherwise arising from any loan, note, letter of credit, guaranty, overdraft, or any other duty owed by Borrower to Lender, now existing or hereafter arising.“Person” shall mean an individual, corporation, partnership, limited liability company, trust, or unincorporated organization, or a government or any agency or political subdivision thereof. “Principal Amount” has the meaning ascribed to such term in the Recitals. “QALICB” means a “qualified active low-income community business,” as such term is defined in Section 45D of the Code and the Treasury Regulations and Guidance. {B0846882.3} 200846512.1
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“Treasury Regulations and Guidance” means and includes any temporary and/or final regulations promulgated under the Code and any guidance, rule, or procedure published by the US Department of Treasury CDFI Fund, including without limitation the Community Development Entity Certification Application. Section 1.02 Accounting Terms. The accounting terms used in this Agreement have the meanings customarily given them in accordance with generally accepted accounting principles, unless this Agreement expressly provides a different meaning. ARTICLE II. BASIC TERMS OF LOAN Section 2.01 Term Loan. Subject to the compliance of Borrower with the terms of this Agreement and all other Loan Documents and the absence of any default by Borrower hereunder and thereunder, Lender shall advance to Borrower, for use by Borrower as hereafter provided, the Loan, which Loan is expected to constitute a QLICI in the full amount of the Loan on the date hereof. Borrower shall use the proceeds of the Loan to acquire a leasehold interest in the Property, pay certain fees and expenses of the Borrower, capitalize one or more reserves, pay for construction costs and pay for certain other expenses set forth in the Financial Projections, all in connection with the development of the Project. Section 2.02 Loan Disbursement. Following the satisfaction of all of the conditions precedent set forth in Section 3.01, and subject to the satisfaction of all of the conditions subsequent set forth in Section 3.02, Lender shall advance the full Principal Amount of the Loan to Borrower, which amount is expected to constitute a QLICI on the date of such advance. Section 2.03 Evidence of Loan; Terms of Repayment. The interest rate on the Loan and the method of calculating interest upon the Loan, the term of the Loan, the method and times of repayment, and other conditions pertaining to the repayment of the Loan are set forth in and evidenced by the Notes. The Loan shall be made on the following terms: (a)
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The Loan. The Loan, equal to the Principal Amount and evidenced by the Notes, shall bear interest at all times at a per annum interest rate of 1.0% commencing on the date the full Principal Amount of the Loan is made and ending on [February 15], 2048 (the “Note Maturity Date”). Borrower shall make payments on Notes as follows on a pari passu basis with payments on the Co-Lender’s Loans: (A) during the period commencing on the Closing Date and ending with the quarterly payment due on December 15, 2020, interest only (as calculated pursuant to Section 2.03(b) below) shall be payable in successive quarterly installments beginning March 15, 2013, and continuing on the fifteenth day of each calendar quarter thereafter (i.e., March 15th, June 15th, September 15th, and December 15th) (each, a “Payment Date”); (B) for the quarterly payment due on March 15, 2021 and for each quarterly payment thereafter through the Note Maturity Date, interest (as calculated pursuant to Section 2.03(b) below) and principal shall be payable in successive quarterly installments on the fifteenth day of each calendar quarter, based on the amortization schedule set forth on Exhibit D attached hereto; and (C) on the Note Maturity Date, the entire outstanding balance, together with all accrued and unpaid interest thereon and all other sums payable hereunder, 5
shall mature and be due and payable in full to Lender, unless sooner accelerated pursuant to the Loan Documents or otherwise. Notwithstanding anything to the contrary, to the extent a Payment Date falls on a day which is not a Business Day, the relevant Loan payment due on such Payment Date shall be due and payable on the next following Business Day. (b)
Calculations. Interest under the Notes shall be calculated based upon a 360-day year and four 90-day quarters, compounded on a quarterly basis. Interest shall accrue on the unpaid accrued interest and on the outstanding principal balance of the Notes at the beginning of each quarter. Interest shall be calculated from the beginning of the calendar quarter in which the Payment Date occurs through the end of the calendar quarter in which the Payment Date occurs.
(c)
Construction Disbursement Account. On the Closing Date, Borrower shall establish a construction disbursement account (the “Construction Disbursement Account”) in an amount equal to no less than $[18,703,500] in the name of Borrower, using the Borrower’s federal taxpayer identification number, and held at Bank. Proceeds in the Construction Disbursement Account shall be available, as provided in the Disbursement Agreement (i) to fund the costs and expenses payable by Borrower in connection with the closing and the funding of the Loan, (ii) for application to previously incurred Project costs, (iii) for payment of specified acquisition and construction costs and expenses, and (iv) for certain other costs and expenses, all as approved by Lender in its reasonable discretion (collectively, the “Approved Advances”). Disbursements from the Construction Disbursement Account shall be made pursuant to a Disbursement Request in the form set forth in Exhibit C of the Disbursement Agreement not more often than on a monthly basis. The Construction Disbursement Account shall be subject to the Account Pledge Agreement and the Account Control Agreement. Any interest earned on funds deposited in such account shall be treated by the Borrower as income of the Borrower for federal income tax purposes. Lender agrees that upon completion of the Project, any remaining funds in the Construction Disbursement Account shall be applied and/or released pursuant to the terms of [Section 4] of the Disbursement Agreement.
(d)
Prepayment. Borrower shall not be permitted to prepay all or any portion of the Loan prior to the seventh anniversary of the date hereof. Thereafter, all or any portion of the Loan may be prepaid upon ten Business Days prior written notice. Lender shall not be obligated to re-advance to Borrower any sums prepaid by Borrower, whether prepaid voluntarily or involuntarily pursuant to the terms of any Loan Document. If Borrower prepays (voluntarily or involuntarily) all or any portion of the Loan prior to the seventh anniversary of the date hereof, Borrower shall also pay to the Lender any and all sums necessary to compensate Lender for all costs, expenses, claims, penalties and liabilities incurred by Lender by virtue of the repayment or prepayment of funds, except for costs, expenses, claims, penalties or liabilities incurred by Lender as a result of a NMTC Recapture Event, which costs, expenses, claims, penalties and liabilities shall be governed solely by
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that certain QALICB Guaranty of New Markets Tax Credits by Borrower in favor of [ ]. ARTICLE III. CONDITIONS TO ADVANCES Section 3.01 Conditions Precedent to Advance. Lender shall not be obligated to advance the Principal Amount of the Loan under this Agreement, unless the following conditions precedent shall have been satisfied: (a)
Loan Documents. Lender shall have received, in form and substance acceptable to Lender each of the Loan Documents duly executed by Borrower.
(b)
Other Requirements. Lender shall have received the documents, data or information with respect to the Borrower, Operator and the Project required under this Agreement and the Disbursement Agreement and as Lender may reasonably request, including, without limitation, governing instruments, financial projections, legal opinions, evidence of insurance, construction and contracting documentation, financial information, third party reports and consents from any entities involved in the transactions contemplated by this Agreement, all in form and content reasonably satisfactory to Lender; provided that Lender shall have the option in its reasonable discretion to waive or defer any of the foregoing requirements.
Section 3.02 Conditions Subsequent to Advance. Lender’s obligation to advance any Principal Amount of the Loan under this Agreement is subject to the satisfaction of the following additional conditions subsequent: (a)
Application of Funds. Baronne Title Co., Inc. (the “Title Agent”) shall distribute the proceeds of the Loan in accordance with the terms of the Flow of Funds Memorandum by and between Borrower and the seller of the Property in accordance with that certain Closing Transfers and Authorizations Agreement dated as of the date hereof, by and among Lender, Borrower, Fund and such other parties thereto. ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that: Section 4.01 Accuracy. All information, financial statements and data submitted to Lender by Borrower are true, accurate and complete in all material respects and fairly represent the financial condition of Borrower as of the respective dates thereof, and no material change has occurred in the financial condition of Borrower as reflected therein since the respective dates thereof. Borrower provided to Lender true, correct and complete copies of Borrower’s certificate of incorporation, bylaws and authorizing resolutions, all as in effect on the date hereof. Section 4.02 Authority. Borrower is duly organized and existing in good standing in the State of Louisiana and all other jurisdictions where it conducts its business or its receivables are located, and has all requisite power, authority, licenses and permits to own its property and {B0846882.3} 200846512.1
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carry on its business, and Borrower shall deliver to Lender a written opinion of counsel to such effect if requested by Lender. None of the terms and conditions herein are in violation of the Articles of Incorporation or by-laws, or other organizational documents of Borrower, any contractual obligation Borrower may have with any Person, or any law, regulation, order or decree by which Borrower is bound, and the execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by appropriate corporate action, and Borrower shall deliver to Lender a written opinion of counsel to such effect if requested by Lender. The Loan Documents to which Borrower is a party constitute the valid and legally binding obligations of Borrower and are fully enforceable against Borrower in accordance with their respective terms, except to the extent that such enforceability may be limited by laws generally affecting the enforcement of creditors’ rights. Section 4.03 Litigation. No litigation or other legal or governmental actions, proceeding, inquiry or investigation by or before any court or administrative agency or government authority is pending, or to the knowledge of Borrower, is threatened against Borrower or any affiliate of Borrower (the outcome of which, with respect to any such affiliate, could have a Material Adverse Effect on Borrower. Borrower is not the subject of any pending bankruptcy proceeding nor subject to the continuing jurisdiction of a bankruptcy court as the result of an approved plan of reorganization. Section 4.04 Addresses. The principal place of business of Borrower is at the address set forth in this Agreement. Section 4.05 Taxes. There are no unpaid Federal, state, city, parish, or other taxes owed by Borrower, there are no Federal, state, city, parish or other tax liens presently filed against Borrower or the Property, and there are no outstanding personal property taxes of any kind, except to the extent an installment payment plan is in effect for such payments. Borrower does not know of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years. All ad valorum real estate taxes required to be paid by the Borrower with respect to the Property have been paid when due and payable. There is not presently pending (and to Borrower’s knowledge, there is not contemplated) any special assessment against the Property or any part thereof. All tax return and information returns required to be filed have been filed with the appropriate governmental authority in a timely manner. Section 4.06 Indebtedness. Borrower has no indebtedness other than the Loan. Section 4.07 Legality of Project. The Property and the Project and their present and contemplated use and occupancy are in full compliance with all applicable legal requirements, and, without limiting the foregoing, are properly zoned for the stated use of the Property and the Project as disclosed to Lender at the time of execution of this Agreement. Section 4.08 Permits. Except as otherwise disclosed in writing to Lender, Borrower has obtained, and will require all its lessees or licensees to obtain, all licenses, permits, registrations, certificates and other approvals, governmental and otherwise (including, without limitation, zoning, building code, land use and environmental) (collectively, the “Permits and Approvals”), necessary for the use, occupancy and operation of the Property and the conduct of its business thereat. No event or condition currently exists which could result in the revocation, {B0846882.3} 200846512.1
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suspension, or forfeiture of any Permits and Approvals that have been obtained on or prior to the date hereof. Section 4.09 No Defaults. Borrower is in compliance with, and no default exists with respect to Borrower (or would, with the giving of notice or the passage of time, exist) under, each of (i) the Construction Contract, (ii) the Architect’s Agreement, (iii) Borrower’s organizational documents, (iv) the Loan Documents, or (v) any other material agreements pertaining to Borrower or to which Borrower is a party relating to the Project or the ownership or operation of the Property. Section 4.10 Utilities. Prior to completion of the Project, the Property shall be adequately served by all utilities required for the current or contemplated use thereof. To Borrower’s knowledge, all water and sewer systems are provided to the Property by public utilities, and the Property has accepted or is equipped to accept such utility services. Section 4.11 Property. Except as may be set forth in the Borrower’s leasehold title policy to be issued to Borrower on the date of the acquisition of the Property, (i) all of the improvements on or to be made on the Property lie wholly within the boundaries and building restriction lines of the Property, (ii) no easements or other encumbrances affecting the Property encroach upon any of the improvements on or to be made on the Property, (iii) no improvements on adjacent properties encroach upon the Property, and (iv) no portion of the improvements on or to be made on the Property are located in an area identified by the Federal Emergency Management Agency or any successor thereto, as an area having special flood hazards. Section 4.12 Assessments. No unpaid assessments for public improvements or assessments otherwise affecting the Property currently exist or, to Borrower’s knowledge, are pending, nor, to Borrower’s knowledge, are improvements contemplated to the Property that may result in any such assessments.
ARTICLE V. COVENANTS Borrower covenants that: Section 5.01 Additional Indebtedness. Except for the Co-Lender’s Loan, t he Borrower, without the prior written consent of the Lender, shall not incur any additional indebtedness or pledge or grant any mortgage or security interest in and to its rights to the Property or the Project. Section 5.02 Closing Costs. The Loan shall be without any cost whatsoever to Lender. Borrower shall pay, or shall cause to be paid, on demand all costs and expenses in connection with the preparation, negotiation, execution, delivery, filing, recording and administration (including amendments and modifications) of the Loan Documents. Lender will employ best efforts to reasonably control any such costs and expenses. In addition, but not as a limitation (except as provided below), Borrower will pay:
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(a)
all taxes and recording expenses, including all intangible, registration and stamp taxes, if any;
(b)
reasonable environmental audit fees and insurance consulting fees;
(c)
fees due to brokers in connection with the Property or this Agreement;
(d)
all legal fees and expenses plus reimbursement of all out of pocket expenses incurred in connection the closing of the Loan;
(e)
all fees incurred in connection with the delivery of the legal opinions; and
(f)
all fees of Novogradac & Co. in connection with preparation of the Financial Projections.
Section 5.03 Leases. Any lease that Borrower shall enter into as lessor shall have rents at or below fair market value rents. Section 5.04 Ground Lease. Borrower shall comply with the terms and provisions of the Ground Lease. Section 5.05 Fund Expenses and Fund Management Fee. So long as the Obligations are outstanding, Borrower shall pay or reimburse, (i) at the direction of Lender all Extraordinary Expenses and Extraordinary Claims (as such terms are defined in the Operating Agreement of the Fund dated as of the date hereof) actually incurred by the Fund and (ii) the Annual Management Fee (as such term is defined in the Operating Agreement of the Fund dated as of the date hereof). Section 5.06 Further Documents. Borrower shall execute and deliver to Lender from time to time any instruments or documents, and shall do all things necessary or convenient to carry into effect the provisions of this Agreement. Section 5.07 Taxes. Borrower shall pay and discharge, and shall cause its lessee to pay and discharge, when due, all taxes, levies, liens, and other charges on any of its assets and shall pay promptly, when due, all other taxes, including withholding taxes. Section 5.08 Laws. Borrower shall comply at all times with all laws, ordinances, rules and regulations of any Federal, state, municipal or other public authorities having jurisdiction over Borrower. Section 5.09 Name and Location. Borrower shall not, without the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed, open any new place of business or close any of its existing places of business, and shall immediately advise Lender in writing of any change in Borrower’s name. Section 5.10 Borrower Purpose. The nature of the business of Borrower and the express purposes for its existence as set forth in Borrower’s organizational documents shall be limited to Borrower’s engagement in any lawful act or activity, and to exercise any powers {B0846882.3} 200846512.1
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permitted, to not-for-profit corporations under the laws of the State of Louisiana that are related, incidental and necessary to accomplish any of the matters contemplated by this Agreement. Section 5.11 Liquidation. For so long as the Loan remains outstanding (the “Applicable Period”), Borrower shall not dissolve or liquidate, in whole or in part. Section 5.12 Consolidation or Merger. Borrower shall not, without the prior written consent of Lender, (i) consolidate or merge with any third party or sell all or substantially all of its assets to any third party; (ii) enter into a line of business or undertake any transaction that is unrelated to (1) Borrower’s not-for-profit purposes or (2) the business of development, ownership and operation of the Project; or (iii) change its name or the location of its executive offices or principal place of business or the office where it keeps its books and records. Section 5.13 Books and Records. The Borrower shall maintain its books and records on an accrual basis, and retained for such period required by law or if longer, such period recommended by the Accountants. The Borrower shall keep a ledger and shall maintain all records with respect to the Project. The Borrower’s books and all other records with respect to the Project and financial statements of the Borrower shall be available for examination by the Lender, or its duly authorized representative, at any and all reasonable times. The Borrower shall provide the following reports to Lender and the Fund at Lender’s expense: (a)
any reports and information reasonably required by Lender to maintain compliance with the NMTC requirements, including those reports set forth in Article VIII;
(b)
within forty-five (45) days of the end of each fiscal quarter of Borrower, quarterly unaudited financial statements including a balance sheet, income statement, and operating statement for that quarter of Borrower;
(c)
within one hundred eighty (180) days of the end of each fiscal year of Borrower, audited annual financial statements of Borrower; and
(d)
upon not less than sixty (60) days prior written notice (which notice period shall be waived after an Event of Default) from Lender, such other information reasonably relating to the condition or operations, financial or otherwise, of Borrower and/or the Project or the economic impact of the Project as Lender may from time to time request.
Section 5.14 Insurance. Borrower shall maintain insurance in accordance with the requirements of Lender and the Fund as set forth on Exhibit B attached hereto or as otherwise mutually agreed by and among the Lender, Fund (with the consent of [ ] as investor member of the Fund) and Borrower, at Borrower’s sole cost and expense. Borrower shall ensure that each policy of insurance lists Lender and Fund as additional insureds under such policy. Section 5.15 Notice of Litigation Default. Borrower shall promptly advise Lender, in writing, of (i) any actions, suits, proceedings, or governmental investigations brought against it, or (ii) any default by Borrower under any other indebtedness of Borrower.
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Section 5.16 Leases. Other than the Lease, the Borrower shall not lease all or any part of the Property to any Person. The Borrower shall not materially amend or modify the terms of the Lease without Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Borrower shall be permitted to waive all non-rental obligations of its tenant under the Lease in its sole discretion. Section 5.17 Property. Borrower shall maintain and preserve, and shall cause each of its lessees and sublessees to maintain and preserve, (i) the Property and all of its components in a safe and good working order and condition (ordinary wear and tear excepted), and (ii) all rights, permits, licenses, approvals and privileges which are used or useful or necessary in the conduct of its business. Section 5.18 Inspection. Borrower shall allow Lender, or its agents, during normal business hours, upon not less than two (2) Business Days’ prior written notice, access to the books, records and such other documents of Borrower as Lender shall reasonably require, and allow Lender, at Lender’s expense, to inspect, audit and examine the same and to make extracts therefrom and to make copies thereof. Section 5.19 Notification. Borrower shall promptly notify Lender in writing of (i) any default or violation under Borrower’s organizational documents or the Loan Documents, (ii) any event that would have a Material Adverse Effect with respect to Borrower; (iii) any acceleration of the maturity of any Indebtedness owing by Borrower; (iv) any claim against or affecting Borrower or any material part of its assets that would result in a Material Adverse Effect; (v) any material change in the leasing status of the Project or the physical condition or value of the Property; (vi) at least thirty (30) days prior thereto, any change in Borrower’s name or address as shown above, and/or any change in the organizational documents of Borrower; (vii) any pending or threatened action, suits or proceedings before any court, arbitrator or Governmental Authority which could reasonably be expected to, if decided adversely to Borrower, have a Material Adverse Effect; (viii) any Default or Event of Default; (x) the occurrence of any delay in construction of the Project of more than 60 days; (ix) any increase in Project costs in excess of the overall amount provided for in the Financial Projections (except that, to the extent Lender’s consent is not required with respect to such increase, Borrower may provide such notification as part of its next disbursement request); and (x) any default or violation under the Construction Contract or Architect’s Agreement of which notice is given by either party thereto. ARTICLE VI. EVENTS OF DEFAULT. The following shall constitute a default hereunder if existing thirty (30) days after Borrower learns of such (by written notice from Lender or otherwise); provided, however, that if such default is of a type that is not susceptible of cure within such thirty-day period, such failure shall constitute a default hereunder if Borrower commences to cure such default within such thirty-day period and thereafter diligently prosecutes such cure to completion within one hundred twenty (120) calendar days; provided, further, however, that the occurrence of an event under Section 6.04, Section 6.05 or Section 6.06, the default by Borrower under, or breach of any provision or warranty in Section 8.01 through and including Section 8.15, or a failure by Borrower to make any payment hereunder within ten (10) business days after receipt of Notice
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from Lender that such interest or other amount is due and payable shall automatically be a default hereunder: Section 6.01 Nonperformance. Default by Borrower under, or breach of any covenant, provision or warranty of, this Agreement, any Loan Document, any other instrument, agreement or document in connection with any of the Obligations, or any other instrument, agreement or document of Borrower with Lender, whether such instrument, agreement or document presently exists or is hereafter executed; Section 6.02 Representations and Warranties. Any warranty, representation, or statement made to Lender by or on behalf of Borrower proving to have been intentionally incorrect in any material respect when made or furnished; Section 6.03 Reserved. Section 6.04 Assignments. creditors;
Any assignment made by Borrower for the benefit of
Section 6.05 Bankruptcy. Institution of bankruptcy, insolvency, reorganization or receivership proceedings by or against Borrower in any state or Federal court or the appointment of a receiver, assignee, custodian, trustee or similar official under any Federal or state insolvency or creditors’ rights law for any property of such entities; provided that such entities shall have ninety (90) days to dismiss any involuntary bankruptcy proceeding to which it does not consent; Section 6.06 Extraordinary Acts. A change of ownership or the sale, dissolution, merger, consolidation, liquidation or reorganization of Borrower without Lender’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed; or Section 6.07 Other Defaults. A default by Borrower under the documents evidencing or securing any other indebtedness of Borrower to any Person in excess of $500,000 and any notice and cure period applicable to such default has elapsed and such default has not been waived by such Person.
ARTICLE VII. REMEDIES Section 7.01 Specific Rights and Remedies. In addition to all other rights and remedies provided by law and the Loan Documents, Lender, on the occurrence of any default, subject to any applicable cure period as set forth in Article VI, may: (i) accelerate and call due and payable any and all of the Obligations, including all principal, accrued interest and other sums due as of the date of default; (ii) impose the default rate of interest provided in any promissory note evidencing the Loan, with or without acceleration; (iii) file suit against Borrower; (iv) seek specific performance or injunctive relief to enforce performance of the Obligations, whether or not a remedy at law exists or is adequate; (v) realize upon any security held by Lender with respect to the Obligations, if any; or (vi) refuse to make any further or permit any disbursements from the Construction Disbursement Account.
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Section 7.02 Costs of Collection. Upon the occurrence of any default, Lender shall be entitled to recover from Borrower reasonable attorneys’ fees, plus court costs and other expenses which may be incurred by Lender in the enforcement or attempted enforcement of its rights hereunder, whether against any third party or Borrower. Section 7.03 Alternative Remedies. Lender may exercise its rights and remedies hereunder either alternatively or concurrently with its rights under any and all other agreements between Lender and Borrower until Lender receives payment in full of all amounts owing to Lender under any of its agreements with Borrower, including principal, interest, costs and expenses, and costs of enforcement or attempted enforcement of this or any other agreement among or between Lender and Borrower. ARTICLE VIII. NEW MARKET TAX CREDITS, REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower hereby represents, warrants, agrees, and covenants that, as of the date hereof and at all times thereafter during which the Loan is outstanding (except where otherwise indicated below): Section 8.01 The Borrower is, and shall maintain its status as, a QALICB, and Borrower has no information or knowledge that it does not or will not satisfy the definition of a QALICB; Section 8.02 The Property owned by the Borrower is located in census tract number 22071004401, which is a Low-Income Community within the meaning of Section 45D of the Code and has a poverty rate greater than 30%, median family income that does not exceed 60% of the greater of the statewide median family income of Louisiana or the applicable Metropolitan Area median family income and an unemployment rate at least 1.5 times the national average. The Property has the following street address: 2400 Dumaine Street, New Orleans, Louisiana; which address is located in the Census Tract; Section 8.03 Fifty percent (50%) or more of the total gross income of Borrower is and shall continue to be derived from the active conduct of a qualified business (as defined in Section 45D(d)(3) of the Code and the related NMTC Regulations) within the Census Tract; Section 8.04 With respect to the current taxable year and each following taxable year, at least forty percent (40%) of the use of the tangible property of Borrower (whether owned or leased) shall be within census tract number 22071004401, which percentage shall be determined utilizing the methodology set out in Section 1.45D-1(d)(4)(i)(B) of the NMTC Regulations; provided, however, that for any taxable year in which Borrower has no employees, at least eighty-five percent (85%) of the use of the tangible property of Borrower (whether owned or leased) will be within census tract number 22071004401; Section 8.05 Borrower has no employees and has no plans to have any employees; Section 8.06 If Borrower has no employees, forty percent (40%) or more of the services performed for Borrower by its employees are and shall continue to be performed in the Census Tract. This percentage is determined based on a fraction, the numerator of which is the total {B0846882.3} 200846512.1
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amount paid by the Borrower for employee services performed in the Census Tract and the denominator of which is the total amount paid by the Borrower for employee services during the taxable year. Notwithstanding the foregoing, Borrower is not expected to have employees during the term of the Loan; Section 8.07 At all times less than five percent (5%) of the property of the Borrower shall be attributable to collectibles (as defined in Section 408(m)(2) of the Code) other than collectibles that are held primarily for sale to customers in the ordinary course of business and the Borrower shall calculate (or cause to be calculated) the amount of any collectibles (as defined in Section 408(m)(2) of the Code) other than collectibles that are held primarily for sale to customers in the ordinary course of business in its possession quarterly and agrees to notify Lender within ten (10) business days after such quarterly calculation in the event that such percentage reaches three percent (3%); Section 8.08 At all times less than five percent (5%) of the average of the unadjusted bases of the property of Borrower shall be attributable to nonqualified financial property (as defined in Section 1.45D-1(d)(4)(i)(E) of the NMTC Regulations) and the Borrower shall calculate (or cause to be calculated) the amount of any nonqualified financial property (as defined in Section 1.45D-1(d)(4)(i)(E) of the NMTC Regulations) in its possession quarterly and agrees to notify Lender within ten (10) business days after such quarterly calculation in the event that such percentage reaches four percent (4%); Section 8.09 The Borrower reasonably expects to generate revenues from the operation of the Project or engage in activities that further its purpose as a not-for-profit corporation within three (3) years after the date hereof; Section 8.10 No part of the Borrower’s business activities includes or will include the rental to others of residential rental property (as defined in Section 168(e)(2)(A) of the Code), and the land on which the Project is located will contain substantial improvements; Section 8.11 No part of the business activities of Borrower or any tenant or subtenant of the Project (i) includes or will include the rental to others of residential rental property, (ii) includes or will include the development or holding of intangibles for sale or license, or (iii) consists or will consist of the operation of any: (1) private or commercial golf course, (2) country club, (3) massage parlor, hot tub facility, or suntan facility, (4) race track or other facility used for gambling, or (5) store the principal business of which is the sale of alcoholic beverages for consumption off premises; Section 8.12 Farming (within the meaning of Section 2032A(e)(5)(A) or (B) of the Code) is not and will not be an activity of Borrower; Section 8.13 Borrower is not a bank, credit union or other financial institution; Section 8.14 Borrower has fully and accurately stated in writing to Lender the nature of Borrower’s business and of the Project, Borrower’s primary sources of revenue and Borrower’s primary expenditures. Borrower has no present plans or intentions to change the nature of, or manner in which it conducts, its business in any way that would cause to be untrue any of the representations, warranties or covenants set out in this Article VIII; {B0846882.3} 200846512.1
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Section 8.15 Borrower shall not (i) discontinue conducting business, (ii) materially change the nature of its business or (iii) materially change the manner in which its business activities are conducted, other than changes in the nature of its business or the manner in which it conducts its business that do not cause the Loan to cease to constitute QLICIs (as determined by Lender in its good faith judgment and based upon the advice of counsel) and which are otherwise permitted hereunder; Section 8.16 No portion of the Property constitutes or will constitute a qualified lowincome building under Section 42 of the Code; Section 8.17 The Borrower is, and shall remain, engaged primarily in the ownership, development, leasing and management of the Project; Section 8.18 Borrower does not own, nor will it own, any asset or property other than a leasehold interest in or ownership of the Property, equipment and incidental personal property necessary for the ownership or operation of the Project; Section 8.19 The Borrower has provided and will provide to Lender (upon request from time to time), a true, correct and complete list of tangible property owned or leased by the Borrower and a description of where such property is used by the Borrower. If any property is used outside of a Low-Income Community, the Borrower shall provide to Lender (upon request from time to time) the cost basis of all property owned by the Borrower and the estimated value of any leased property and the basis of such estimate and the business hours of usage of the Borrower’s property within and without a Low-Income Community. The Borrower shall retain records of the foregoing throughout the NMTC Recapture Period; Section 8.20 Borrower shall not move or expand existing operations to any location outside of the Property or develop, construct or improve any real property at any location outside of the Property without the prior written consent of Lender; Section 8.21 The Borrower has provided to Lender, and will provide (upon request from time to time), a true, correct, and complete listing of any nonqualified financial property owned by the Borrower, including therein the unadjusted basis of such property and shall maintain records thereof throughout the NMTC Recapture Period; Section 8.22 For any year in which the Borrower has employees, the Borrower shall provide to Lender (upon request from time to time) a list of employees providing services, including a general description of services provided, and if applicable compensation paid for services rendered with respect to the Project within and without a Low-Income Community; Section 8.23 To the knowledge of the Borrower, the assumptions underlying the Financial Projections are reasonable in all material respects and to the knowledge of the Borrower, are accurate and complete in all material respects based on all of the facts and circumstances known to the Borrower; Section 8.24 The amount of reserves, receivables, assets and other items of working capital shown on the balance sheets of Borrower submitted to Lender is reasonable based upon Borrower’s reasonably anticipated costs of constructing and operating the Project; {B0846882.3} 200846512.1
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Section 8.25 Borrower has reasonable grounds to believe that (i) the Project will have significant residual value upon the maturity of the Loan, (ii) Borrower will at all times have sufficient assets to repay the Loan in full in accordance with its terms, and (iii) the value and/or income generated by Borrower will be sufficient to allow Borrower to repay and/or refinance the outstanding principal and interest on the Loan at or prior to maturity; Section 8.26 The Borrower is, and shall continue to be, a Louisiana nonprofit corporation. The Borrower has filed or will file for tax exemption and expects to obtain (c)(3) status and file returns consistent therewith; Section 8.27 The Borrower is and will continue to be organized on a nonstock basis, and is not owned by any other Person; Section 8.28 The members and directors of the Borrower are individuals who are not elected officials of any governing body of the State of Louisiana or a political subdivision thereof; Section 8.29 No governing body of the State of Louisiana or a political subdivision thereof has the authority to appoint a member of the board of directors of the Borrower; Section 8.30 The Borrower is a corporation as that term is defined in Treasury Regulation Section 301.7701-2(b) and will take all actions necessary to maintain its status as a corporation for federal income tax purposes separate and distinct from any other Person; Section 8.31 The Borrower has had no communications with the CDFI Fund concerning noncompliance with, or deficiencies in, reporting practices; Section 8.32 The Borrower shall provide all information, reports and statements reasonably requested by Lender for purposes of Lender’s reporting requirements pursuant to the Allocation Agreement to monitor compliance with Section 45D of the Code, and to measure the community benefit of the Project. The Borrower shall provide to Lender copies of all rent rolls, leases, and subleases, modifications, amendments, renewals and extensions of such leases and subleases, together with information as to the tenant or subtenant, the tenant’s or subtenant’s business, and the lease or sublease term, promptly after such documents become available; Section 8.33 With the exception of the Lease and Ground Lease, the Borrower agrees it shall not (except in the ordinary course of business), without Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, enter into any lease, and in no event shall any leases, amendments or subleases be entered into that could adversely affect Lender’s compliance with the New Markets Tax Credit requirements, including Section 45D of the Code, the Treasury Regulations and Guidance and the Allocation Agreement; Section 8.34 The Borrower shall provide to Lender (upon request) such information and sign such documents as are necessary for Lender and the Fund to make timely, accurate and complete submissions of (i) federal and state income tax returns, (ii) reports to governmental agencies, and (iii) any other reports required to be delivered to Lender and the Fund or their members;
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Section 8.35 The Borrower shall not permit a change in control or ownership of interests in the Borrower which would result in the Fund or Lender having control, as such term is defined in Treas. Reg. Section 1.45D- 1 (d)(6)(ii)(B) (as amended, restated, or modified from time to time), of the Borrower; Section 8.36 The Borrower shall promptly supply Lender (upon request) with any reports, records, statements, documents or other information reasonably requested by Lender in connection with responding to any request by the CDFI Fund and the US Department of Treasury, including any request pursuant to the Allocation Agreement (e.g., financial and activity reports, records, statements, documents and other information for purposes of ensuring compliance herewith) as may be required to comply with the New Markets Tax Credit requirements, including Section 45D of the Code, the Treasury Regulations and Guidance and the Allocation Agreement, and shall promptly cooperate with Lender to enable Lender to comply with all of the requirements of the Allocation Agreement; Section 8.37 The Borrower shall make all such records available to Lender for inspection and copying from time to time (at the Lender’s expense) as Lender may reasonably request and as may be required to comply with the New Markets Tax Credit requirements; Section 8.38 The Borrower shall collaborate with Lender with respect to the response to be made to any 90 day notice of noncompliance and ability to cure the provisions hereof provided by the CDFI Fund to Lender pursuant to the Allocation Agreement; Section 8.39 The Borrower shall cooperate with Lender in seeking any waiver or extension sought by Lender with respect to a NMTC Recapture Event (regardless of whether or not the Borrower has violated any covenants provided herein or failed to act as directed by Lender), pursuant to Treas. Reg. Section 1.45D- 1 (e)(5); Section 8.40 Borrower shall not take or fail to take any action reasonably within its control which would cause (i) Borrower to cease to be a QALICB pursuant to Section 45D of the Code and the related NMTC Regulations and (ii) the Loan to cease to be a QLICI pursuant to Section 45D of the Code and the related NMTC Regulations, and (iii) a recapture of the NMTCs resulting from the Loan; Section 8.41 The Borrower shall utilize “substantially all” of the proceeds of the Loan within twelve (12) months of the date hereof, as such requirement is provided for in Section 1.45D¬1(c)(5) of the NMTC Regulations; Section 8.42 The Borrower will treat the Loan as indebtedness for all purposes, and will not take any position contrary to such treatment; Section 8.43 Borrower will treat all funds in the Construction Disbursement Account and income therefrom as an asset on its financial statements; Section 8.44 Borrower shall maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;
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Section 8.45 Upon request, the Borrower will certify in writing to Lender that it remains in compliance with the provisions hereof, including in such certification the current percentages or ratios under the above paragraphs that are applicable to the Borrower at such time; Section 8.46 All documents and information provided by Borrower to Lender are materially complete and accurate and accurately describe the entire business of Borrower; Section 8.47 No officer, director, principal, employee or owner of Borrower are on the list of Specially Designated Nationals and Blocked Persons promulgated by the United States Department of the Treasury and located on the internet at http://www.treas.gov/offices/eotffc; http://www.treas.gov/ofac/t11sdn.pdf; Section 8.48 Borrower shall do all things necessary to observe organizational formalities and preserve its separate legal and tax existence, and Borrower shall not materially amend, modify or otherwise change its articles of organization, bylaws or other organizational documents, as the case may be, without the written consent of Lender; Section 8.49 Borrower shall file tax returns on its own behalf and shall not consolidate its tax return with any other party; Section 8.50 Borrower shall maintain all of its books, records, financial statements and bank accounts separate from those of its affiliates and any other Person. Borrower’s assets shall not be listed as assets on the financial statement of any other Person, and Borrower shall have and maintain its own separate financial statements; Section 8.51 Borrower shall maintain its funds and other assets separate from those of any other Person shall not participate in a cash management system with any other Person unless any funds of Borrower which are maintained or deposited in such cash management system can at all times be identified as funds owned by Borrower; Section 8.52 Borrower shall be, and at all times shall hold itself out to the public as, a legal and taxable entity separate and distinct from any other Person (including any Affiliate of Borrower), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, and shall not identify itself or any of its Affiliates as a division or part of the other;Borrower does not currently guarantee and shall not guarantee or become obligated for the debts of any other Person or pledge its assets for the benefit of any Person and does not and shall not hold itself out as being responsible for the debts or obligations of any other Person; Section 8.53 Borrower shall maintain its assets in such a manner that it is not costly or difficult to segregate, identify or ascertain Borrower’s assets as separate from the assets of another Person and shall maintain its bank accounts separate from those of any other Person; Section 8.54 Borrower shall hold regular meetings, as appropriate, to conduct the business of Borrower and observe all customary organizational and operational formalities;
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Section 8.55 Borrower shall pay its own liabilities and expenses out of its own funds drawn on its own bank account; Section 8.56 Borrower shall not acquire obligations or securities of its affiliates; Section 8.57 Borrower shall not hold out its credit as available to satisfy the obligations of any other Person; Section 8.58 Borrower shall not discontinue conducting business, shall not relocate, expand or materially change the nature of its business, and shall not materially change the manner in which its business activities are conducted, other than changes in the nature of its business or the manner in which it conducts it business that do not cause such business to cease to be a qualified business of Borrower or to cease to continue as a QALICB (as determined by Lender’s in Lender’s judgment and based upon the advice of counsel) and which are otherwise permitted hereunder; Section 8.59 On May 15th and November 15th each year the Loan is outstanding, the Borrower shall (i) provide Lender with a Compliance Certificate regarding its continued status as a QALICB (the “Compliance Certificate”) and shall otherwise certify in writing to the Lender that Borrower remains in compliance with the provisions of this Article VIII, which Compliance Certificate shall be in the form attached hereto as Exhibit C and (ii) provide to Lender, promptly at Lender’s request, evidence including, without limitation, the data to be maintained pursuant to Section 8.29 above, to substantiate such certifications to the Lender’s satisfaction. If Lender’s form of Compliance Certificate is subsequently updated (the “Updated Compliance Certificate”), Lender shall provide such Updated Compliance Certificate to Borrower. Borrower shall have the later of (i) sixty (60) calendar days from Borrower’s receipt of the Updated Compliance Certificate or (ii) the next due date for delivery of the Compliance Certificate to deliver the completed Updated Compliance Certificate to Lender. In the event the Borrower fails to provide Lender with a Compliance Certificate within thirty (30) days from the date Lender gives Borrower notice that such Compliance Certificate is delinquent, then Borrower shall owe Lender $10 for each day the Compliance Certificate remains delinquent following the expiration of such two week cure period; Section 8.60 Borrower shall promptly notify Lender of any noncompliance with this Article VIII and shall inform Lender of any of the events contained in this Article VIII of which Borrower has knowledge within five (5) business days of becoming aware of the occurrence of such an event; Section 8.61 In connection with the issuance of certain opinion letters to be delivered by Manatt, Phelps & Phillips, LLP and Jones Walker, LLP, the Borrower acknowledges and agrees that such counsel may rely on the representations, warranties and covenants contained in this Agreement, including without limitation this Article VIII. ARTICLE IX. GENERAL PROVISIONS Section 9.01 Continuity and Termination. This Agreement shall become effective immediately and remain in effect so long as any of the Obligations are outstanding and unpaid.
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The Loan may not be prepaid, in whole or in part, at any time, prior to the end of the NMTC Recapture Period. Section 9.02 Remedies Cumulative. All rights, remedies and powers of Lender hereunder are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Lender whether in or by any other instruments, agreements or any laws. Section 9.03 Governing Law; Severability. This Agreement shall be construed and governed by the laws of the State of Louisiana without regard to principles of conflicts of laws thereof. If any part of this Agreement shall be adjudged invalid or unenforceable in any respect, then such partial invalidity or unenforceability shall not cause the remainder of this Agreement to be or become invalid or unenforceable, and if a provision hereof is held invalid or unenforceable in one or more of its applications, that provision shall remain in effect in all valid or enforceable applications that are severable from the invalid or unenforceable application or applications. Section 9.04 Notices. Any notice or demand required or permitted by or in connection with this Agreement or any other Loan Document shall be in writing and shall be made by hand delivery, by facsimile, by Federal Express or other similar overnight delivery service, or by certified mail, return receipt requested, postage prepaid, addressed to the respective parties at the appropriate address set forth below or to such other address as may be hereafter specified by written notice by the respective parties. Notice shall be considered given as of the date of facsimile confirmation or hand delivery, one (1) calendar day after delivery to Federal Express or similar overnight delivery service, or three (3) calendar days after the date of mailing, independent of the date of actual delivery or whether delivery is ever in fact made, as the case may be, provided the giver of notice can establish the fact that notice was given as provided herein. If notice is tendered pursuant to the provisions of this section and is refused by the intended recipient thereof, the notice, nevertheless, shall be considered to have been given and shall be effective as of the date herein provided. Notwithstanding anything to the contrary, all notices and demands for payment from the holder actually received in writing by Borrower shall be considered to be effective upon the receipt thereof by Borrower regardless of the procedure or method utilized to accomplish delivery thereof to Borrower. A copy of any notice provided to Lender hereunder shall be provided to: [ ] With copies to: [ ]
A copy of any notice to Borrower hereunder shall be provided to: Wheatley School Facilities Foundation, Inc. With copies to: {B0846882.3} 200846512.1
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Jones Walker, LLP 8555 United Plaza Blvd., 5th Floor Baton Rouge, Louisiana 70809 Attention: Amanda S. Wells Section 9.05 Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Faxed, scanned or photocopied signatures shall be deemed equivalent to original signatures. ARTICLE X. WAIVER OF TRIAL BY JURY. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH OF THE BORROWER AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DISCUSSIONS, DEALINGS, OR ACTIONS OF THE PARTIES TO THIS LOAN AGREEMENT OR EITHER OF THEM (WHETHER ORAL OR WRITTEN) WITH RESPECT THERETO, OR TO THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREINAFTER ARISING, AT LAW OR IN EQUITY, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER EQUITY OR STATUTORY CLAIMS. EACH OF THE BORROWER AND THE LENDER HEREBY CONSENTS AND AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY A TRIAL COURT WITHOUT A JURY, AND THAT EITHER PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY HEREOF WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE BORROWER AND THE LENDER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. THE BORROWER AND THE LENDER EACH ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF THIS AGREEMENT AND EACH OTHER DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER IN MAKING THE LOANS. THE BORROWER AND THE LENDER EACH FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. ARTICLE XI. CONSENT TO JURISDICTION AND SERVICE OF PROCESS As part of the consideration for new value this day received, Borrower hereby consents to the jurisdiction of any state court located within the City of New Orleans, Louisiana or the {B0846882.3} 200846512.1
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United States District Court for the Eastern District of Louisiana, and any appellate court from any thereof, and waives personal service of any and all process upon Borrower and consents that all such service of process be made by certified or registered mail directed to Borrower at the address set forth in the preliminary statements hereof, and service so made shall be deemed to be completed upon actual receipt thereof. Nothing contained herein should be deemed to affect the parties’ right to remove to Federal Court within the Eastern District of Louisiana. ARTICLE XII. NO RECOURSE. All covenants, stipulations, promises, agreements and obligations of the Borrower contained in this Agreement or any of the Loan Documents shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Borrower, and not of any member, director, officer, employee or agent of the Borrower in his individual capacity, and no recourse shall be had for the payment of any amounts hereunder against any member, director, officer, employee or agent of the Borrower. [Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower and Lender have executed this Loan Agreement as of the day and year first above written. BORROWER: WHEATLEY SCHOOL FACILITIES FOUNDATION, INC., a Louisiana nonprofit corporation
By: Name: Title:
LENDER: By: Name: Title:
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Signature Page to QLICI Loan Agreement
EXHIBIT A PROPERTY DESCRIPTION
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Exhibit A-1
EXHIBIT B INSURANCE REQUIREMENTS
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Exhibit B-1
EXHIBIT C COMPLIANCE CERTIFICATE
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Exhibit C-2
EXHIBIT D AMORTIZATION SCHEDULE
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Exhibit D-1
This instrument prepared by and when recorded return to: Robert E. Scheffy Jones Walker 8555 United Plaza Blvd. 5th Floor Baton Rouge, Louisiana 70809
LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT By and between
WHEATLEY SCHOOL FACILITY FOUNDATION, INC. As Mortgagor And
[ GSNMF Sub-CDE 9, LLC / MBS-UI Sub-CDE XXIV, LLC ] As Mortgagee
_____________, 2013
{B0846861.2}
LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT
This Leasehold Mortgage, Assignment of Leases and Rents, and Security Agreement (the "Mortgage"), made as of the ____ day of ____________, 2013, between WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana nonprofit corporation, as mortgagor, acting through its duly authorized ________________ pursuant to a resolution or consent of its Board of Directors, attached hereto, whose address is _____________________________ (“Mortgagor”), and [ GSNMF Sub-CDE 9, LLC / MBS-UI Sub-CDE XXIV, LLC ], represented herein by _____________ its duly authorized ______________ pursuant to a ________________ attached hereto, whose address is __________________________ (“Mortgagee”). WITNESSETH: WHEREAS, pursuant to that certain Lease (“Ground Lease”) by and between Mortgagee as tenant and The Orleans Schools Facilities Foundation, Inc. as landlord, dated even date herewith, Mortgagee acquired a leasehold interest in certain immovable property in New Orleans, Orleans Parish, Louisiana, more fully described on Exhibit “A” attached hereto and made a part hereof (“Premises”); WHEREAS, pursuant to the Ground Lease, Mortgagor is obligated to develop and construct a public [elementary] school facility on the Premises (“Project”); WHEREAS, the Mortgagee has extended a loan in the maximum principal amount of ____________________________ AND 00/100 DOLLARS ($4,000,000 / 5,745,000,000.00) (“Loan”) to Mortgagor pursuant to a Loan Agreement between Mortgagor and Mortgagee dated even date herewith to be used to finance the Project; and WHEREAS, as security for the Loan, Mortgagee has required that Mortgagor grant a first priority security interest in the leasehold estate created by the Ground Lease. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor hereby agrees with Mortgagee as follows: ARTICLE I DEFINITIONS Section 1.01 Definition of Terms. As used in this Mortgage, the following terms shall have the following meanings: (a) Default Rate: the greater of the rate of 10.00% per annum, or the maximum amount allowable by applicable law. (b) Ground Lease: that certain Ground Lease dated _____________, 2013, between Mortgagor, as tenant, and Landlord. (c)
Landlord: Orleans Schools Facilities Foundation, Inc.
(d) Leases: all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Property, or any portion of the Property, and all modifications, extensions or renewals, including that certain Facilities Lease between Mortgagor and First Line Schools, Inc. dated _____________.
(e) Loan: the loan from Mortgagee to Mortgagor for construction of the Project in the maximum principal amount of $[4,000,000 / 5,745,000], as evidenced by one or more promissory notes (collectively, the “Note”). (f)
Mortgagee: [GS New Markets Fund, LLC / MBS Urban Initiatives CDE, LLC]
(g) Mortgagor: successors and assigns.
Wheatley School Facility Foundation, Inc., and its permitted
(h) Permitted Exceptions: those exceptions to title to the Property set forth on Exhibit “C” attached hereto and made a part hereof. {B0846861.2}
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(i) Premises: shall mean the real property and improvements described in Exhibit “A” attached hereto and made a part hereof, together with any and all servitudes, rights-of-way, licenses, hereditaments, rights and privileges and appurtenances thereto. (j) Project: that certain renewable diesel production facility constructed with the Loan proceeds on the Premises. (k) Property: shall mean the Premises and the Project, together with all of the other property securing the Obligations described in Article II hereof. (l) Rents: all rents, except that Rents shall not include any rents paid by Mortgagor under the Ground Lease, revenues and other income of the Premises or the Project, including parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Property, whether now due, past due, or to become due, and deposits forfeited by tenants. Other Terms. Other capitalized terms used herein shall have the meaning given to such terms in other Sections of this Mortgage. Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Loan Agreement. ARTICLE II GRANTING CLAUSE Section 2.01 Mortgage. To secure the performance of all covenants and agreements contained in this Mortgage and to secure the payment and performance by Mortgagor of its obligations under the Loan Agreement and the Note, as and when due, whether now existing or hereafter arising, and to secure the payment of all fees, costs, charges, interest and other amounts that may come due by Mortgagor to Mortgagee under this Mortgage (collectively, the “Obligations”), Mortgagor by these presents does hereby mortgage, hypothecate, grant, convey and assign to Mortgagee, its successors and assigns, all and singular its entire estate and interest in the following described property, whether now owned or hereafter acquired, to-wit: (a) Leasehold. All of Mortgagor’s leasehold interest in the Premises, as tenant under the Ground Lease, including without limitation any option to purchase the Premises contained in the Ground Lease. (b) Appurtenances. All right, title and interest of Mortgagor, if any, now or at any time hereafter existing, in and to all highways, roads, streets, alleys and other public thoroughfares, bordering on or adjacent to the Premises, together with all right, title and interest of Mortgagor to the land making up such highways, roads, streets, alleys and other public thoroughfares and all heretofore or hereafter vacated highways, roads, streets, alleys, and public thoroughfares adjoining or within the Premises or any part thereof. (c) Buildings and Improvements. All buildings, constructions, structures, improvements, plants, works and fixtures now or at any time hereafter located on any portion of the Premises and, without any further act, all extensions, additions, betterments, substitutions and replacements thereof. (d) Fixtures and Equipment. All fixtures, furniture, furnishings, equipment, machinery, appliances, apparatus and other property of every kind and description now or at any time hereafter installed or located on or used in connection with the Premises, or the buildings and improvements situated thereon, whether such right, title or interest in such items of property is now owned or hereafter acquired by Mortgagor, including, but not limited to, all accessories, toilets, cabinets, paneling, attached floor coverings, antennas, all lighting, heating, cooling, ventilating, air conditioning, humidifying, dehumidifying, plumbing, sprinkling, incinerating, refrigerating, air-cooling, lifting, fire extinguishing, cleaning, communicating and electrical systems, and the machinery, appliances, fixtures and equipment used in the operation of the facility on the Premises, all switchboards, engines, motors, tanks, pumps, partitions, conduits, ducts, compressors, elevators and escalators, boilers, incinerators and the machinery, appliances, fixtures and equipment pertaining thereto. (e) Scope of Lien and Security Interest. It is the intention hereof that all property of the kind and character described in this Section 2.01(b), (c) and (d) which Mortgagor now owns, and all of such property which it may hereafter acquire, including all fixtures, furnishings and equipment (collectively, the “FFE”), shall be subject to the lien and security interest of this Mortgage with like effect as if now owned by Mortgagor. {B0846861.2}
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(f) Proceeds. Any and all proceeds of the conversion, whether voluntary or involuntary, of all or any part of the Property into cash or liquidated claims, including, without limitation by reason of specification, proceeds of insurance and condemnation awards. With respect to the proceeds referred to in this Section 2.01(f) (collectively, the “Proceeds”), this Mortgage is a collateral assignment thereof pursuant to Louisiana Revised Statutes 9:5386, et seq., whether such Proceeds or any of them now exist or arise in the future. The Proceeds shall be included in the term “Property” for all purposes of this Mortgage. The collateral assignment herein made of the Proceeds shall not be construed as imposing upon the Mortgagee any obligations with respect thereto unless and until the Mortgagee shall become the absolute owner thereof and the Mortgagor shall have been wholly dispossessed thereof. (g) Maximum Amount. The maximum amount of the Obligations that may be outstanding at any time and from time to time that this Mortgage secures is $[20,000,000].00, including all principal plus interest at the rate of 10% compounded quarterly from the date the disbursements (as set forth in the Note) are made to Mortgagor, and any expenses and advances incurred by Mortgagee hereunder, and all other amounts included within the obligations secured hereunder. Notwithstanding anything to the contrary in this Mortgage to the contrary, in accordance with the requirements of applicable law including Louisiana Civil Code Article 3288, the maximum amount of indebtedness secured hereby is equal to the amount of the Obligations. Section 2.02 After Acquired Property. This Mortgage, without further action, shall also attach to all (a) subsequent additions, substitutions, and replacements to and for any or all of the Property, (b) present and future component parts thereof and accessions thereto, (c) natural increases, accessions, accretions, and issues of the Property, and (d) rights of the Mortgagor to receive proceeds attributable to the sale, insurance loss, condemnation, or other taking of all or any part of the Property, without further act or deed of Mortgagor or Mortgagee. Section 2.03 Acquisition of Premises. In the event Mortgagor acquires the fee estate or full ownership in all or part of the Premises, including, without limitation, pursuant to any purchase option contained in the Ground Lease, this Mortgage shall automatically and without need for any further act attach to and cover and be a lien upon such fee estate or full ownership so acquired by Mortgagor. Section 2.04 Purpose. This Mortgage has been executed by Mortgagor pursuant to Article 3298 of the Louisiana Civil Code for the purpose of securing the Obligations that may now be existing and/or that may arise in the future as provided herein, with the preferences and priorities provided under applicable Louisiana law. However, nothing under this Mortgage shall be construed as limiting the duration of this Mortgage or the purpose or purposes for which the Obligations may be requested or extended. Section 2.05 No Paraph. Mortgagor and the Mortgagee acknowledge that no promissory note or other instrument has been presented to the undersigned Notary Public to be paraphed for identification herewith. Section 2.06 Acceptance. The Mortgagee’s acceptance of the benefits of this Mortgage is presumed without the necessity of the execution of this Mortgage by the Mortgagee in accordance with Louisiana Civil Code Article 3289. ARTICLE III CONDITION OF TITLE Mortgagor represents and warrants to and covenants with Mortgagee, its successors and assigns that: Mortgagor has and will continue to have good and marketable title to the leasehold interest in the Premises granted to, or held by, Mortgagor under the Ground Lease free and clear of liens, encumbrances and charges, subject only to the Permitted Exceptions, as of the date of this Mortgage. Mortgagor retains the right to grant easements, rights-of-way and other servitude necessary or required in connection with the operation of the facility on the Premises, including without limitation utility, access, ingress, egress, and passage servitudes, and to grant licenses or subleases or other agreements with respect to all or any portion of the Premises as Mortgagor deems necessary or required for the operation of the facility on the Premises (“Future Encumbrances”), which Future Encumbrances will in all respects be superior to the lien of this Mortgage. By acceptance of this Mortgage, Mortgagee agrees that its mortgage lien is subordinate to the Future Encumbrances, without the necessity of any further action or the recordation of any further instruments; provided, however, in the event Mortgagor requests a written subordination of this Mortgage lien to any Future Encumbrance, Mortgagee will execute and deliver the same. ARTICLE IV COVENANTS OF MORTGAGOR {B0846861.2}
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So long as this Mortgage remains in effect, Mortgagor shall abide by each of the following covenants: Section 4.01 Compliance. Mortgagor shall comply with and carry out all of its obligations, covenants and agreements under the terms and conditions and as set forth in the Loan Agreement. Section 4.02
Insurance: Damage or Destruction.
(a) Mortgagor shall provide and maintain or cause to be maintained at all times this Mortgage is in effect, the insurance coverage and insurance policies required under the terms of the Ground Lease. No insurance policy shall be cancelable or subject to reduction of coverage or modification except after 30 days prior written notice to Mortgagee. At least 20 days prior to the expiration of Mortgagor's insurance policies, Mortgagor shall furnish Mortgagee with renewals or "binders" therefor, and if Mortgagor fails to do so, following 10 days prior written notice to Mortgagor of such failure, Mortgagee may order such insurance and charge Mortgagor for the cost thereof in accordance with Section 4.09 hereof. (b) Mortgagor shall give Mortgagee prompt notice of any damage or destruction to the Property, and in such event: (i) If in the reasonable judgment of Mortgagee, the Property can be restored to an economic unit not less valuable than the Property was prior to the Insured Casualty, and, if no Event of Default shall have occurred and be continuing, the proceeds of casualty insurance shall be applied to reimburse Mortgagor for the cost of restoring, repairing, replacing or rebuilding the Property or part thereof, and Mortgagor hereby covenants and agrees, not later than 120 days after the date of the casualty, to commence and to diligently prosecute such restoring, repairing, replacing or rebuilding; provided, always, that Mortgagor shall pay all costs of such restoring, repairing, replacing or rebuilding in excess of the proceeds of insurance; and (ii) Provided the insurance proceeds are made available to Mortgagor for such purpose, and subject to Mortgagor’s rights under the Loan Agreement, Mortgagor hereby covenants to restore, repair, replace or rebuild the same to be of at least equal value, and in the same character and of the same quality as prior to such damage or destruction. In the event Mortgagor fails to restore, repair, replace or rebuild as a result of the exercise of its rights under the Loan Agreement, and all of the Obligations are not then satisfied, Mortgagee shall be entitled to be paid such proceeds in satisfaction of the remaining Obligations. (c) All policies of insurance provided for in subsection (a) of this Section 4.02 shall be effective under a valid and enforceable policy or policies issued by an insurance company which is reasonably acceptable to Mortgagee and which has a rating of at least "B+" and is in the financial size category of at least "VII" as established by A.M. Best Company and of recognized responsibility licensed to do business in the State of Louisiana. Mortgagor shall deposit with Mortgagee policies evidencing all such insurance or a certificate or certificates of the respective insurers stating that such insurance is in force and effect. Section 4.03 Performance under Ground Lease. Mortgagor represents and warrants that the Ground Lease is in full force and effect and is unmodified except as described above. All rents, additional rents, and all other material charges payable under the Ground Lease have been paid to the extent that they were due and payable prior to the date hereof. No notice of default exists under the Ground Lease. The Mortgagor’s interest in the Ground Lease is subject to no liens or encumbrances except (i) for the Permitted Exceptions; (ii) for those exceptions permitted under this Mortgage, the Ground Lease or the Loan Agreement; (iii) Future Encumbrances; and (iv) as otherwise expressly approved by the Mortgagee in writing. The Mortgagor owns the entire leasehold estate of the tenant under and as created by the Ground Lease and has the right under the Ground Lease to execute this Mortgage. The Mortgagor has deposited with the Mortgagee a true, correct and complete copy of the Ground Lease, including any and all amendments thereto. (a) Mortgagor will pay or cause to be paid all rent and other charges required under the Ground Lease as and when the same are due and Mortgagor will keep, observe and perform, or cause to be kept, observed and performed, all of the other terms, covenants, provisions and agreements of the Ground Lease on the part of the Tenant thereunder to be kept, observed and performed, and will not in any manner, cancel, terminate or surrender, or permit any cancellation, termination or surrender of the Ground Lease, except pursuant to rights expressly granted in the Ground Lease to Tenant permitting such action.
{B0846861.2}
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(b) Mortgagor will do, or cause to be done, all things necessary to preserve and keep unimpaired the rights of Mortgagor as Tenant under the Ground Lease, and to prevent any default under the Ground Lease, and in the event of the failure of Mortgagor to make any payment required to be made by Mortgagor pursuant to the provisions of the Ground Lease or to keep, observe or perform, or cause to be kept, observed or performed, any of the terms, covenants, provisions or agreements of the Ground Lease. Mortgagor agrees that Mortgagee may (but shall not be obligated to), after notice to Mortgagor, and Mortgagor’s failure to act within 10 days of receiving such notice, take any action on behalf of Mortgagor, to make or cause to be kept, observed or performed any such terms, covenants, provisions or agreements, to the end that the rights of Mortgagor in and to the leasehold estate created by the Ground Lease shall be kept unimpaired and free from default, and all money so expended by Mortgagee, with interest thereon at the Default Rate from the date of each such expenditure until paid, shall be paid by Mortgagor to Mortgagee promptly upon demand by Mortgagee and shall be secured by the Mortgage. (c) Mortgagor will enforce the obligations of the Landlord under the Ground Lease to the end that Mortgagor may enjoy all of the rights granted to it under the Ground Lease, and will promptly notify Mortgagee in writing of any default by the Landlord or by Mortgagor in the performance or observance of any of the terms, covenants and conditions on the part of the Landlord or Mortgagor, as the case may be, to be performed or observed under the Ground Lease and Mortgagor will promptly advise Mortgagee in writing of the occurrences of any of the events of default enumerated in the Ground Lease and of the giving of any notice by the Landlord to Mortgagor of any default by Mortgagor in performance or observance of any of the terms, covenants or conditions of the Ground Lease on the part of the Mortgagor to be performed or observed and will deliver to Mortgagee a true copy of each such notice. (d) If any action or proceeding shall be instituted to evict Mortgagor or to recover possession of the Property or for any other purpose affecting the Ground Lease or this Mortgage, Mortgagor will, immediately upon service thereof on or to Mortgagor, deliver to Mortgagee a true copy of each petition, summons, complaint, notice of motion, order to show cause and of all other provisions, pleadings, and papers, however designated, served in any such action or proceeding. (e) Mortgagor covenants and agrees that unless Mortgagee shall otherwise expressly consent in writing, the full ownership to the Property and the leasehold estate shall not merge but shall always remain separate and distinct, notwithstanding the union of said estates either in the Mortgagor or a third party by purchase or otherwise; and in case Mortgagor acquires the full ownership or any other title or interest in the Property, this Mortgage shall attach to and cover and be a lien upon the full ownership or such other interest so acquired, and such full ownership or other interest shall, without further assignment, mortgage or conveyance, become and be subject to the lien of and covered by this Mortgage. (f) No release or forbearance of any of Mortgagor's obligations under the Ground Lease, pursuant to the Ground Lease, or otherwise, shall release Mortgagor from any of its obligations under this Mortgage, including its obligation with respect to the payment of rent as provided for in the Ground Lease and the performance of all of the terms, provisions, covenants, conditions and agreements contained in the Ground Lease, to be kept, performed and complied with by the tenant therein. (g) Mortgagor will give Mortgagee prompt written notice of the commencement of any arbitration or appraisal proceeding under and pursuant to the provisions of the Ground Lease. Mortgagee shall have the right to intervene and participate in any such proceeding and Mortgagor shall confer with Mortgagee to the extent which Mortgagee deems necessary for the protection of Mortgagee. (h) Mortgagor may exercise any option or right to renew or extend the term of the Ground Lease without the prior written consent of Mortgagee. Mortgagor shall give Mortgagee simultaneous written notice of the exercise of such option or right to renew or extend, together with a copy of the instrument given to the Landlord under the Ground Lease exercising such option or right, and, thereafter, shall promptly deliver to Mortgagee a copy of any acknowledgment by the Landlord under such Ground Lease with respect to the exercise of such option or right. (i) The Property includes all of Mortgagor's claims and rights to the payment of damages arising from any rejection of the Ground Lease by Landlord or any other owner of the Property under the Bankruptcy Code. If an Event of Default has occurred and is continuing, Mortgagee shall have the right to proceed in its own name or in the name of Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of the Ground Lease, including, without limitation, the right to file and prosecute, either in its own name or in the name of Mortgagor, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect to the Landlord or any fee owner under the Bankruptcy Code. {B0846861.2}
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(j) Mortgagor shall, after obtaining knowledge thereof, promptly notify Mortgagee of any filing by or against the Landlord or other fee owner of a petition under the Bankruptcy Code. Mortgagor shall promptly deliver to Mortgagee, following receipt, copies of any and all notices, summonses, pleadings, applications and other documents received by Mortgagor in connection with any such petition and any proceedings relating thereto. (k) Notwithstanding anything to the contrary contained herein, this Mortgage shall not constitute an absolute assignment of the Ground Lease and Mortgagee shall have not liability or obligation thereunder by reason of its acceptance of this Mortgage. Section 4.04
Preservation and Maintenance of Property. Mortgagor shall: (a)
not commit waste or permit impairment or deterioration of the Property,
(b)
not abandon the Property,
(c) restore or repair promptly and in a good and workmanlike manner all or any part of the Property to the equivalent of its original conditions, or such other condition as provided for in the Ground Lease, in the event of any damage, injury or loss thereto, whether or not insurance proceeds are available to cover in whole or in part the costs of such restoration or repair, (d) keep the Property, including improvements, fixtures, equipment, machinery and appliances thereon in good repair and shall replace fixtures, equipment, machinery and appliances on the Property when necessary to keep such items in good repair, (e) comply with all laws, ordinances, regulations and requirements of any governmental body applicable to the Property, (f) comply with all covenants, requirements, and obligations of Mortgagor or with respect to the Property under any agreement, servitude or restriction, including without limitation the Permitted Exceptions, (g) exercise commercially reasonable efforts to obtain from the Landlord under the Ground Lease and deliver to Mortgagee, within thirty (30) days after the written request by Mortgagee, and at no cost to Mortgagee, any Landlord’s estoppel certificate provided for in the Ground Lease (subject however to Landlord’s rights and obligations with respect to such estoppel certificate as provided for in the Ground Lease), (h) pay all taxes, assessments, water and sewer rates, mechanics’ liens and other liens and charges of every nature assessed, levied or imposed upon or in respect of the Property, or any portion thereof, or constituting in whole or in part a lien thereon or upon the Mortgagee in respect of this Mortgage debt, whether under statutes now in force or that may be hereafter enacted, and all other sums hereby secured, and (i) give notice in writing to Mortgagee of and, appear in and defend any action or proceedings purporting to affect the Property, the security of this Mortgage or the rights or powers of Mortgagee. Section 4.05 Condemnation Proceeding. Mortgagor shall give Mortgagee prompt notice of any pending or threatened expropriation or eminent domain proceedings of any or all of the Property. Section 4.06 Compliance with Laws. Mortgagor covenants and represents that the Property shall be operated in all material respects accordance with all applicable laws. The Property is or shall be zoned to permit the intended operation and use of the Property. Section 4.07 No Further Encumbrances. Mortgagor will keep the Property and the leasehold estate in the Ground Lease free from all liens and encumbrances, whether inferior or superior to the lien of this Mortgage, except for the Permitted Exceptions and Future Encumbrances. Section 4.08 Protection of Mortgagee's Security. If Mortgagor fails to perform the covenants and agreements contained in this Mortgage, within 30 days after receiving written notice from Mortgagee of such failure, then Mortgagee, at its option, make take such action as Mortgagee deems necessary, in its sole discretion, to protect Mortgagee's interest, including, but not limited to: (i) disbursement of attorneys' fees; (ii) entry upon the Property to make repairs; or (iii) procurement of satisfactory insurance as provided in Section 4.02 hereof. Any amounts disbursed by Mortgagee pursuant to this Section 4.08 shall be due and payable on demand, with interest thereon at the Default Rate from the date of the {B0846861.2}
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disbursement to the date reimbursed, and such sums shall be secured by this Mortgage. Nothing contained in this Section 4.09 shall require Mortgagee to incur any expense or take any action hereunder. Section 4.09 Valid and Binding Agreement. Mortgagor covenants and warrants that this Mortgage is a valid and enforceable obligation of Mortgagor in accordance with its terms, as limited by (i) bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance, revocatory actions, oblique actions, or other laws relating to creditors’ rights generally and (ii) general principles of equity, whether considered in an action at law or in equity. The performance by Mortgagor of the terms hereof does not contravene any covenant in any agreement, indenture or other document affecting Mortgagor. Section 4.10 Waiver. To the full extent permitted by law, Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any advantage of, any stay, exemption or extension law or any so-called "Moratorium Law" now or at any time hereafter in force providing for the valuation or appraisement of the Property, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to any decree, judgment or order of any court of competent jurisdiction; or after such sale or sales claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof. To the full extent permitted by law, Mortgagor hereby expressly waives any and all rights of redemption under any order or decree of foreclosure of this Mortgage, on its own behalf, on behalf of all persons claiming or having an interest (direct or indirect) by, through or under Mortgagor and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date hereof, it being the intent hereof that any and all such rights of redemption of Mortgagor, and of all other persons, are and shall be deemed to be hereby waived to the full extent permitted by applicable law. ARTICLE V DEFAULT Section 5.01 Event of Default. Each of the following shall constitute an event of default ("Event of Default" or "Events of Default") under this Mortgage: (a) Mortgagor’s failure to pay as and when do its monetary obligations under the Loan Agreement or the Note, as and when due under the Loan Agreement and the Note, and such failure is not cured within the time periods set forth the Ground Lease or the Loan Agreement for Mortgagor to cure such failure. (b) Mortgagor's failure to perform or observe any of its covenants, agreements, or obligations contained in this Mortgage (other than an Event of Default described in Section 5.01)(a) of this Mortgage), and such failure continues for more than thirty (30) days after notice thereof given by Mortgagee to Mortgagor; provided that if such failure cannot reasonably be cured within thirty (30) days, but the Mortgagor commences and diligently pursues a cure, such cure period shall be extended for a reasonable period necessary to cure. (c) The occurrence of any breach of any material representation or warranty contained in this Mortgage and such breach is not cured within thirty (30) days after written notice to Mortgagor of such breach. (d) A default by Mortgagor under the Loan Agreement (other than as set forth in 5.01(a) above), which default is not cured with any applicable grace or cure periods. (e)
The Property is abandoned by Mortgagor.
(f) The occurrence of a default by Mortgagor under the Ground Lease, which is not cured within any applicable grace or cure period. ARTICLE VI REMEDIES Section 6.01 Rights under Loan Agreement. Mortgagee shall have all the rights and remedies granted to Mortgagee in the Loan Agreement. Section 6.02 Foreclosure. Subject to the Ground Lease, Mortgagee shall also have the right to commence appropriate foreclosure proceedings against the Property and in connection therewith, may cause the Property, or any part or parts thereof, to be immediately seized and sold, whether in term of court or in vacation, under ordinary or executory process, in accordance with applicable Louisiana law, to the highest bidder for cash, with or without appraisement, and without the necessity of making additional {B0846861.2}
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demand upon or notifying Mortgagor or placing Mortgagor in default, all of which are expressly waived. Any and all declarations of fact made by authentic act before a Notary Public in the presence of two witnesses by any person declaring such facts lie within his knowledge shall constitute authentic evidence of such facts for the purpose of executory process and also for purposes of La. R.S. 9:3509.1, La. R.S. 9:3504(D)(6) and La. R.S. 10:9-508, where applicable. Mortgagee shall be entitled to collect in such proceeding all expenses of foreclosure, including but not limited to, reasonable attorneys' fees and costs including abstracts and title reports all of which shall become a part of the Obligations secured by this Mortgage, and immediately due and payable with interest at the Default Rate from the date incurred until paid. Section 6.03 Louisiana Commercial Laws. In the exercise of its rights and remedies under the Loan Agreement and to foreclose under this Mortgage, Mortgagee shall also have the right to sell any of the Property that is subject to the provisions of the Louisiana Commercial Laws at public or private sale, for cash, upon credit, or for future delivery, at such price or prices as Mortgagee may deem satisfactory, and in connection with any such sale, the Mortgagor hereby specifically waives all rights of redemption, stay, or appraisal that it has or may have under any laws now existing or hereafter adopted and agrees that ten (10) days prior written notice of the time and place of any such sale or other intended disposition of any such Property constitutes “reasonable notification” within the meaning of the Louisiana Commercial Laws, except that shorter or no notice shall be reasonable as to any of such Property that is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market. Section 6.04 Payment on Behalf of Mortgagor. Following the occurrence of an Event of Default, Mortgagee may, at Mortgagee’s option, but without obligation so to do, make any payment which, under the provisions hereof, is the obligation of the Mortgagor and is not paid by the Mortgagor when due; and that all amounts advanced by the Mortgagee therefor shall be repaid by the Mortgagor upon demand, and until repaid may, at the option of the Mortgagee, bear interest at the Default Rate, and, together with such interest, and payment of such sums shall be secured by this Mortgage. Section 6.05 Waivers. For purposes of foreclosure under Louisiana executory process procedures, Mortgagor confesses judgment and acknowledges to be indebted unto and in favor of Mortgagee, up to the full amount outstanding under this Mortgage, in principal, interest, costs, expenses, attorneys’ fees and other fees and charges. To the extent permitted under applicable Louisiana law, Mortgagor additionally waives: (a) the benefit of appraisal as provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws with regard to appraisal upon judicial sale; (b) the demand and three (3) days’ delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice of seizure as provided under Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three (3) days’ delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (e) all other benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code of Civil Procedure and all other Articles not specifically mentioned above. Section 6.06 Right to Appoint Keeper. Should any or all of the Property be seized as an incident to an action for the recognition or enforcement of this Mortgage, by executory process, sequestration, attachment, writ of fieri ficas or otherwise, Mortgagor hereby agrees that the court issuing any such order shall, if requested by Mortgagee, appoint Mortgagee, or any agent designated by Mortgagee, or any person or entity named by Mortgagee at the time such seizure is requested, or any time thereafter, as Keeper of the Property as provided under La. R.S. 9:5136, et seq. Such a Keeper shall be entitled to reasonable compensation. Mortgagor agrees to pay the reasonable fees of such Keeper, which are hereby fixed at $150.00 per hour, which compensation to the Keeper shall also be secured by this Mortgage in the form of an additional advance as provided herein. Section 6.07 No Waiver. No waiver, forbearance, extension of time or indulgence shown by the Mortgagee to the Mortgagor or to any other person now or hereafter interested herein or in the Property with respect to any conditions, covenants or agreements on the part of the Mortgagor to be paid, performed or observed as set forth or referred to herein or in the Loan Agreement shall affect the right of the Mortgagee thereafter to require payment, performance or observance of the same or of any other covenant, condition or agreement; that the terms “Mortgagor” and “Mortgagee” wherever used herein shall be construed to mean, and the provisions hereof shall bind, the parties herein above named as “Mortgagor” and “Mortgagee”, and their respective, successors and assigns, as the case may be. All rights and powers of the Mortgage hereunder may be exercised by any subsequent holder of this Mortgage. Section 6.08 Remedies Not Cumulative. The rights and remedies of Mortgagee are as expressly set forth herein, and are not in addition to and Mortgagee shall not have any other rights granted at law, in equity, or by statute; Mortgagee’s rights and remedies being limited to the rights and remedies expressly stated herein. No delay or omission in exercising any right or power accruing upon any default shall {B0846861.2}
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impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein. ARTICLE VII SECURITY AGREEMENT This Mortgage is also a security agreement under the Uniform Commercial Code for any of the Property which, under applicable law, may be subject to a security interest under the Uniform Commercial Code, whether acquired now or in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and Mortgagor hereby grants to Mortgagee a security interest in the UCC Collateral. Mortgagor hereby authorizes Mortgagee to file financing statements, continuation statements and financing statement amendments in such form as Mortgagee may require to perfect or continue the perfection of this security interest and Mortgagor agrees, if Mortgagee so requests, to execute and deliver to Mortgagee such financing statements, continuation statements and amendments. Mortgagor shall pay all filing costs and all costs and expenses of any record searches for financing statements that Mortgagee may require. Without the prior written consent of Mortgagee, Mortgagor shall not create or permit to exist any other lien or security interest in any of the UCC Collateral. If an Event of Default has occurred and is continuing, Mortgagee shall have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Mortgage or existing under applicable law. In exercising any remedies, Mortgagee may exercise its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability of Mortgagee’s other remedies. This Mortgage constitutes a financing statement with respect to any part of the Property which is or may become a Fixture. ARTICLE VIII ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. Section 8.01 Absolute Assignment. As part of the consideration for the Obligations, Mortgagor absolutely and unconditionally assigns and transfers to Mortgagee all Rents. It is the intention of Mortgagor to establish a present, absolute and irrevocable transfer and assignment to Mortgagee of all Rents and to authorize and empower Mortgagee to collect and receive all Rents without the necessity of further action on the part of Mortgagor. Promptly upon request by Mortgagee, Mortgagor agrees to execute and deliver such further assignments as Mortgagee may from time to time require. Mortgagor and Mortgagee intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. For purposes of giving effect to this absolute assignment of Rents, and for no other purpose, Rents shall not be deemed to be a part of the “Property,” as that term is defined in Section 1(x). However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the Property Jurisdiction, then the Rents shall be included as a part of the Property and it is the intention of the Mortgagor that in this circumstance this Mortgage create and perfect a security interest on Rents in favor of Mortgagee, which security interest shall be effective as of the date of this Mortgage. Section 8.02 Right to Collect. After the occurrence of an Event of Default, Mortgagor authorizes Mortgagee to collect, sue for and compromise Rents and directs each tenant of the Property to pay all Rents to, or as directed by, Mortgagee, and Mortgagor shall, upon Mortgagor’s receipt of any Rents from any sources, pay the total amount of such receipts to the Mortgagee. However, until the occurrence of an Event of Default, Mortgagee hereby grants to Mortgagor a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Mortgagee and to apply all Rents to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, and to pay the current costs and expenses of managing, operating and maintaining the Property, including utilities, Taxes and insurance premiums, tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be retained by Mortgagor free and clear of, and released from, Mortgagee’s rights with respect to Rents under this Mortgage. From and after the occurrence of an Event of Default, and without the necessity of Mortgagee entering upon and taking and maintaining control of the Property directly, or by a receiver, Mortgagor’s license to collect Rents shall automatically terminate and Mortgagee shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid. Mortgagor shall pay to Mortgagee upon demand all Rents to which Mortgagee is entitled. At any time on or after the date of Mortgagee’s demand for Rents, Mortgagee may give, and Mortgagor hereby irrevocably authorizes Mortgagee to give, notice to all tenants of the Property instructing them to pay all Rents to Mortgagee, no tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no tenant shall be obligated to pay to Mortgagor any amounts which are actually paid to Mortgagee in response to such a notice. Any such notice by Mortgagee shall be delivered to each tenant personally, by mail or by {B0846861.2}
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delivering such demand to each rental unit. Mortgagor shall not interfere with and shall cooperate with Mortgagee’s collection of such Rents. Section 8.03 No other Assignment. Mortgagor represents and warrants to Mortgagee that Mortgagor has not executed any prior assignment of Rents, that Mortgagor has not performed, and Mortgagor covenants and agrees that it will not perform, any acts and has not executed, and shall not execute, any mortgage which would prevent Mortgagee from exercising its rights under this Section 4, and that at the time of execution of this Mortgage there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents. Mortgagor shall not collect or accept payment of any Rents more than two months prior to the due dates of such Rents. Section 8.04 Right to Operate. If an Event of Default has occurred and is continuing, Mortgagee may, regardless of the adequacy of Mortgagee’s security or the solvency of Mortgagor and even in the absence of waste, enter upon and take and maintain full control of the Property in order to perform all acts that Mortgagee in its discretion determines to be necessary or desirable for the operation and maintenance of the Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Property and the execution or termination of contracts providing for the management, operation or maintenance of the Property, for the purposes of enforcing the assignment of Rents pursuant to Section 8.01, protecting the Property or the security of this Mortgage, or for such other purposes as Mortgagee in its discretion may deem necessary or desirable. Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Mortgagee’s security, without regard to Mortgagor’s solvency and without the necessity of giving prior notice (oral or written) to Mortgagor, Mortgagee may apply to any court having jurisdiction for the appointment of a receiver for the Property to take any or all of the actions set forth in the preceding sentence. If Mortgagee elects to seek the appointment of a receiver for the Property at any time after an Event of Default has occurred and is continuing, Mortgagor, by its execution of this Mortgage, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte if permitted by applicable law. Mortgagee or the receiver, as the case may be, shall be entitled to receive a reasonable fee for managing the Property. Immediately upon appointment of a receiver or immediately upon the Mortgagee’s entering upon and taking possession and control of the Property, Mortgagor shall surrender possession of the Property to Mortgagee or the receiver, as the case may be, and shall deliver to Mortgagee or the receiver, as the case may be, all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Property and all security deposits and prepaid Rents. In the event Mortgagee takes possession and control of the Property, Mortgagee may exclude Mortgagor and its representatives from the Property. Mortgagor acknowledges and agrees that the exercise by Mortgagee of any of the rights conferred under this Section 8 shall not be construed to make Mortgagee a mortgageein-possession of the Property so long as Mortgagee has not itself entered into actual possession of the Premises or Project. Section 8.05 No Liability. If Mortgagee enters the Property, Mortgagee shall be liable to account only to Mortgagor and only for those Rents actually received. Mortgagee shall not be liable to Mortgagor, anyone claiming under or through Mortgagor or anyone having an interest in the Property, by reason of any act or omission of Mortgagee under this Section 4 unless such act or omission is determined by a court of competent jurisdiction to constitute fraud, gross negligence or willful misconduct, and Mortgagor hereby releases and discharges Mortgagee from any such liability to the fullest extent permitted by law. Section 8.06 Set-Off. If the Rents are not sufficient to meet the costs of taking control of and managing the Property and collecting the Rents, any funds reasonably expended by Mortgagee for such purposes shall become an additional part of the Obligations as provided in Section 13. Section 8.07 No Waiver. Any entering upon and taking of control of the Property by Mortgagee or the receiver, as the case may be, and any application of Rents as provided in this Mortgage shall not cure or waive any Event of Default or invalidate any other right or remedy of Mortgagee under applicable law or provided for in this Mortgage. ARTICLE IX ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY. Section 9.01 Assignment of Leases. As part of the consideration for the Obligations, Mortgagor absolutely and unconditionally assigns and transfers to Mortgagee all of Mortgagor’s right, title and interest in, to and under the Leases, including Mortgagor’s right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. It is the intention of Mortgagor to establish a present, absolute and irrevocable transfer and assignment to Mortgagee of all of Mortgagor’s right, title and interest in, to and under the Leases. Mortgagor and Mortgagee intend this assignment of the Leases to be immediately effective and to constitute an absolute present assignment and not an assignment for {B0846861.2}
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additional security only. For purposes of giving effect to this absolute assignment of the Leases, and for no other purpose, the Leases shall not be deemed to be a part of the “Property,” as that term is defined in Section 1(x). However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then the Leases shall be included as a part of the Property and it is the intention of the Mortgagor that in this circumstance this Mortgage create and perfect a security interest on the Leases in favor of Mortgagee, which security interest shall be effective as of the date of this Mortgage. Section 9.02 Mortgagor’s Rights Until Default. Until Mortgagee gives notice to Mortgagor of Mortgagee’s exercise of its rights under this Section 9, Mortgagor shall have all rights, power and authority granted to Mortgagor under any Lease (except as otherwise limited by this Section or any other provision of this Mortgage), including the right, power and authority to modify the terms of any Lease or extend or terminate any Lease. Upon the occurrence of an Event of Default, the permission given to Mortgagor pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall automatically terminate. Mortgagor shall comply with and observe Mortgagor’s obligations under all Leases. Section 9.03 No Mortgagee in Possession. Mortgagor acknowledges and agrees that the exercise by Mortgagee, either directly or by a receiver, of any of the rights conferred under this Section 9 shall not be construed to make Mortgagee a mortgagee-in-possession of the Property so long as Mortgagee has not itself entered into actual possession of the Premises and the Project. The acceptance by Mortgagee of the assignment of the Leases pursuant to Section 9.01 shall not at any time or in any event obligate Mortgagee to take any action under this Mortgage or to expend any money or to incur any expenses. Mortgagee shall not be liable in any way for any injury or damage to person or property sustained by any person or persons, firm or corporation in or about the Property. Prior to Mortgagee’s actual entry into and taking possession of the Property, Mortgagee shall not: (i) be obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease); (ii) be obligated to appear in or defend any action or proceeding relating to the Lease or the Property; or (iii) be responsible for the operation, control, care, management or repair of the Property or any portion of the Property. The execution of this Mortgage by Mortgagor shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Property is and shall be that of Mortgagor, prior to such actual entry and taking of possession. Section 9.04 Absolute Right. Upon delivery of notice by Mortgagee to Mortgagor of Mortgagee’s exercise of Mortgagee’s rights under this Section 9 at any time after the occurrence of an Event of Default, and without the necessity of Mortgagee entering upon and taking and maintaining control of the Property directly, by a receiver, or by any other manner or proceeding permitted by the laws of the Property Jurisdiction, Mortgagee immediately shall have all rights, powers and authority granted to Mortgagor under any Lease, including the right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. Section 9.05 Delivery of Leases. Mortgagor shall, promptly upon Mortgagee’s request, deliver to Mortgagee an executed copy of each Lease then in effect. All Leases shall be on forms approved by Mortgagee, and shall not include options to purchase. ARTICLE X GENERAL Section 10.01 Notices. Any notice required or permitted to be delivered under this Mortgage by either party to the other shall be given in writing and given by personal delivery to Mortgagor (in the case of notice to Mortgagor) or to Mortgagee (in the case of notice to Mortgagee) or by registered or certified mail, mailed postage prepaid, return receipt requested, to the parties at their addresses set forth in the Loan Agreement. Notice shall be deemed delivered upon the date of personal delivery (in the case of notice given by personal delivery) or on the date of deposit into the United States mail, with sufficient postage affixed (in the case of notice given by registered or certified mail). Either party may change the address to which notices shall be sent by giving notice to the other pursuant to this Section 9.01. Section 10.02 Governing Law: Venue. This Mortgage shall be construed and enforced according to the laws of the State of Louisiana (“Property Jurisidiction”). Section 10.03 Successors and Assigns: Partial Invalidity. All covenants and agreements in this Mortgage contained by or on behalf of either of the parties hereto shall be binding upon and shall inure to the benefit of the respective successors and assigns of Mortgagor and Mortgagee. Invalidation of part or all of any one of the covenants herein contained by judgment or court order shall not affect any of the other provisions, which shall remain in full force and effect. {B0846861.2}
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Section 10.04 Forbearance by Mortgagee not a Waiver. Any forbearance by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any right or remedy. The acceptance by Mortgagee of payment of any sum secured by this Mortgage after the due date of such payment shall not be a waiver of Mortgagee's rights to either require prompt payment when due or all other sums so secured or to declare a default for failure to make prompt payment. Section 10.05 Release. Upon termination of the Loan Agreement or upon satisfaction of Mortgagor’s obligations under the Loan Agreement, Mortgagee shall release this Mortgage upon payment by Mortgagor of all costs and fees to release same, if any. Mortgagor shall be responsible for recording the release, including all related costs of recordation. If Mortgagee fails to provide such release within 30 days of written request therefore, Mortgagor may release and cancel this Mortgage by unilateral act, as agent and attorney-in-fact for the Mortgagee. Section 10.06 Waiver of Trial by Jury. To the fullest extent permitted by applicable law, Mortgagor and Mortgagee (by its acceptance hereof) each knowingly, voluntarily and intentionally waive any right to a trial by jury in any claim, controversy, dispute, action or proceeding arising out of or related to this Mortgage and agree that any such action or proceeding shall be tried before a court and not before a jury. Mortgagor and Mortgagee acknowledge that this waiver is a material inducement to enter into a business relationship, that each of them have relied on this waiver in entering into this Mortgage and that each of them will continue to rely on this waiver in their related future dealings. Mortgagor and Mortgagee warrant and represent that each had the opportunity to review this jury waiver with legal counsel, and that each knowingly and voluntarily waives its jury trial rights.
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THUS DONE AND PASSED, on the day, and in the month and year first written above, by the undersigned Mortgagor in the presence of the undersigned competent witnesses, who hereunto sign their names with Mortgagor and me, Notary, after due reading of the whole.
WITNESSES:
WHEATLEY SCHOOL FOUNDATION, INC. a Louisiana nonprofit corporation
FACILITY
_____________________________________ Print Name: ___________________________
By:___________________________________ Name:_______________________________
______________________________________
Title: _________________________________
Print Name: ___________________________
Notary Public Print Name:____________________________ Bar Roll/Identification No.________________ My Commission Expires _________________
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THUS DONE AND PASSED, on the day, and in the month and year first written above, by the undersigned Mortgagee in the presence of the undersigned competent witnesses, who hereunto sign their names with Mortgagee and me, Notary, after due reading of the whole.
WITNESSES:
[GS New Markets Fund, LLC / MBS Urban Initiatives CDE, LLC]
_____________________________________ Print Name: ___________________________
By:___________________________________ Name:_______________________________
______________________________________
Title: _________________________________
Print Name: ___________________________
Notary Public Print Name:____________________________ Bar Roll/Identification No.________________ My Commission Expires _________________
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EXHIBIT A LEGAL DESCRIPTION
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EXHIBIT B PERMITTED EXCEPTIONS
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PROMISSORY NOTE Borrower:
Lender:
WHEATLEY SCHOOL FACILITY FOUNDATION, INC.
[GSNMF Sub-CDE 9, LLC / MBS-UI Sub-CDE XXIV, LLC]
New Orleans, Louisiana 701
Principal Amount: $[2,830,000 (GSNMF A-Note) / 1,170,000 (GSNMF B-Note) / 4,117,087 (MBS A-Note) / 1,627,913 (MBS B-Note)].00 Rate: 1.00% Date of Note: _____________, 2013 PROMISE TO PAY. WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana notfor-profit corporation ("Borrower") promises to pay to the order of [GSNMF Sub-CDE 9, LLC / MBS-UI Sub-CDE XXIV, LLC] (“Lender”) in lawful money of the United States of America the sum of ______________ and No/100 Dollars (U.S. $[2,830,000 (GSNMF A-Note) / 1,170,000 (GSNMF B-Note) / 4,117,087 (MBS A-Note) / 1,627,913 (MBS B-Note)].00) or such other or lesser amounts as may be reflected from time to time on the books and records of the Lender, together with interest assessed on such loan advances at the interest rate provided below, as may be adjusted from time to time, one or more times, in accordance with the terms of this Note, commencing on _____________, 2013 and continuing until this Note is paid in full, or until default under this Note with interest thereafter being subject to interest at the Default Rate. This Note evidences advances made by Lender under the Loan Agreement. LOAN AGREEMENT. This Note evidences an advance by Lender under a nonrevolving term loan made to Borrower under and pursuant to a Loan Agreement, dated ______________, 2013, by and between Borrower and Lender (“Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Loan Agreement. In the event of a conflict between the provisions of this Note and the Loan Agreement, the provisions of the Loan Agreement shall prevail. PAYMENT AT MATURITY. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on [February 15, 2048] (“Maturity Date”). QUARTERLY PAYMENTS. Borrower will pay regular quarterly payments of accrued unpaid interest, in arrears, on the 15th day of each March, June, September, and December beginning on [March 15, 2013], and ending with the payment due on [December 15, 2019]. Beginning on [March 15, 2020], and for each quarterly payment thereafter through the Maturity Date, interest plus principal shall be paid in quarterly installments based on the amortization schedule set forth on Schedule A attached hereto, with a final payment of all outstanding principal and interest due on the Maturity Date. Interest on this Note is computed on a 360-day, four 90-day quarters basis compounded quarterly, that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Unless otherwise agreed or required by applicable law, payment will be applied first to reimbursement of Lender’s expenses as provided under this Note, then to accrued unpaid interest, and then to principal. Borrower will pay Lender at its address stated above or at such other place as Lender may designate in writing in lawful money of the United States of America that at the time of payment is legal tender for payment of public and private debts.
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PREPAYMENT. Borrower may prepay this Note as set forth in the Loan Agreement. LATE CHARGE. If Borrower fails to pay any payment under this Note in full within 10 days of when due, Borrower agrees to pay Lender a late payment fee in an amount equal to 10.00% of the delinquent interest due. Late charges will not be assessed following declaration of default and acceleration of maturity of this Note. DEFAULT. The following actions and/or inactions shall constitute “default events” or “Event of Default” under this Note: Default Under Loan Agreement. Should an event of default occur or exist under the terms of the Loan Agreement in favor of Lender. Default Under This Note. Should Borrower default in the payment of principal and/or interest under this Note, as and when due. LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or exist under this Note as provided above, Lender shall have the right, at its sole option, to declare formally this Note to be in default and to accelerate the maturity and insist upon immediate payment in full of the unpaid principal balance then outstanding under this Note, plus accrued interest, together with reasonable attorneys' fees, costs, expenses and other fees and charges as provided herein. Lender shall have the further right, again at its sole option, to declare formal default and to accelerate the maturity and to insist upon immediate payment in full of each and every other loan, extension of credit, debt, liability and/or obligation of every nature and kind that Borrower may then owe to Lender, whether direct or indirect or by way of assignment, and whether absolute or contingent, liquidated or unliquidated, voluntary or involuntary, determined or undetermined, secured or unsecured, whether Borrower is obligated alone or with others on a "solidary" or "joint and several" basis, as a principal obligor or otherwise, all without further notice or demand, unless Lender shall otherwise elect. Lender shall also have all of the rights granted in the Loan Agreement upon the occurrence of an event of default under the Loan Agreement. INTEREST AFTER DEFAULT. From and immediately after an Event of Default, this Note shall bear interest at the Default Rate. ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or files suit against Borrower to collect this Note, Borrower agrees to pay Lender's reasonable attorneys' fees and other costs and expenses. GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby shall be governed under the laws of the State of Louisiana. Specifically, this business or commercial Note is subject to La. R.S. 9:3509 et seq. WAIVERS. Borrower hereby waives demand, presentment for payment, protest, notice of protest and notice of nonpayment, and all pleas of division and discussion. Borrower further agrees that discharge or release of any party who is or may be liable to Lender for the indebtedness represented hereby, or the release of any collateral directly or indirectly securing repayment hereof, shall not have the effect of releasing any other party or parties, who shall remain liable to Lender, or of releasing any other collateral that is not expressly released by Lender. Borrower additionally agrees that Lender's acceptance of payment other than in accordance with the terms of this Note, or Lender's subsequent agreement to extend or modify such repayment terms, or Lender's failure or delay in exercising any rights or remedies granted to Lender, shall likewise not have the effect of releasing Borrower or any other party or parties from their respective obligations to Lender, or of releasing any collateral that directly or indirectly secures {B0846823.2}{B0846823.2}
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repayment hereof. In addition, any failure or delay on the part of Lender to exercise any of the rights and remedies granted to Lender shall not have the effect of waiving any of Lender's rights and remedies. Any partial exercise of any rights and/or remedies granted to Lender shall furthermore not be construed as a waiver of any other rights and remedies; it being Borrower's intent and agreement that Lender's rights and remedies shall be cumulative in nature. Borrower further agrees that, should any default event occur or exist under this Note, any waiver or forbearance on the part of Lender to pursue the rights and remedies available to Lender, shall be binding upon Lender only to the extent that Lender specifically agrees to any such waiver or forbearance in writing. A waiver or forbearance on the part of Lender as to one default event shall not be construed as a waiver or forbearance as to any other default event. Borrower further agrees that any late charges provided for under this Note will not be charges for deferral of time for payment and will not and are not intended to compensate Lender for a grace or cure period, and no such deferral, grace or cure period has or will be granted to Borrower in return for the imposition of any late charge. Borrower recognizes that Borrower's failure to make timely payment of amounts due under this Note will result in damages to Lender, including but not limited to Lender's loss of the use of amounts due, and Borrower agrees that any late charges imposed by Lender hereunder will represent reasonable compensation to Lender for such damages. Failure to pay in full any installment or payment timely when due under this Note, whether or not a late charge is assessed, will remain and shall constitute an Event of Default hereunder. SUCCESSORS AND ASSIGNS LIABLE. Borrower's obligations and agreements under this Note shall be binding upon Borrower and its successors and assigns. The rights and remedies granted to Lender under this Note shall inure to the benefit of Lender's successors and assigns, as well as to any subsequent holder or holders of this Note. CAPTION HEADINGS. Caption headings of the sections of this Note are for convenience purposes only and are not to be used to interpret or to define their provisions. In this Note, whenever the context so requires, the singular includes the plural and the plural also includes the singular. SEVERABILITY. If any provision of this Note is held to be invalid, illegal or unenforceable by any court, that provision shall be deleted from this Note and the balance of this Note shall be interpreted as if the deleted provision never existed. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. BORROWER: WHEATLEY SCHOOL FACILITY FOUNDATION, INC. By:_______________________________________ Its:________________________________________
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FACILITIES SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT (“Sublease”) is made, entered into and effective as of the ____ day of _____________, 2013 (the “Effective Date”), between WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana non-profit corporation (hereinafter called “Sublessor”), and FIRSTLINE SCHOOLS, INC. a Louisiana non-profit corporation (hereinafter called “Sublessee”). Capitalized terms used but not defined herein show the meaning set forth in Ground Lease (as hereinafter defined). RECITALS: A. Sublessor is the tenant under that certain Ground Lease by and between The Orleans Schools Facilities Foundation, Inc., a Louisiana public benefit corporation, as landlord (“Ground Lease Lessor”) and Sublessor, dated as of _______________, 2013 (the “Ground Lease”). B. Pursuant to the Ground Lease, Ground Lease Lessor demised to Sublessor certain immovable property located in the Parish of Orleans, State of Louisiana with a municipal address of 2300 Dumaine Street (“Wheatley School Facilities Site”), which Wheatley School Facilities Site is more particularly described in EXHIBIT A attached hereto and made a part hereof, together with any and all rights, rights of way, servitudes, alleys, ways, privileges appurtenances, to the same belonging or in any way appertaining thereto (all of which, together with the Wheatley School Facilities Site, are hereinafter referred to collectively as the “Premises”). C. Ground Lease Lessor and Sublessor intend that the Premises will be redeveloped and utilized as an elementary public school, including the development of community and recreational facilities (collectively, the “Project”) to be known and operated as “The Phillis S. Wheatley School” (“Wheatley School”), and Sublessor has entered into a Development Agreement with The State of Louisiana, Department of Education, Recovery School District (“RSD”) dated _________________, 2013 (“Development Agreement”) to fully develop, construct and over-see the Project on the Premises. E. Sublessor has identified Sublessee to operate, manage and control the Wheatley School upon completion of the Project. Pursuant to applicable State law and regulations, Sublessee has previously entered into a Charter Operating Agreement dated ________________ (as may be amended, extended or modified, “Charter Operating Agreement”) with the RSD wherein Sublessee agrees to be bound by the terms contained therein related to operation of public elementary school facilities. The existence and continued compliance by Sublessee with the Charter Operating Agreement is a material condition precedent to the parties entering into this Sublease. G. Sublessor has agreed to (i) sublease to Sublessee the Premises, all of which was demised to Sublessor in the Ground Lease, along with the Project constructed or to be {B0841338.2}
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Sublease Agreement
constructed by Sublessor on the Premises (the Premises and the Project, collectively, the “Subleased Premises”), (ii) grant Sublessee, its agents and other authorized persons, a license to use and operate the Wheatley School, all on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and of the mutual benefits, covenants and agreements herein expressed, Sublessor and Sublessee hereby agree as follows: ARTICLE I GROUND LEASE 1.1 Sublease Subject to Ground Lease and Master Lease. This Sublease is subject and subordinate to the Ground Lease. Additionally, the Sublessee and Sublessor recognize and acknowledge that Ground Lease Lessor holds its interest in the Premises pursuant to that certain Master Lease between Ground Lease Lessor as Master Lessee and the RSD and the Orleans Parish School Board collectively as Master Lessor (“Master Lease”). This Sublease is also subject and subordinate to the Master Lease. Sublessee acknowledges and agrees that it has received copies of both the Ground Lease and the Master Lease and agrees to be bound by any terms and obligations applicable to Sublessee thereunder. 1.2 Compliance With Ground Lease and Master Lease. Sublessee agrees that whenever the consent of Ground Lease Lessor or the Master Lessor is required under the terms of either the Ground Lease or the Master Lease, Sublessee shall obtain the consent of Ground Lease Lessor or the Master Lessor, respectively, prior to taking any action. Sublessee hereby covenants and agrees to promptly deliver to Sublessor copies of any and all notices or other correspondence received by Sublessee from Ground Lease Lessor or Master Lessor that might affect Sublessor in any manner. Sublessee shall be entitled to use the Wheatley School for the purposes set forth in Section 12 of the Ground Lease and for no other purposes. Sublessee agrees to comply with all federal, state and/or local laws and regulations that affect the Wheatley School and the Subleased Premises. If there is a conflict between the Ground Lease or the Master Lease and this Sublease, the terms of the Ground Lease or the Master Lease shall govern and control. Any matters not specifically governed by the terms of this Sublease shall be governed and controlled by the terms and provisions set forth in the Ground Lease, as if Sublessee were tenant thereunder and Sublessor were landlord thereunder, which terms and provisions are specifically incorporated into and made a part of this Sublease. Sublessee shall not commit or suffer any act or omission that will breach or violate any of the provisions of the Ground Lease or the Master Lease or that would constitute a default under the Ground Lease or Master Lease. Notwithstanding anything in this Sublease to the contrary, if the Ground Lease or the Master Lease terminates, this Sublease shall terminate and the parties shall be relieved of any further liability or obligation under this Sublease.
{B0841338.2}
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Sublease Agreement
ARTICLE II DEMISE AND DESCRIPTION 2.1 Demise of Subleased Premises. Subject to and upon the terms and conditions set forth herein, Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor for the term and rent herein set forth, all of Sublessor's right, title and interest in and to the Subleased Premises, which definition shall include, without limitation, all property demised to Sublessor by Ground Lease Lessor under the Ground Lease. 2.2 Use of Subleased Premises. The Sublessee shall use the Subleased Premises solely for the purpose of conducting classes and activities incidental to the lawful operation of the Wheatley School and consistent with the mission and purpose of the Charter Contract Agreement, as may be amended. Sublessee shall not use the Subleased Premises for anything other than the above stated permitted uses, without Sublessor’s and Ground Lease Lessor’s and Master Lessor’s prior written approval. Sublessee shall adhere to the School Facility Use policy adopted by the State of Louisiana Board of Elementary and Secondary Education. Sublessee acknowledges and agrees that any use of the Subleased Premises for purposes other than school purposes shall result in immediate reversion of the Subleased Premises to the Orleans Parish School Board. 2.3 Right of Entry. The Sublessor hereby delivers to the Sublessee the sole and exclusive possession of the Subleased Premises (subject to the right of the Ground Lease Lessor, Master Lessor and Sublessor to enter thereon for inspection purposes and to the other provisions of the Ground Lease and Master Lease) and the Sublessee hereby accepts possession of the Subleased Premises. Sublessor shall have the same rights of entry and inspection as Ground Lease Lessor under Section 22 of the Ground Lease with respect to the Subleased Premises. 2.4 License of Premises. In addition to the rights to the Subleased Premises granted to Sublessee in this Sublease, the Sublessee and any persons, agents or other designees of Sublessee shall have the right to access and use the Subleased Premises, which right of access and use shall include, without limitation, the right to place and store equipment, materials, vehicles, and such other property deemed necessary in connection with the management and operation of the Wheatley School (the “License”). Such License shall terminate upon the date this Sublease, the Ground Lease or the Master Lease terminates. 2.5 Condition of the Premises. Sublessee acknowledges and agrees that it has inspected the Subleased Premises, agrees to accept same “AS IS, WHERE IS, AND WITH ALL FAULTS” and that the provisions of Section 26 of the Ground Lease are hereby incorporated by reference as if fully set forth herein and Sublessee agrees to be bound by such terms as if Sublessee were tenant thereunder and Sublessor were landlord thereunder. 2.6 Alterations to Subleased Premises. Sublessee shall not make any changes, alterations, or installations to the Subleased Premises, including but not limited to wiring, flooring, adding or deleting walls and/or partitions, even at Sublessee’s expense, without the {B0841338.2}
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express and prior written consent of the Sublessor, which consent shall not be unreasonably withheld, conditioned or delayed, subject to any reasonable conditions as Sublessor may impose. Sublessee is prohibited from altering, accessing, configuring, installing or maintaining the Subleased Premises’s communication/IT network infrastructure and equipment. Sublessee is further prohibited from allowing any third party to alter, access, configure, install or maintain the Subleased Premises’s communication/IT network infrastructure and equipment. Equipment includes, but is not limited to, servers, switches, routers, WAPs, telephones, call managers, security devices, filters, VPNs, firewalls, and wireless networks. Any such changes, alterations or installations initiated by Sublessee, with Sublessor’s approval, shall be paid for by Sublessee unless the alteration constitutes a capital expense or unless Sublessor and Sublessee agree otherwise in writing. 2.7 Keys; Locks. Sublessee shall not change any keys or any locks on any doors in the Subleased Premises, without prior written permission from Sublessor. 2.8 Work to be Performed by Licensed Contractors. Any approved changes or alterations shall be performed by a licensed contractor with proper bonding and insurance. Copies of the contractor’s bonding and insurance shall be provided to the Sublessor. Any approved changes, alterations or installations made by Sublessee shall not diminish the value of the Subleased Premises. The Sublessor shall reserve the right to inspect any work performed by the Sublessee’s contractor. 2.9 Ownership of Improvements. Unless agreed upon by the parties at the time alterations are approved by Sublessor, any physical additions or improvements to the Subleased Premises will become property of Sublessor. At the termination of this Sublease, Sublessor may require Sublessee, at the Sublessee’s expense, to remove any physical additions, changes, alterations or improvements, or repair any changes, alterations or improvements and restore the Subleased Premises to the condition in which it existed at the beginning of this Sublease. At the time Sublessor approves any changes, alterations or improvements to the Subleased Premises, Sublessee shall be informed whether or not such changes, alterations or improvements, must be removed at the termination of this Sublease. 2.10 Unauthorized Alterations. Any material changes, alterations or improvements made without prior approval may be grounds for termination of this Sublease. Sublessee shall be fully responsible for payment of any damages caused by unauthorized changes, alterations or improvements. 2.11 Movable Property. Sublessor may provide certain of the contents, including, but not limited to furniture, equipment and supplies, in the Subleased Premises. Ownership of such contents will remain with the Sublessor and do not constitute an asset of Sublessee. Prior to occupancy, Sublessor shall provide Sublessee with an inventory report of all contents provided by Sublessor. Both parties shall sign the inventory report, which shall acknowledge receipt of the contents by Sublessee, who further agrees to protect and preserve all contents belonging to Sublessor. A copy of the inventory report shall be attached to this Sublease as Exhibit C. {B0841338.2}
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2.12 Liability for Damages. Sublessee will be responsible for any damage or destruction to any contents provided by Sublessor. Repair and/or replacement of damaged, lost or stolen contents shall be the sole responsibility of Sublessee. Sublessee shall be responsible for taking ordinary care to protect and preserve any and all contents in the Subleased Premises. At the termination of this Sublease, Sublessee shall return the contents to Sublessor in substantially the same quality and quantity as provided at the beginning of this Sublease, ordinary wear and tear excepted. ARTICLE III TERM; SURRENDER OF POSSESSION 3.1 Sublease Term. This Sublease shall become effective on the Effective Date, and the term (“Sublease Term”) of this Sublease shall commence on the Effective Date and, subject to the provisions of this Sublease and the Ground Lease, shall remain effective until 5:00 o’clock p.m. on the day that is the seventh (7th) anniversary of the Effective Date. Unless terminated pursuant to the terms set forth herein or in the Ground Lease or Master Lease (including noncompliance with the terms of the Charter Operating Agreement), after the initial term, this Sublease shall automatically renew for one year periods unless either party provides written notice of its intent to terminate this Sublease no later than 120 days prior to the end of the then current year term. Notwithstanding any other provisions of this Sublease, this Sublease shall automatically terminate upon revocation of Sublessee’s right to operate a charter school by the State of Louisiana Board of Elementary and Secondary Education, the Orleans Parish School Board, RSD or any other governmental authority with jurisdiction over Sublessee. 3.2 Surrender of the Premises. At the termination of this Sublease, by lapse of time or otherwise, and upon the termination of the License, Sublessee shall deliver up the Subleased Premises to Sublessor in the same manner as required in Section 24 of the Ground Lease. ARTICLE IV RENT 4.1 Base Rent. Beginning on the first day of the month in which Sublessee begins occupying the Subleased Premises, which is anticipated to be July 1, 2014 (“Rent Commencement Date”), and continuing the first day of each month during the Sublease Term, Sublessee shall pay to Sublessor, Monthly Rent payments of $[25,000, increasing by 1.5% per year commencing on July 1, 2015] (Monthly Rent”). 4.2 Additional Rent. Sublessee shall also pay to Sublessor as additional rent any other amounts due hereunder, including without limitation, late fees, default interest, Taxes, utility charges, insurance, and Operating Expenses (“Additional Rent”). 4.3 Net Sublease. It is the intent of the parties that this Sublease shall be a net sublease, with all costs, expenses, liabilities, charges or other deductions whatsoever with respect {B0841338.2}
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to the Subleased Premises being paid by Sublessee,.other than as is expressly set forth in this Sublease (and except for Sublessor’s and Ground Lease Lessor’s legal fees, third party consultants retained by Sublessor or Ground Lease Lessor, and Sublessor’s or Ground Lease Lessor’s own personnel costs). Sublessor shall provide monthly statements to Sublessee detailing the costs attributed to the Subleased Premises, including taxes, insurance, or other fees and charges. All such amounts shall constitute Additional Rent hereunder and shall be paid upon receipt of an invoice therefor. 4.4 Payment of Rent. Each installment of Monthly Rent and Additional Rent (collectively, “Gross Rent”) due to Sublessor under this Sublease shall be payable by Sublessee at Sublessor's address herein set forth or at such other place as Sublessor shall designate in writing from time to time at least 1 day prior to the date that such payment is due. ARTICLE V ADDITIONAL OBLIGATIONS OF SUBLESSOR AND SUBLESSEE 5.1 Additional Obligations of Sublessee. As additional consideration for this Sublease, Sublessee does hereby agree to (a) manage and operate the Wheatley School, including, without limitation, the hiring, supervising and managing of employees, including the intended day-to-day principal, all in a manner that is satisfactory to Sublessor, in Sublessor’s sole discretion and determination; (b) pay for the operation of the Wheatley School; (c) maintain and repair the Subleased Premises, it being acknowledged and agreed by Sublessee that Sublessor shall have no liability or responsibility to repair or maintain the Subleased Premises as between Sublessor and Sublessee (collectively, the “Sublessee Obligations and Services”). 5.2 Maintenance of Subleased Premises. Sublessee shall, at Sublessee’s sole cost and expense, be responsible for taking ordinary care to protect and preserve any and all parts of the Subleased Premises, including the grounds and landscaping, that Sublessee, its employees, officers, agents, representatives, contractors, or invitees may traverse incidental to the use of the Subleased Premises. Sublessee shall keep the Subleased Premises in good working order and in a safe and sanitary condition, ordinary wear and tear excepted, all in accordance with all rules and regulations of the State Board of Elementary and Secondary Education and the Orleans Parish School Board, and all federal and state laws relating to the condition of school facilities. Sublessee shall be responsible for all routine maintenance and repair, including, but not limited to, replacement of light bulbs, broken windows, toilets, ballasts, maintaining scheduled safety tests and termite contracts and control. In the event that Sublessee is sharing the Subleased Premises with one or more schools, Sublessee’s shall be responsible for its pro-rata share of all routine maintenance and repairs, as calculated in relation to its student enrollment at the school. 5.3 Capital Expenditures. Sublessee shall not be required to make extensive repairs to the building or facility that would be considered a capital expense. Capital expenses will be determined on a case-by-case basis by the Sublessor, but generally refer to those expenditures that add value to the Subleased Premises or equipment or substantially prolong the life of the Subleased Premises or equipment. Examples of capital expenses may include, but are not {B0841338.2}
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limited to roof, flooring and structural components of the building (excluding doors and glass windows), boilers, elevators, HVAC, fire panels and the Public Address System. 5.4 Systems Maintenance. Sublessee shall be responsible for ensuring that all equipment, including those considered capital expenditures, such as boilers, elevators, HVAC, fire panels, and the Public Address System, are properly maintained in clean, safe and operable condition. Sublessee shall be responsible for all routine preventative maintenance and repairs on all such equipment, including but not limited to the HVAC systems, provided, that any such routine preventative maintenance and repairs shall be performed in accordance with factory recommended schedules and be performed by an authorized maintenance and repair contractor. Sublessee shall be responsible for ensuring that all necessary certification is maintained on any and all such equipment and machinery, including, but not limited to, certification required by the State Fire Marshal and the Department of Health and Hospitals. 5.5 Records of Maintenance. Sublessee shall keep monthly records on all routine and preventative maintenance of equipment, including but not limited to HVAC Equipment, Fire Alarm System, Water Heaters, Kitchen Equipment, on a form provided by the Sublessor. Said maintenance records shall be submitted on a monthly basis, due on the first day of each month, to the Sublessor. Sublessor reserves the right to require Sublessee to utilize property maintenance services selected by Sublessor in the event Sublessee fails to take proper care of the Lease Subleased Premises and its contents, with the costs of such services to be borne solely by Sublessee. 5.6 Repair by Sublessor. In the event Sublessee fails to maintain any property, equipment or pay any service contracts for the routine preventative maintenance on any equipment in the Subleased Premises, Sublessor reserves the right to provide such services, maintenance and/or repairs at Sublessee’s expense. Failure to maintain any property, equipment or maintain any service contracts for routine preventative maintenance may be grounds for termination of this Sublease in accordance with the provisions of Article XIII. Such costs paid by Sublessor shall be charged to Sublessee as Additional Rent hereunder. 5.7 Obligation to Report. Sublessee shall be responsible for immediately reporting any capital repairs that become necessary and shall take all precautions to mitigate further damages. Sublessor reserves the right to seek reimbursement from Sublessee if Sublessee fails to report and/or mitigate any damages. Any damage caused by Sublessee, Sublessee’s employees, agents, representatives, contractors, or invitees shall be the repaired at Sublessee’s expense. 5.8
[Reserved.].
5.9 Sublessor Right to Inspect. Sublessor shall have the right to inspect the Subleased Premises in accordance with Section 2.3, at any time to make operational repairs if Sublessee fails to do so. Sublessee shall be responsible for costs of any repairs the Sublessor may be required to perform that are not considered capital expenses. {B0841338.2}
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5.10 Failure to Maintain. Failure to properly maintain the Subleased Premises may constitute grounds for termination of this Sublease, provided that Sublessor shall give written notice specifying Sublessee’s failure, and Sublessee does not correct the alleged failure within fifteen (15) days of receipt of the notice specifying the failure. 5.11 Right to Audit. Sublessee agrees that the Department of Education’s Internal Auditors, the Legislative Auditor of the State of Louisiana, the Office of the Governor, Division of Administration’s auditors and/or other auditors representing the State or Federal government shall have the option to audit all accounts or records of Sublessee which relate to this Sublease. All copies of audits must be forwarded to the Department’s Internal Audit Section. ARTICLE VI OBLIGATION TO INSURE 6.1
[Reserved.]
6.2 Property Insurance. Property insurance (including flood insurance if required by applicable law), to the extent that such insurance provides full replacement value coverage for the building and contents provided by Sublessor, will be procured by Sublessor. Sublessee will be billed monthly for property (including building and contents procured by Sublessor) and flood insurance premiums. In the event the Sublessee is sharing the Subleased Premises with one or more schools, Sublessee will be billed monthly for its pro-rata share of the Subleased Premises as calculated based upon student enrollment at the school. Sublessee acknowledges and agrees that any insurance proceeds received for damage or destruction to the Subleased Premises will be the sole property of Sublessor to be used in accordance with the provisions of the Ground Lease. Sublessor will name Master Lessor, Master Lessee, Sublessee, and any leasehold mortgagee as additional insured under such policy. 6.3
[Reserved.]
6.4 Liability for Costs. Property insurance for contents and other physical property procured by Sublessee shall be the sole responsibility of Sublessee. 6.5 Third Party Providers. Subleased Premises and/or flood insurance procured by a third party shall not relieve Sublessee from obtaining any other insurance required under this Sublease, or eliminate the obligation of Sublessor to pay the premiums for such coverage as provided for herein. 6.6 Liability Insurance. Sublessee shall maintain comprehensive general liability insurance with a minimum of $1,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. Any insurance obtained by Sublessee shall provide the Sublessor with the ability to file a claim for any loss of property owned or purchased by Sublessor. Sublessee shall provide Sublessor with a Certificate of Liability Insurance prior to occupancy of the Subleased Premises. {B0841338.2}
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6.7 Extent of Insurance. Sublessee’s obligation to procure insurance shall apply to permitted uses, as well as uses that are not permitted uses under this Sublease. Sublessee shall also comply with all insurance requirements stated in the Charter School Agreement, or any other agreement to which Sublessee is bound. 6.8 Notice of Claims. The Sublessee shall immediately notify Sublessor whenever any event occurs that will require the filing of a claim under any insurance policy held by Sublessee related to the Subleased Premises.
ARTICLE VII UTILITIES 7.1 Utilities Responsibility of Sublessee. The Sublessee shall be responsible for the payment of all utilities and services, including, but not limited to, the payment of electricity, heat, light, power, gas, water, sewerage and drainage, all telephonic services, and all other charges by public utilities of every kind for services furnished to the Subleased Premises during the term of this Sublease. Payment shall be made directly to the utility provider. Sublessee agrees to make payment on all utilities in a timely manner. In the event Sublessor receives any bills for any penalties, fines, interest or other costs due to Sublessee’s non-payment of bills, Sublessor shall promptly forward said bills to Sublessee for payment. 7.2 Liability for Payment. Non-payment of utility may be grounds for termination of this Sublease, in accordance with the provisions of Paragraph 21.
ARTICLE VIII JANITORIAL AND SANITATION DISPOSAL SERVICES 8.1 Services Responsibility of Sublessee. Sublessee shall be responsible for providing janitorial services, including all sanitation disposal services, pest control services, and city inspections. In the event the Sublessee is sharing the Subleased Premises with one or more schools, Sublessee shall be responsible for the payment of its pro-rata share of all such services, as calculated based upon student enrollment at the school. ARTICLE IX HAZARDOUS MATERIALS 9.1 Compliance with Law. Sublessee shall comply with all Environmental Laws relating to the use or occupation of the Subleased Premises, including but not limited to the Asbestos Hazardous Emergency Response Act (AHERA, 15 USC § 2641, et seq.). 9.2 Use of Hazardous Materials. Sublessee shall not be allowed, cause or permit any hazardous materials to be generated, used, treated, released, stored, or disposed of in or about the Subleased Premises by Sublessee or Sublessee’s employees, agents, etc., provided that Sublessee may use and store normal and reasonable quantities of standard cleaning and office {B0841338.2}
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materials, as long as such materials are properly, safely, and lawfully stored and used by Sublessee and the quantity of such materials does not equal or exceed a “reportable quantity” as defined in 40 CFR §§ 302 and 305, and as may be amended. In no event shall Sublessee cause or permit the deposit, release or discharge any Hazardous Materials to the soil or groundwater of the Subleased Premises. 9.3 Notice of Release. Sublessee shall promptly notify Sublessor, in writing, if Sublessee has or acquires notice or knowledge that any Hazardous Material has been or is threatened to be released, discharged, disposed of, transported, or stored on, in, under, or from the Subleased Premises. Sublessee shall immediately notify Sublessor, and provide copies upon receipt of, all written complaints, claims, citations, demands, inquiries, reports, or notices relating to the condition of the Subleased Premises or compliance with Environmental Laws. Sublessee shall promptly deliver to Sublessor copies of all notices, reports, correspondence and submissions made by Sublessee to the United States Environmental Protection Agency (EPA), the United States Occupational Safety and Health Administration (OSHA), the Louisiana Department of Environmental Quality (DEQ), the Louisiana Department of Health and Hospitals (DHH), or any other Governmental Authority that requires submission of any information concerning environmental matters or hazardous waste or substances pursuant to Environmental Laws. 9.4 Indemnification. Sublessee agrees to indemnify, defend (with counsel reasonably acceptable to Sublessor at Sublessee’s sole cost) and hold Sublessor its employees, contractors, agents, etc., harmless from and against all Environmental liabilities and costs, liabilities and obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind (including attorneys’ and experts’ fees and fees and expenses incurred in investigating, defending, or prosecuting any litigation, claim, or proceeding) that may at any time be imposed upon, incurred by or asserted or awarded against Sublessor or any of them in connection with or arising from or out of: (a) any misrepresentation, inaccuracy or breach of any warranty, covenant or agreement contained or referenced to in this Section; or (b) any violation by Sublessee of any Environmental Law. 9.5 Definitions. For purposes of this section, “Hazardous Materials” means any substance or material (i) the presence or suspected presence of which requires or may require investigation, response, clean-up, remediation or monitoring, or may result in liability, under any Governmental Requirement; (ii) that is or contains a hazardous substance, waste, extremely hazardous substance, hazardous material, hazardous waste, hazardous constituent, solid waste, special waste, toxic substance, pollutant, contaminant, petroleum or petroleum derived substance or waste, and related materials, including, without limitation, any such materials defined, listed, identified under or described in any Environmental Law; (iii) that is flammable, explosive, radioactive, reactive, toxic, corrosive, infectious, carcinogenic, mutagenic or otherwise hazardous, or is or becomes regulated under any Environmental Law; (iv) that is or contains {B0841338.2}
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asbestos (whether friable or non-friable), any polychlorinated biphenyls or compounds or equipment containing polychlorinated biphenyls, or medical waste; (v) that is or contains or once contained gasoline, diesel fuel, oil, diesel and gasoline range organics (TPH-DRO / GRO), or any other petroleum products or petroleum hydrocarbons, or additives to petroleum products, or any breakdown products or compounds of any of the foregoing or (vi) radon gas. 9.6 Survival. The provisions of this Section will be in addition to any and all obligations and liabilities Sublessee may have to Sublessor and will survive expiration or earlier termination of this Sublease. ARTICLE X QUIET ENJOYMENT 10.1 Covenant of Quiet Enjoyment. Provided Sublessee has performed all of the terms, covenants, agreements and conditions of this Sublease and the Ground Lease, including the payment of Gross Rent and all other sums due hereunder, Sublessee shall peaceably and quietly hold and enjoy the Subleased Premises against Sublessor and all persons claiming by, through or under Sublessor, subject to the provisions and conditions of this Sublease and the Ground Lease. 10.2 Limitation. It is understood and agreed that the provision of Section 6.1 and any and all other covenants of Sublessor contained in this Sublease shall be binding upon Sublessor and its successors only with respect to breaches occurring during its and their respective ownership of the Sublessor’s interest hereunder. This Sublease is subject to and subordinate to all matters of public record encumbering the Subleased Premises in Orleans Parish, Louisiana as of the date of recordation of the Ground Lease. ARTICLE XI ASSIGNMENT AND SUBLETTING 11.1 Restriction. Sublessee shall not, without the prior written consent of Sublessor, Ground Lease Lessor and Master Lessor, assign, sublease, transfer, mortgage, pledge, hypothecate or encumber this Sublease or any interest herein. Any such assignment without such consent by Sublessor or any sublet in violation of the Ground Lease or Master Lease shall be void. Any such consent by Sublessor to any such assignment or any subletting by Sublessee shall not release Sublessee from any of Sublessee's obligations hereunder or be deemed to be a consent to any subsequent assignment. 11.2 Consent Discretionary. Sublessor's consent to any proposed assignment may be withheld at the sole and absolute discretion of Sublessor, or may be given subject to the further consent of Ground Lease Lessor or Master Lessor.
{B0841338.2}
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ARTICLE XII INDEMNIFICATION AND EXCULPATION 12.1 Indemnity. Sublessee shall indemnify Sublessor and Ground Lease Lessor and Master Lessor (the “Indemnified Parties”) for and hold the Indemnified Parties harmless from and against all costs, expenses (including reasonable attorneys' fees), fines, suits, claims, demands, liabilities and actions resulting from any breach, violation or nonperformance of any covenant or condition hereof or from the use or occupancy of the Subleased Premises by Sublessee or other person, or Sublessee’s or other person’s employees, agents, contractors, licensees and invitees, including any such costs, expenses, fines, suits, claims, demands, liabilities and actions which are attributable in whole or in part to the negligence of the Indemnified Parties, such other person, or their respective employees, agents, contractors, licensees or invitees. 12.2 Exculpation. Sublessor shall not be liable to Sublessee or Sublessee's employees, agents, contractors, licensees or invitees for any damage to person or property resulting from any act or omission of any visitor to the Subleased Premises except as Sublessor's own negligence may contribute thereto. ARTICLE XIII DEFAULTS AND REMEDIES 13.1 Default by Sublessee: Remedies of Sublessor. In case of any breach hereof by Sublessee, Sublessee shall have fifteen (15) days following receipt of notice specifying such breach in which to correct the alleged breach. In the case of any uncured breach hereunder, Sublessor shall have the right to terminate this Sublease, seek specific performance against Sublessee, in addition to all other rights of Sublessor that are available at law or equity, including without limitation, all remedies that are available to the Ground Lease Lessor under the Ground Lease. The Events of Default set forth in Section 23 of the Ground Lease shall apply to Sublessee under this Sublease, as if Sublessee were the tenant under the Ground Lease. 13.2 Events of Default. Each of the following shall be an Event of Default by Lessee under the terms of this Sublease: a. Failure by Sublessee to use the Subleased Premises for its permitted use. b. Failure to keep the Subleased Premises in a safe and well-maintained condition. c. Termination, revocation, or adverse modification of the Sublessee’s Charter School Agreement to operate as a public charter school in Louisiana. d. Any representation or warranty made by Sublessee in this Sublease that shall be false or misleading on the date it was made.
{B0841338.2}
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e. Filing of a petition of bankruptcy or insolvency proceedings or for reorganization or for the appointment of a receiver or trustee of all or substantially all of Sublessee’s property resulting in Sublessee’s ability to meet its obligations. f. Engaging in, or allowing its employees, contractors, subcontractors or agents to engage in unlawful activities on the Subleased Premises and failing to take immediate action to rectify said illegal activities. g. Failure to comply with the terms and conditions of this Sublease.
ARTICLE XIV MISCELLANEOUS 14.1 Amendment. No amendment, modification or alteration of the terms hereof shall be binding unless the same shall be in writing, dated subsequent to the date hereof and duly executed by the parties hereto. 14.2 Headings; Interpretation. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Sublease. Whenever the context of this Sublease requires, words used in the singular shall be construed to include the plural and vice versa and pronouns of whatsoever gender shall be deemed to include and designate the masculine, feminine or neuter gender. 14.3 Counterparts. For the convenience of the parties, any number of counterparts of this Sublease may be executed by one or more parties hereto and each such executed counterpart shall be, and shall be deemed to be, an original instrument. 14.4 Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be validly given, made or served, if in writing and delivered personally or sent by United States certified or registered mail, postage prepaid, return receipt requested or by overnight delivery via a nationally recognized overnight courier, if to: Sublessor:
Wheatley School Facility Foundation, Inc. NEW ORLEANS, LOUISIANA 701
Sublessee:
or to such other addresses as any party hereto may, from time to time, designate in writing delivered in a like manner.
{B0841338.2}
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14.5 Successors and Assigns. This Sublease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns in accordance with the terms of this Sublease. 14.6 Time of the Essence. Time is of the essence in the performance by Sublessee of its obligations hereunder. 14.7 Estoppel Certificate. Sublessor and Sublessee shall, at any time and from time to time, within 10 days after being requested to do so by the other party and/or any lender of the Project execute, enseal, acknowledge and address and deliver to the requesting party a certificate in recordable form certifying as to the matters set forth in Section 21 of the Ground Lease pertaining to this Sublease. 14.8 Waiver of Lien by Sublessee. Sublessee shall have no right, and Sublessee hereby waives and relinquishes all rights which Sublessee might otherwise have, to claim any nature of lien against the Subleased Premises or to withhold, deduct from or offset against any rent or other sums to be paid to Sublessor by Sublessee, except as expressly provided under this Sublease. 14.9 Remedies Cumulative; Applicable Law. All rights and remedies of Sublessor under this Sublease shall be cumulative and none shall exclude any other rights or remedies allowed by law; and this Sublease is declared to be a Louisiana contract, and all of the terms thereof shall be construed according to the laws of the State of Louisiana. 14.10 Entire Agreement. The recitals and terms and provisions of all Exhibits described herein and attached hereto are hereby made a part hereof for all purposes. This Sublease constitutes the entire agreement of the parties with respect to the subject matter hereof, and all prior correspondence, memoranda, agreements or understandings (written or oral) with respect hereto are merged into and superseded by this Sublease. 14.11 Authority. Sublessee warrants, represents and covenants that (a) it is a duly organized and existing legal entity under the laws of the state in which it is organized, and in good standing in the State of Louisiana, (b) it has full right and authority to execute, deliver and perform this Sublease Agreement, (c) the person executing this Sublease on behalf of Sublessee was authorized to do so and (d) upon request of Sublessor, Sublessee will deliver to Sublessor satisfactory evidence of the due authorization, execution and delivery of this Sublease by Sublessee. 14.12 Execution of Additional Instruments. Each party agrees to execute and deliver, or cause to be executed and delivered, such additional documents and to take such additional actions as may be required to effectively carry out the transactions contemplated by this Sublease.
{B0841338.2}
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Sublease Agreement
14.13 Attorney’s Fees. If Sublessor or Sublessee shall prevail in any court proceeding to enforce any term, covenant or condition hereof, the non-prevailing party, as determined by the court, shall promptly reimburse the prevailing party upon demand for the cost thereof and reasonable attorney’s fees incurred on account of any such proceeding. 14.14 Prior Approval from Master Lessor. Sublessee acknowledges that the prior written approval of the Master Lessor must be obtained before this Sublease may be entered into between the parties. After the form and content of this Sublease has been agreed upon between the parties, Sublessor shall engage in reasonable efforts to obtain the necessary approval of this Sublease from the Master Lessor at Sublessor’s sole cost and expense. Sublessor and Sublessee agree to abide by the decision of Master Lessor in connection therewith. 14.15 Excused Performance. The performance by Sublessor and Sublessee of their obligations under this Sublease will be excused by delays due to failure of power, governmental requirements, restrictions of law, fire or other damage, war or civil disorder, or other causes beyond the reasonable control of the party delayed but not delays resulting from changes in economic or market conditions, or financial or internal problems of the party delayed, or problems that can be satisfied by the payment of money. As a condition to the right to claim a delay, the delayed party will notify the other within 7 days after the delay occurs and describe on at least a weekly basis in reasonable detail the nature and status of its efforts to end the delay. 14.16 Recordation of Sublease. The parties hereto may record this Sublease or a memorandum hereof in the public records of Orleans Parish, Louisiana at the expense of the party so requesting same. 14.17 Severability. If any term or provision of this Sublease, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Sublease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Sublease shall be valid and shall be enforceable to the extent permitted by law. 14.18 Discrimination Clause. Sublessee agrees to abide by the requirements of the following, as applicable: (a) Title VI and VII of the Civil Rights Act of 1964, as amended by the Equal Opportunity Act of 1972. (b) Federal Executive Order 11246. (c) Federal Rehabilitation Act of 1973, as amended. (d) Vietnam Era Veteran’s Readjustment Assistance Act of 1974. (e) Title IX of the Educational Amendments of 1972. {B0841338.2}
-15-
Sublease Agreement
(f) Age Act of 1975. (g) Americans with Disabilities Act of 1990. Sublessee agrees not to discriminate in its employment practices, and will render services under this Sublease without regard to race, color, religion, sex, sexual orientation, national origin, veteran status, political affiliation, or disabilities. Any intentional acts of discrimination committed by Sublessee, or failure to comply with the above statutory obligations when applicable, shall be grounds for termination of this Sublease. [Signature page follows.]
{B0841338.2}
-16-
Sublease Agreement
IN WITNESS WHEREOF, the undersigned Sublessor and Sublessee have executed this Sublease effective as of the date and year first written above.
SUBLESSOR: WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana nonprofit corporation
By: Name: Title:
SUBLESSEE: FIRSTLINE SCHOOLS, INC., a Louisiana nonprofit corporation
By: Name:. Title:
{B0841338.2}
Signature Page
Sublease Agreement
EXHIBIT A
{B0841338.2}
Sublease Agreement
EXHIBIT B
{B0841338.2}
Sublease Agreement
CLOSING CHECKLIST The Goldman Sachs Group, Inc. Phillis Wheatley Elementary School New Market Tax Credit Financing Status as of: January 31, 2013 Anticipated Closing Date: February 14, 2013 Transaction Participants/Contact Information Transaction Role 1. NMTC Investor
2. 3.
1
Name and Type of Entity GSGroup NMTC Investor LLC1
4.
Investment Fund Investment Fund (Non‐Member) Manager GSNMF Allocatee
Wheatley NMTC Investment Fund LLC MBS Investment Management Company
5.
GSNMF Sub‐CDE
6.
Disbursement Agent
GS New Markets Fund, LLC (Delaware LLC) GSNMF Sub‐CDE 9 LLC (Delaware LLC) Goldman Sachs Bank USA
7.
MBS Allocatee
MBS Urban Initiatives CDE, LLC
See NMTC Investor See NMTC Investor
May change to GSB NMTC Investor LLC
305692970.6
Contact info The Goldman Sachs Group, Inc. 200 West Street New York, NY 10282 Fax: 212‐357‐5505 Carrie Van Syckel Tel: 212‐902‐6514 carrie.vansyckel@gs.com Michael Lohr Tel: 212‐357‐0390 michael.lohr@gs.com See Investment Fund Manager See MBS Allocatee
1
See NMTC Investor McCormack Baron Salazar 720 Olive Street, Suite 2500 St. Louis, Missouri 63101
8. 9.
MBS Sub‐CDE QALICB
MBS‐UI Sub‐CDE XXIV, LLC Wheatley School Facility Foundation, Inc.
10.
Leverage Lender
Orleans Schools Facilities Foundation, Inc.
11.
OPSB
Orleans Parish School Board
12.
Charter School Operator
FirstLine Schools
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Laurel Tinsley Tel: 314.335.2740 laurel.tinsley@mccormackbaron.com; Ron Roberts Tel: [_________] ron.roberts@mccormackbaron.com; Kim Hartmann Tel: [_________] kim.hartmann@mccormackbaron.com; Angela Kloeckner Tel: [_________] angela.kloeckner@mccormackbaron.com See MBS Allocatee Wheatley School Facility Foundation, Inc. [ ] The Orleans Schools Facilities Foundation, Inc. [ ] Orleans Parish School Board 3520 General De Gaulle Drive Suite 5084 New Orleans, LA 70114 Stanley Smith Tel: (504) 304‐5911 stan_smith@nops.k12.la.us FirstLine Schools 4200 Canal St, Suite B, New Orleans, LA 70119 Jay Altman Tel: (504) 267‐9038
2
13.
RSD
Recovery School District
14.
QALICB Counsel
Jones Walker, LLP (“JW”)
15.
RSD Counsel
JW
16.
Charter School Operator Counsel
[ ]
17.
OPSB Counsel
Foley Judell, LLP (“Foley”)
305692970.6
jaltman@firstlineschools.org Recovery School District 1615 Poydras Street, Suite 1400 New Orleans, LA 70112 Annie Cambria Tel: 504‐920‐6881 annie.cambria@rsdla.net Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Amanda Wells Tel: (225) 248‐2018 awells@joneswalker.com J. Marshall Page, III Tel: 504‐582‐8248 mpage@joneswalker.com Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Amanda Wells Tel: (225) 248‐2018 awells@joneswalker.com J. Marshall Page, III Tel: 504‐582‐8248 mpage@joneswalker.com [ ] Foley Judell, LLP 365 Canal Street One Canal Place Suite 2600: New Orleans, LA 70130
3
18.
Leverage Lender Counsel
Foley
19.
NMTC Investor, GSNMF Allocatee and GSNMF Sub‐CDE Counsel
Manatt, Phelps & Phillips, LLP (“MPP”)
305692970.6
4
Wayne Neveu Tel: (504) 568‐1249 wneveu@FoleyJudell.com Jason Akers Tel: (504) 568‐1249 Jason@FoleyJudell.com Foley Judell, LLP 365 Canal Street One Canal Place Suite 2600: New Orleans, LA 70130 Wayne Neveu Tel: (504) 568‐1249 wneveu@FoleyJudell.com Jason Akers Tel: (504) 568‐1249 Jason@FoleyJudell.com Manatt, Phelps & Phillips, LLP 7 Times Square New York, NY 10036 Neil Faden Tel: 212‐830‐7181 Fax: 212‐790‐4545 nfaden@manatt.com Peter Olberg Tel: 212‐830‐7217 Fax: 212‐830‐7354 polberg@manatt.com Sabrina N. Conyers Tel: 212‐790‐4513 Fax: 212‐536‐1803 sconyers@manatt.com
20.
Investment Fund Non‐Member Manager, MBS Allocatee and Sub‐CDE Counsel
Polsinelli Shughart PC (“Polsinelli”)
21.
Title Company
[ ]
22.
Accountant
Novogradac & Company LLP (“Novoco”)
23.
General Contractor
Gibbs Construction, LLC
24.
Leverage Financing Consultant to OPSB
Crescent Growth Capital
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5
Janson Mao Tel: 310‐312‐4283 Fax: 310‐996‐7047 jmao@manatt.com Polsinelli Shughart PC 100 S. Fourth Street, Suite 1000 St. Louis, MO 63102 Fred Miller Tel: (314) 552‐6864 fmiller@polsinelli.com Connie Reiniger Tel: 314.622.6613 creiniger@polsinelli.com [ ] Novogradac & Company LLP John Sciarretti Tel: (330) 365‐5403 john.sciarretti@novoco.com Gibbs Construction, LLC 5736 Citrus Boulevard, Suite 200 Harahan, LA 70123 Lawrence Gibbs Tel: (504) 733‐4336 Crescent Growth Capital 201 St. Charles Avenue Suite 4205 New Orleans, LA 70170 Eric Finley Tel: 214‐665‐9430
25.
Third Party Expert
Abacus Education Partners, LLC
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6
eric.finley@crescentgrowthcapital.com Troy Villafarra Tel: 504‐378‐3472 troy.villafarra@crescentgrowthcapital.com Ryan Kenter Tel: 504‐378‐3473 ryan.kenter@crescentgrowthcapital.com Frank Rabalais Tel: 504‐378‐3471 frank.rabalais@crescentgrowthcapital.com Ray Rabalais Tel: (504) 378‐3474 ray.rabalais@crescentgrowthcapital.com Abacus Education Partners, LLC Bryan Adams Tel: (415) 309‐8758 badams88@gmail.com
Email Distribution List: nfaden@manatt.com; polberg@manatt.com; sconyers@manatt.com; jmao@manatt.com; carrie.vansyckel@gs.com; michael.lohr@gs.com; laurel.tinsley@mccormackbaron.com; ron.roberts@mccormackbaron.com; kim.hartmann@mccormackbaron.com; angela.kloeckner@mccormackbaron.com; Jason@FoleyJudell.com; annie.cambria@rsdla.net; john.sciarretti@novoco.com; WNeveu@FoleyJudell.com; frank.rabalais@crescentgrowthcapital.com; eric.finley@crescentgrowthcapital.com; ryan.kenter@crescentgrowthcapital.com; troy.villafarra@crescentgrowthcapital.com; ray.rabalais@crescentgrowthcapital.com; stan_smith@nops.k12.la.us; mpage@joneswalker.com; awells@joneswalker.com; jkatz@joneswalker.com; jgood@joneswalker.com; fmiller@polsinelli.com; creiniger@polsinelli.com
305692970.6
7
1.
GS NMTC Term Sheet
PARTY PREPARING OR OBTAINING GENERAL GS
2.
MBS NMTC Term Sheet
MBS
#
NAME OF DOCUMENT
STATUS
Complete Complete
NOTES/COMMENTS
ORGANIZATIONAL DOCUMENTS Investment Fund Organizational Documents 3. Certificate of Formation 4. Operating Agreement 5. Amended and Restated Operating Agreement
MPP MPP MPP
Complete Complete Distributed 1/31
6. 7.
MPP MPP
N/A
Certificate of Good Standing Employer Identification Number
Investment Fund Non‐Member Manager Organizational Documents 8. Certificate of Incorporation 9. Bylaws 10. Employer Identification Number 11. Certificate of Good Standing 12. Resolutions 13. Manager’s Certificate GSNMF Allocatee Organizational Documents 14. Certificate of Formation 15. Operating Agreement 16. Employer Identification Number GSNMF Sub‐CDE Organizational Documents 17. a. Certificate of Formation b. Qualification to do business 18. Operating Agreement 19. Amended and Restated Operating Agreement
305692970.6
Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli
Received Received 20‐5879809
MPP MPP MPP
Complete Complete Complete
MPP MPP MPP MPP
Complete Complete Complete
8
Will provide for distribution of an amount equal to the leverage loan to GSGroup at closing Using EIN of Parent of NMTC Investor
#
NAME OF DOCUMENT
20.
Second Amended and Restated Operating Agreement Employer Identification Number
21. 22. 23.
IRS Form 8832 Certificate of Good Standing MBS Allocatee Organizational Documents 24. Certificate and Articles of Organization 25. Operating Agreement and First Amendment 26. Employer Identification Number 27. Resolutions/Written Consent 28. Manager’s Certificate MBS Sub‐CDE Organizational Documents 29. a. Certificate of Formation b. Qualification to do business in Missouri 30. Operating Agreement 31. Amended and Restated Operating Agreement 32. Second Amended and Restated Operating Agreement 33. Employer Identification Number 34. IRS Form 8832 35. Certificate of Good Standing 36. Resolutions/Written Consent 37. Manager’s Certificate OPSB Organizational Documents 38. Resolutions Leverage Lender Organizational Documents 39. a. Articles of Incorporation b. Amended and Restated Articles of Incorporation b. Qualification to do business 40. Bylaws 41. Employer Identification Number 42. Certificate of Good Standing 43. Resolutions/Written Consent
305692970.6
PARTY PREPARING OR OBTAINING MPP
STATUS Distributed 1/31
MPP
N/A
MPP MPP
Filed
Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli
Complete Complete 20‐3331445
Polsinelli
Complete
Polsinelli Polsinelli Polsinelli
Complete Complete
Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli
27‐3511789 Filed
Foley
MPP comments sent 1/24
Foley
a. MPP comments sent 1/24 b. Revised draft received 1/30
Foley Foley Foley Foley
MPP comments sent 1/24 46‐1802167 Revised draft received 1/30
9
NOTES/COMMENTS
Using EIN of Parent of NMTC Investor
#
NAME OF DOCUMENT
44.
Officer’s Certificate QALICB Organizational Documents 45. a. Articles of Incorporation b. Qualification to do business 46. Bylaws 47. Louisiana Association of Charter Schools Designation of Directors 48. Employer Identification Number 49. Certificate of Good Standing 50. Resolutions/Written Consent 51. Officer’s Certificate 52. IRS Form 1023 Charter School Operator Organizational Documents 53. Certificate of Incorporation 54. Bylaws 55.
Employer Identification Number
56.
Certificate of Good Standing
57.
Resolutions/Written Consent
58.
Officer’s Certificate
GSNMF Allocatee and GSNMF Sub‐CDE NMTC Documents 59. CDE Certification Application (Allocatee) 60. CDE Certification Application (Sub‐CDE) 61. Notice of CDE Certification (Allocatee) 62. Notice of CDE Certification (Sub‐CDE) 63. Notice of Allocation 64. Allocation Agreement (including amendment adding Sub‐CDE as a party) 65. Screenshot of Allocation Tracking Transfer to Sub‐CDE
305692970.6
PARTY PREPARING OR OBTAINING Foley JW
STATUS
a. Revised draft received 1/30
JW JW JW JW JW JW JW Charter School Operator Counsel Charter School Operator Counsel Charter School Operator Counsel Charter School Operator Counsel Charter School Operator Counsel Charter School Operator Counsel
MPP comments sent 1/24 MPP comments sent 1/24 72‐1409800
MPP MPP MPP MPP MPP MPP
Complete Complete Complete Complete Complete Complete
MPP
Complete
10
NOTES/COMMENTS
#
NAME OF DOCUMENT
66. 67.
Assignment and Assumption of Sub‐Allocation Advisory Board Recommendation for Investment 68. Tax Allocation Agreement with GSNMF Sub‐CDE MBS Allocatee and MBS Sub‐CDE NMTC Documents 69. CDE Certification Application (Allocatee) 70. CDE Certification Application (Sub‐CDE) 71. Notice of CDE Certification (Allocatee) 72. Notice of CDE Certification (Sub‐CDE) 73. Notice of Allocation 74. Allocation Agreement (including amendment adding Sub‐CDE as a party) 75. Screenshot of Allocation Tracking Transfer to Sub‐CDE 76. Assignment and Assumption of Sub‐Allocation 77. Advisory Board Recommendation for Investment 78. Tax Allocation Agreement with MBS Sub‐CDE Debarment Certificates 79. QALICB Debarment Certificate 80. QALICB Guarantor 81. Investment Fund Debarment Certificate 82. GSNMF Sub‐CDE Debarment Certificate 83. MBS Sub‐CDE Debarment Certificate 84. Leverage Lender Debarment Certificate Geocoder Map 85. CDFI Geocoder Map (Project Census Tract Designation) a. current map b. dated as of Closing Date
PARTY PREPARING OR OBTAINING MPP GSNMF Allocatee
Complete Complete
MPP
Complete
Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli Polsinelli
Complete Complete Complete Complete Complete Complete
Polsinelli
Complete
Polsinelli Polsinelli
Complete
Polsinelli
Complete
STATUS
MPP MPP MPP MPP MPP MPP MBS/GS
a. Received 1/18
OTHER DILIGENCE ITEMS
305692970.6
11
NOTES/COMMENTS See A&R Operating Agreement
#
NAME OF DOCUMENT
86.
PARTY PREPARING OR OBTAINING
STATUS
NOTES/COMMENTS
UCC, judgment, lien, bankruptcy and litigation searches in formation state, principal place of business and state where project is located for QALICB [Financial Statements of any other parties that GS designates]
87.
LEVERAGE LOAN DOCUMENTS Leverage Loan Documents 88. Loan Agreement 89. Promissory Note 90. Pledge and Security Agreement 91. UCC‐1 Financing Statement Tax Credit Guaranty Agreements 92. QALICB Guaranty of New Markets Tax Credits 93.
Option Agreement (aka Investment Fund Put/Call) MBS Indemnity Agreement (with respect to MBS Sub‐CDE)
94.
95. 96.
Grant Funding Agreement (OSFF to QALICB) Cooperative Endeavor Agreement
Revised draft received 1/30 MPP comments sent 1/24 Revised draft received 1/30
MPP MPP
Distributed 1/31
MPP
Distributed 1/31
GRANT DOCUMENTS Foley Revised draft received 1/30 Foley Received 1/25 QLICI LOAN DOCUMENTS
QLICI Loan Agreements
97.
Loan Agreement
98.
Construction Monitoring and Disbursement Agreement
Foley Foley Foley Foley
JW
Revised draft received 1/30
MPP
Distributed 12/17
Notes
99.
GS Loan Note A
JW
Revised draft received 1/30
100.
GS Loan Note B
JW
Revised draft received 1/30
101.
MBS Loan Note A
JW
Revised draft received 1/30
102.
MBS Loan Note B
JW
Revised draft received 1/30
Collateral Documents
305692970.6
12
Sent to MBS & Counsel
#
NAME OF DOCUMENT
103.
104.
105.
Leasehold Mortgage, Assignment of Leases and Rents and Security Agreement Collateral Agent Agreement
Assignment of Permits and Contracts a. Assignment of Permits and Contracts b. Contractor’s Consent to Assignment (Construction Manager Letter) c. Architect’s Consent to Assignment 106. Account Pledge Agreements: a. QALICB Borrower Account (Construction Disbursement Account) b. [QALICB Expense and Fee Reserve Account] c. GSNMF Sub‐CDE Bank Account d. MBS Sub‐CDE Bank Account 107. Deposit Account Control Agreements: a. Investment Fund – Operating Account b. QALICB – Disbursement Account c. QALICB – Operating Account d. GSNMF Sub‐CDE Bank Account e. MBS Sub‐CDE Bank Account Guaranties and Indemnities 108.
109.
Development Agreement between RSD and QALICB Fee Agreements
111.
STATUS
a. Asset Management and Compliance Services Agreement between QALICB and New Market Assurance Company b. Closing Certificate of Community Impact
MPP Polsinelli Polsinelli
Polsinelli
a. Complete d. Complete e. Complete
MPP MPP JW
Received 1/30
Polsinelli
Other
305692970.6
NOTES/COMMENTS
MPP comments sent 1/30
Development Agreement
110.
Completion Guaranty against Hard and Soft Construction Cost Overruns (RSD) Environmental Indemnity (OPSB)
PARTY PREPARING OR OBTAINING JW
13
#
NAME OF DOCUMENT
112.
Community Benefits Agreement
113. 114. 115.
116.
117. 118.
119. 120.
121.
122.
Master Lease (OPSB to Leverage Lender) Ground Lease (Leverage Lender to QALICB) Facilities Lease (QALICB to Charter School Operator) Subordination, Non‐disturbance and Attornment Agreement Appraisal Third Party Expert Opinion: a. Third Party Expert Verification of Projected Operating Revenue and Expense b. Third Party Expert Verification of Reasonableness of Projected Increase in Government Support c. Third Party Expert Verification of Number of Potential Qualified Applicants for Sub‐Sublease ALTA Survey Title Documents a. Title Searches (Liens, real estate taxes) b. Title Report b. Underlying Title Docs c. Proforma Title Policy d. Title Instruction Letter e. Invoice/Settlement Statement f. Final Title Policy [to be provided on Closing Date] Environmental Report a. Phase I Environmental Report b. Phase II Environmental Report c. Reliance Letters Flood Certificate
305692970.6
PARTY PREPARING OR OBTAINING MPP
STATUS
NOTES/COMMENTS Will use the GS form with the MBS certificate
REAL ESTATE DOCUMENTS Foley Received 1/30 Foley Received 1/30 Foley Received 1/30 JW
MPP comments sent 1/29
GS Abacus
RSD JW to order a. Title Company b. Title Company c. Title Company d. JW e. Title Company f. Title Company RSD
GS Title Requirements
a. Received 12/10; revised report sent to GS 1/9
Title Company
14
Received
#
NAME OF DOCUMENT
123.
124.
125. 126. 127. 128. 129. 130.
131. 132. 133.
134.
Architect’s Certificate re: compliance with zoning, building, planning, fire, handicapped access and other applicable laws and regulations Guaranteed Maximum Price Construction Agreement Architect Agreement Plans and Specifications Construction Cost Breakdown Construction Schedule Construction Building Permit Contractor Qualifications a. General Qualifications b. Resumes for the key construction personnel managing the project Contractor Financials (last two years) Architect Qualifications Insurance: a. Property b. Liability c. General Contractor d. Architect Errors and Omissions e. Builder’s Risk f. Environmental Consultant’s Liability g. D&O Substantiation of Predevelopment Costs
135. 136.
Evidence of Real Estate Tax Exemptions Evidence of Sales Tax Exemption
137.
Financial Projections a. Projections b. Agreed Upon Procedures
305692970.6
PARTY PREPARING OR OBTAINING RSD
RSD
STATUS
NOTES/COMMENTS
Received 12/4
Received 12/4; being reviewed by GS internally Received 12/4 Delivered 1/4 Received 12/4 Received 12/4 Received 12/10 Received 12/10
RSD RSD RSD RSD RSD RSD
RSD RSD RSD
Received 12/4 Received 1/11
RSD
Received 1/11
RSD Received 12/10 RSD Received 12/10 PROJECTIONS AND BANK ACCOUNTS Novoco a. Received 1/10
15
If predevelopment costs of developer are expected at closing
#
NAME OF DOCUMENT
138.
139.
140.
141. 142.
143. 144. 145.
146.
Flow of Funds
147.
GSNMF QEI Designation a) CDFI Screen Shot of QEI b) IRS Form 8874‐A NOTE: QEI designation must be circulated by e‐ mail to gs‐uig@gs.com no later than ten (10) business days after the date that the QEI is made.
305692970.6
PARTY PREPARING OR OBTAINING
Bank Accounts: a. Investment Fund b. GSNMF Sub‐CDE Account(s) c. MBS Sub‐CDE Account(s) d. QALICB Disbursement Account e. QALICB Operating Account
STATUS a. Complete b. Complete c. Complete
MANAGEMENT AGREEMENT/OPERATING AGREEMENT Administrative and Accounting Services JW Received 1/30 Agreement between RSD and QALICB Charter Operating Agreement between RSD RSD Received 1/14 and Charter School Operator LEGAL OPINIONS QALICB Enforceability Opinion JW QALICB Tax Opinion on QLICI/QALICB JW (including reasonable expectations and true debt) MBS Sub‐CDE Enforceability Opinion Polsinelli MBS Sub‐CDE Tax Opinion Polsinelli Overall Tax Opinion MPP a. Opinion b. Backup Certificates MISCELLANEOUS MPP POST‐CLOSING GS
16
a. Complete
NOTES/COMMENTS
#
NAME OF DOCUMENT
148.
MBS QEI Designation a) CDFI Screen Shot of QEI b) IRS Form 8874‐A NOTE: QEI designation must be circulated by e‐ mail to gs‐uig@gs.com no later than ten (10) business days after the date that the QEI is made.
PARTY PREPARING OR OBTAINING MBS
305692970.6
17
STATUS a. Complete b. Complete
NOTES/COMMENTS
ENVIRONMENTAL INDEMNITY AGREEMENT THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”), dated as of ___________, 2013, is made on a joint and several basis by WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana not-for-profit corporation (“Borrower”), ORLEANS PARISH SCHOOL BOARD, a political subdivision of the State of Louisiana (“OPSB”), and the STATE OF LOUISIANA, DEPARTMENT OF EDUCATION, RECOVERY SCHOOL DISTRICT, a pubic body and instrumentality of the State of Louisiana (“RSD” and, together with Borrower and OPSB, each, an “Indemnitor” and, together, the “Indemnitors”), to GSNMF Sub-CDE 9 LLC, a Delaware limited liability company (“GS Sub-CDE”), and MBS-UI SUB-CDE XXIV, LLC, a Missouri limited liability company (“MBS Sub-CDE” and, together with GS Sub-CDE, the “Co-Lenders”). R E C I T A L S: WHEREAS, OPSB is the record title owner of that approximately 2.2063 acre parcel of property located in the City of New Orleans, Parish of Orleans, with a municipal address of 2300 Dumaine Street, New Orleans, Louisiana 70119 (the “Premises”); WHEREAS, RSD was given certain control over the operations and management of certain schools in Orleans Parish and has determined that new school facilities should be built on the Premises (the “Wheatley School Facility”); WHEREAS, OPSB and RSD have agreed to transfer all of their respective right, title and interest in the Premises to Orleans Schools Facilities Foundation, Inc. (the “Master Lessee”) pursuant to that certain Master Lease, dated as of the date hereof, by and among OPSB, RSD and the Master Lessee (the “Master Lease”) and to provide that the Master Lessee shall sublease the Premises to Borrower pursuant to that certain Ground Lease, dated as of the date hereof, by and between the Master Lessee and Borrower (the “Ground Lease”) in order for Borrower to arrange equity and debt financing to develop, construct, furnish, equip and operate the Wheatley School Facility; WHEREAS, to facilitate the operation of the Wheatley School Facility, Borrower has entered into that certain Facilities Lease, dated as of the date hereof, by and between Borrower and Firstline Schools, Inc.(the “Facilities Lease” and, together with the Master Lease and the Ground Lease, the “Leases”); WHEREAS, pursuant to that certain Loan Agreement, dated of even date herewith (the “Loan Agreement”) made by and between the Borrower and the Co-Lenders, the Co-Lenders have made to the Borrower certain loans in the aggregate original principal amount of [Nine Million Seven Hundred Forty Five Thousand] and No/100 Dollars ($[9,745,000]) (collectively, the “Loans”) for purposes of financing the development of the Wheatley School Facility; WHEREAS, the Loans are evidenced by the promissory notes dated the date hereof, as specified in the Loan Agreement (the “Notes”), which Notes are secured by certain mortgages dated of even date herewith, as specified in each Leasehold Mortgage, Assignment of Leases and Rents, and Security Agreement, dated as of the date hereof, by and between the Borrower and
200908592.3
1
each Co-Lender (the “Leasehold Mortgages”), encumbering Borrower’s leasehold interest in the Premises. WHEREAS, the Indemnitors will derive material financial benefit from the Loans evidenced and secured by the Notes, the Mortgages and the other Loan Documents (as defined in the Loan Agreement). WHEREAS, Co-Lenders have relied on the statements and agreements contained herein in agreeing to make the Loans. The execution and delivery of this Agreement by the Indemnitors is a condition precedent to the making of the Loans by Co-Lenders. A G R E E M E N T S: In consideration of the Recitals set forth above and hereby incorporated herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Indemnitors hereby agrees as follows: 1.
Definitions.
(a) All capitalized terms used but not defined herein shall have the meaning given such terms in the Loan Agreement. (b) The term “Environmental Law” means, collectively, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901 et seq., the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Liability Act, 42 U.S.C. §9601 et seq., the Toxic Substance Control Act, 15 U.S.C. §2601 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Clean Water Act, 33 U.S.C. §1251 et seq., all municipal, county, and state analogues to any of the foregoing, all amendments to any of the foregoing, any other municipal, county, state or federal law, rule, regulation, ordinance or directive regulating Hazardous Materials, and all enforceable orders, regulations and requirements under any of the foregoing. (c) The term “Hazardous Material” means, collectively (A) any hazardous, toxic, or infectious substance, material or waste, including, but not limited to, those substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto and replacements therefor; (B) such substances, materials or wastes as are regulated by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901 et. seq. (“RCRA”), the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Liability Act, 42 U.S.C. §9601 et. seq. (“CERCLA”), the Toxic Substance Control Act, 15 U.S.C. §2601 et seq. (“TSCA”), the Clean Air Act, 42 U.S.C. §7401 et seq. (“CAA”), the Clean Water Act, 33 U.S.C §1251 et. seq. (“CWA”), and all amendments to any of the foregoing laws, and all orders, regulations, directions and requirements thereunder; (C) asbestos; (D) such toxic, hazardous, or infectious substances, materials or wastes that are or may become regulated under any other applicable municipal, county, state or federal law, rule, ordinance, direction, or regulation; and (E) any other substance or material regulated under any applicable municipal,
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county, state or federal law, rule, ordinance, direction, or regulation because of its dangerous or deleterious effects on human health or the environment. (d) The term “Operating Supplies” means such materials which may be Hazardous Material such as cleaning materials and fuel oil used in the ordinary course in the operation and maintenance of the Premises or the conduct of any tenant’s business therein or the conduct of any tenant’s business at the Premises, and legally permissible construction items incorporated into the Premises during the construction thereof, in each case only to the extent in compliance with all Environmental Laws and other federal, state and local laws, rules and regulations, and only in such quantities as shall be used in the ordinary course for the operation and maintenance of the Premises, and legally permissible construction items incorporated into the Premises during the construction thereof. (e) The term “Other Property” means any property which becomes contaminated with Hazardous Materials directly as a result of construction, operations or other activities on, or the contamination of, the Premises. (f) The term “Reports” means (i) the Phase I Environmental Site Assessment report dated January 31, 2011, as updated, and (ii) the Phase II Environmental Site Assessment report dated [___________], as updated, in each case, prepared by Nave Environmental, LLC with respect to the Project. 2. Indemnity. The Indemnitors hereby jointly and severally agree to pay, protect, defend (at trial and appellate levels) with attorneys, consultants and experts acceptable to the Co-Lenders, and save the Co-Lenders and their officers, directors, employees, agents, participants, members, partners, successors and assigns, and any parent or affiliate of the CoLenders (collectively, the “Beneficiaries”) harmless from and against, and hereby indemnify the Beneficiaries from and against any and all present or future liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements and expenses of any kind or of any nature whatsoever (including, without limitation, attorneys’, consultants’ and experts’ fees and disbursements actually incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding or enforcing the obligations of the Indemnitors hereunder) (collectively “Costs”) which may at any time be actually imposed upon, incurred by or asserted or awarded against any Beneficiary with respect to the Premises, and arising directly or indirectly from or out of: (i) the violation of any Environmental Law; (ii) the actual or alleged presence, release or threat of release of any Hazardous Material now or hereafter on, in, under or affecting all or any portion of the Premises or any surrounding areas, regardless of whether or not caused by or within the control of Indemnitors, or at any other location if the Hazardous Materials were generated, treated, stored, transported or disposed of by or on behalf of Indemnitors; (iii) the failure by Indemnitors to comply fully with the terms and conditions of this Agreement; (iv) the breach of any representation or warranty by Indemnitors contained in this Agreement; or (v) the enforcement of this Agreement, including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Materials from all or any portion of the Premises or any surrounding areas, the cost of any actions taken in response to the presence, release or threat of release of any Hazardous Materials on, in, under or affecting any portion of the Premises or any surrounding areas. “Costs” as used in this Agreement shall
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include, without limitation, any diminution in the value of the Premises or any Other Property, or any future reduction of the sales or rental price of the Premises or any Other Property, loss of use of the Premises or any Other Property, and the imposition of any lien on or against the Premises or any Other Property by reason of any matter set forth in this Paragraph 2; but “Costs� shall not include any punitive damages except to the extent that the damages listed in this sentence may be considered punitive damages. 3. Representations Regarding Hazardous Materials. Indemnitors hereby represent and warrant to and covenant and agree with the Beneficiaries as follows: (a) Except as set forth in the Reports, the Premises is not in violation of any Environmental Law; (b) Except as set forth in the Reports, no Hazardous Materials (other than Operating Supplies) are located on or have been handled, generated, stored, processed or disposed of on or released or discharged from the Premises (including underground contamination); (c) Except as set forth in the Reports, the Premises is not subject to any private or governmental lien or judicial or administrative notice or action relating to Hazardous Materials; (d) Except as set forth in the Reports, there are no existing or closed underground storage tanks or other underground storage receptacles for Hazardous Materials on the Premises; and (e) Except as set forth in the Reports, Indemnitors have received no notice of, and there exists no investigation, action, proceeding or claim by any agency, authority or unit of government or by any third party which could reasonably be expected to result in any liability, penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or operation of the Premises. 4.
Covenants of Indemnitors.
(a) Subject to the terms of the Leases, the Indemnitors shall, for so long as the Premises is owned or leased by the Indemnitors, exercise the same degree of care as a reasonable, prudent developer, owner or lessee of like properties would exercise to keep or cause the Premises to be kept free from Hazardous Materials (other than Operating Supplies) and in compliance with all applicable Environmental Laws, shall not install or use any underground storage tanks, shall expressly prohibit the use (other than Operating Supplies), generation, handling, storage, production, processing and disposal of Hazardous Materials by all occupants of space in the improvements at the Premises, and, without limiting the generality of the foregoing, shall not install in the improvements at the Premises or permit to be installed in the improvements at the Premises asbestos or any substance containing asbestos. Indemnitors acknowledge and agree that the Beneficiaries have no duty to provide Indemnitors with any information regarding the Environmental Laws or any interpretation thereof.
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(b) (i) The Indemnitors shall immediately notify the Beneficiaries should Indemnitors, or either of them, become aware of (A) any Hazardous Materials (other than Operating Supplies), or other potential environmental problem or liability, with respect to the Premises, (B) any lien, regulatory or enforcement action or notice affecting the Premises or the Borrower resulting from any violation or alleged violation of the Environmental Laws, (C) the institution of any investigation, inquiry or proceeding by any applicable governmental authority concerning the Borrower or the Premises pursuant to any Environmental Law or otherwise relating to Hazardous Materials, or (D) the discovery of any occurrence, condition or state of facts which would render any representation or warranty contained in this Agreement incorrect in any material respect if made at the time of such discovery. (ii) Subject to the terms of the Leases, the Indemnitors shall, promptly and when and as required and regardless of the source of the contamination, at their own expense, take all actions as shall be required pursuant to any applicable Environmental Laws, consistent with the use of the Premises, for the remediation of any and all portions of the Premises or other affected property, including, without limitation, all investigative, monitoring, removal, containment and remedial actions in accordance with all Environmental Laws that are applicable to the Premises, and shall further pay or cause to be paid, at no expense to the Beneficiaries, all remediation, administrative and enforcement costs imposed by applicable governmental agencies and which may be asserted against the Premises. In the event Indemnitors fail to do so, any or all Beneficiaries may, in their sole discretion (but shall have no obligation to), cause the Premises or other affected property to be so freed from any Hazardous Materials or otherwise brought into compliance with Environmental Laws consistent with the use of the Premises and any actual out-of-pocket cost incurred in connection therewith shall be included in Costs and shall be paid by the Indemnitors; provided, however, that the Beneficiaries shall not take such action unless either (i) Indemnitors fail to commence such required actions within fifteen (15) days after written notice by any Beneficiary, and/or Indemnitors thereafter fail to diligently and/or continuously prosecute to completion all required work and actions, and/or any Beneficiary determines in its discretion that Indemnitors may fail to complete the required work and actions within the time frames required under any applicable Environmental Laws and/or under the requirements of any governmental agency or body or (ii) any Beneficiary determines in its discretion that Indemnitors’ failure to take the required actions is likely to have a material and adverse effect on the operation of the Premises as a whole or any Beneficiary’s interests in the Premises and such Beneficiary gives notice to the Indemnitors of such determination. In furtherance of the foregoing, subject to the terms of the Leases, the Indemnitors hereby grant to the Beneficiaries access to the Premises and an irrevocable license to remove any items deemed by the Beneficiaries to be Hazardous Materials in violation of Environmental Laws and to do all things any Beneficiary shall deem necessary to bring the Premises into compliance with Environmental Laws. (c) Upon the request of any Beneficiary, at any time and from time to time after the occurrence of a default by any Indemnitor under this Agreement or at such other time as any Beneficiary has grounds to believe or suspect that Hazardous Materials are or have been released, stored or disposed of on or around the Premises (other than in accordance with applicable Environmental Laws) or that the Premises may be in violation of the Environmental Laws, Indemnitors shall provide, at their sole expense, an inspection or audit of the Premises prepared by a hydrogeologist or environmental engineer or other appropriate consultant selected
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by Indemnitors and approved by the Beneficiaries assessing the presence or absence of Hazardous Materials on the Premises. If Indemnitors fail to commence such inspection or audit within fifteen (15) days after such request, any Beneficiary may order the same, and the Indemnitors hereby grant to the Beneficiaries access to the Premises and an irrevocable license to undertake such inspection or audit. The cost of such inspection or audit shall be included in Costs and shall be paid by Indemnitors. 5.
Indemnification Procedures.
(a) If any action shall be brought against any Beneficiary based upon any of the matters for which such Beneficiary is indemnified hereunder, such Beneficiary shall notify Indemnitors in writing thereof, which notice shall include a copy of all pleadings and summons in the possession of such Beneficiary relating to such action and shall specifically state that indemnification for such action is being sought under this Agreement, and the Indemnitors shall promptly assume the defense thereof, including, without limitation, the employment of counsel selected by the Indemnitors and acceptable to the applicable Beneficiary or Beneficiaries and the negotiation of any settlement; provided, however, that any failure of such Beneficiary to notify Indemnitors of such matter shall not impair or reduce the obligations of Indemnitors hereunder. The Beneficiaries shall reasonably cooperate with the Indemnitors, at the Indemnitors’ sole cost and expense, in connection with the defense or settlement of any such claim or action in accordance with the terms of this Agreement. If (i) any Beneficiary determines, based on the advice of counsel, that the conduct of its defense by Indemnitors would present a conflict of interest or otherwise be materially prejudicial to its interests, (ii) Indemnitors refuse to defend or (iii) Indemnitors shall have failed, in any Beneficiary’s judgment, to defend the action in good faith, then the Beneficiaries shall have the right, at the expense of the Indemnitors (which expense shall be included in Costs), to employ separate counsel in any such action and to participate in the defense thereof. In the event Indemnitors shall fail to undertake to defend the Beneficiaries against any claim, loss or liability for which the Beneficiaries are indemnified hereunder, the Beneficiaries may, at their sole option and election, defend or settle such claim, loss or liability (provided that the Beneficiaries shall give notice of any such settlement to the Indemnitors). The liability of Indemnitors to the Beneficiaries hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation, attorneys’ fees and disbursements, incurred by the Beneficiaries in effecting such settlement. In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitors shall pay the same as hereinafter provided. The Beneficiaries’ good faith in any such settlement shall be conclusively established if the settlement is made on the advice of independent legal counsel for any Beneficiary. (b) Indemnitors shall not, without the prior written consent of the Beneficiaries: (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment with respect to any matter for which any Beneficiary is entitled to be indemnified hereunder and that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Beneficiaries of a full and complete written release of the Beneficiaries (in form, scope and substance satisfactory to the Beneficiaries) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit, proceeding or claim in any
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manner that is reasonably likely to adversely affect the Beneficiaries or to obligate the Beneficiaries to pay any sum or perform any obligation. (c) All Costs shall be immediately reimbursable to the Beneficiaries when and as incurred and, in the event of any litigation, claim or other proceedings without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceedings and Indemnitors shall pay to the Beneficiaries any and all Costs within fifteen (15) days after written notice from a Beneficiary itemizing in reasonable detail the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of Indemnitors to periodically pay such Costs, such Costs, if not paid by the tenth (10th) day after such notice shall accrue interest at the Default Rate. 6. Reinstatement of Obligations. If at any time all or any part of any payment made by Indemnitors or received by the Beneficiaries from Indemnitors under or with respect to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of any Indemnitor), then the obligations of Indemnitors hereunder shall, to the extent of the payment rescinded and returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitors, or receipt of payment by the Beneficiaries, and the obligations of Indemnitors hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitors had never been made, 7. Waivers by Indemnitors. To the extent permitted by law, Indemnitors hereby waive and agree not to assert or take advantage of: (a) Any right to require the Beneficiaries to proceed against any other Person or to proceed against or exhaust any security held by the Beneficiaries at any time or to pursue any other remedy in the Beneficiaries’ power or under any other agreement before proceeding against Indemnitors hereunder; (b) Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of the Beneficiaries to file or enforce a claim against the estate (in administration, bankruptcy or any other proceedings) of any other Person or Persons; (c)
Any defense based upon an election of remedies by the Beneficiaries;
(d)
Any right or claim of right to cause a marshalling of the assets of any
Indemnitor; (e) Any duty on the part of the Beneficiaries to disclose to Indemnitors any facts the Beneficiaries may now or hereafter know about the Premises of which the Indemnitors also had or have knowledge at the operative time, regardless of whether the Beneficiaries has reason to believe that any such facts materially increase the risk beyond that which Indemnitors intend to assume or has reason to believe that such facts are unknown to Indemnitors or has a reasonable opportunity to communicate such facts to Indemnitors, it being understood and agreed that Indemnitors are fully responsible for being and keeping informed of the condition of
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the Premises and of any and all circumstances bearing on the risk that liability may be incurred by Indemnitors hereunder; (f) Any invalidity, irregularity or unenforceability, or any amendment, in whole or in part, of any one or more of this Agreement, the Loan Agreement or the other Loan Documents; (g) Any deficiency in the ability of the Beneficiaries to collect or to obtain performance from any Persons now or hereafter liable for the payment and performance of any obligation hereunder; (h) An assertion or claim that the automatic stay provided by 11 U.S.C. ยง362 (arising upon the voluntary or involuntary bankruptcy proceeding of any Indemnitor) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of the Beneficiaries to enforce any of its rights, whether now or hereafter required, which the Beneficiaries may have against the Indemnitors; (i) Any modifications of the Loan Agreement or other Loan Documents or any obligation of the Indemnitors relating to the Loan Agreement or other Loan Documents by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise; and (j)
Any sale or transfer of all or part of the Premises.
8.
General Provisions.
(a) Fully Recourse. All of the terms and provisions of this Agreement are recourse obligations of Indemnitors and not restricted by any limitation on personal liability contained in any of the Loan Documents. (b) Separate Obligations. Indemnitors hereby acknowledge that even though the representations, warranties, covenants or agreements of Indemnitors contained herein may be identical or substantially similar to representations, warranties, covenants or agreements of the Indemnitors under other agreements, the obligations of Indemnitors under this Agreement are separate obligations of Indemnitors hereunder which can be enforced against Indemnitors without regard to the existence of any other agreement. (c) Survival. This Agreement shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the payment in full of all amounts owed to Co-Lenders under the Loan Agreement or the other Loan Documents and the exercise of any remedy by Co-Lenders under the Loan Agreement or the other Loan Documents. Anything to the contrary herein notwithstanding, it is agreed and intended by Indemnitors and the Beneficiaries that this Agreement and the indemnities provided herein may be assigned or otherwise transferred by the Beneficiaries to any of their assignees with respect to the Loan and Co-Lenders.
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(d) No Recourse Against Beneficiaries. No Indemnitor shall have any right of recourse against the Beneficiaries by reason of any action the Beneficiaries may take or omit to take under the provisions of this Agreement provided that such Beneficiary has given notice of any action as required hereby and has not acted in bad faith or committed willful misconduct. (e) Reservation of Rights. Nothing contained in this Agreement shall prevent or in any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which the Beneficiaries may have against any Indemnitor or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. §9601 et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved. (f) Rights Cumulative; Payments. The Beneficiaries’ rights under this Agreement shall be in addition to all rights of the Beneficiaries under the Loan Agreement, the other Loan Documents and any agreements executed and delivered in connection therewith. (g) No Limitation on Liability. Indemnitors hereby consent and agree that each Beneficiary may at any time and from time to time without further consent from Indemnitors do any of the following and the liability of Indemnitors under this Agreement shall be unconditional and absolute and shall in no way be impaired or limited by any of the following events, whether occurring with or without notice to Indemnitors or with or without consideration: (i) any extensions of time for performance required by the Loan Agreement or the other Loan Documents; (ii) any sale or transfer of the Premises; (iii) any change in the composition of Borrower or any affiliate thereof, including, without limitation, the withdrawal or removal of Indemnitors from any current or future position of ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitors herein or in the Loan Agreement or the other Loan Documents; (v) the release of any Person from performance or observance of any of the agreements, covenants, terms or conditions contained in the Loan Agreement or the other Loan Documents by operation of law, the Beneficiaries’ voluntary act or otherwise; (vi) the modification of the terms of any one or more of the Loan Agreement or the other Loan Documents; or (vii) the taking or failure to take any action of any type whatsoever. No such action which any Beneficiary shall take or fail to take in connection with the Loan Agreement and the other Loan Documents, nor any course of dealing with the Indemnitors or any other Person, shall limit, impair or release Indemnitors’ obligations hereunder, affect this Agreement in any way or afford Indemnitors any recourse against the Beneficiaries. Nothing contained in this Paragraph shall be construed to require the Beneficiaries to take or refrain from taking any action referred to herein. (h) Entire Agreement; Amendment; Severability. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements, whether written or oral, between the parties respecting such matters. Any amendments or modifications hereto, in order to be effective, shall be in writing and executed by the parties hereto. A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.
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(i) Governing Law; Binding Effect; Waiver of Acceptance. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, except to the extent that the applicability of any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law shall so govern and be controlling. This Agreement shall bind each Indemnitor and the heirs, personal representatives, successors and assigns of each Indemnitor and shall inure to the benefit of the Beneficiaries and the officers, directors, shareholders, agents and employees of the Beneficiaries and their respective heirs, successors and assigns. Notwithstanding the foregoing, Indemnitors shall not assign any of their respective rights or obligations under this Agreement without the prior written consent of the Beneficiaries, which consent may be withheld by the Beneficiaries in their sole discretion. Each Indemnitor hereby waives any acceptance of this Agreement by the Beneficiaries, and this Agreement shall immediately be binding upon Indemnitors. (j) Notice. All notices, requests and demands to or upon the Indemnitors or the Co-Lenders shall be in writing and shall be deemed to have been duly given or served for all purposes if delivered or given to the addresses set forth below in accordance with the terms of the Loan Agreement. If to the Borrower: Wheatley School Facility Foundation, Inc. 1615 Poydras Street, Suite 1400 New Orleans, LA 70112 with a copy to:
Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Attention: Amanda Wells
If to OPSB:
Orleans Parish School Board 3520 General De Gaulle Drive, Suite 5084 New Orleans, LA 70114 Attention: Stanley Smith
with a copy to:
Foley Judell, LLP 365 Canal Street One Canal Place, Suite 2600 New Orleans, LA 701130 Attention: Wayne Neveu
If to RSD:
Recovery School District 1615 Poydras Street, Suite 1400 New Orleans, Louisiana 70112 Attention: Annie Cambria
with a copy to:
Jones Walker, LLP 8555 United Plaza Blvd, Suite 500 Baton Rouge, LA 70809 Attention: Amanda S. Wells
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If to GS Sub-CDE:
GSNMF Sub-CDE 9 LLC c/o GS New Markets Fund, LLC 200 West Street New York, New York 10282 Attention: Carrie Van Syckel
with a copy to:
Goldman Sachs Bank USA 200 West Street New York, New York 10282 Attention: Andrea Gift Goldman Sachs Bank USA 200 West Street New York, New York 10282 Attention: Joe Curatolo with a copy by electronic mail to: gs-uig-docs@gs.com
and to:
Manatt, Phelps & Phillips, LLP 7 Times Square New York, NY 10036 Attention: Peter F. Olberg, Esq.
If to MBS Sub-CDE:
MBS-UI Sub-CDE XXIV, LLC c/o McCormack Baron Salazar, Inc. 720 Olive Street, Suite 2500 St. Louis, MO 63101 Attention: General Counsel
with a copy to:
Polsinelli Shughart PC 100 S. Fourth Street, Suite 1000 St. Louis, MO 63102 Attention: Fred Miller
(k) No Waiver: Time of Essence; Business Days. The failure of any party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such right or remedy must be in writing and signed by the party to be bound. This Agreement is subject to enforcement at law or in equity, including actions for damages or specific performance. Time is of the essence hereof. The term “business day� as used herein shall mean
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a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in the State of New York are authorized by law to be closed. (l) Captions for Convenience. The captions and headings of the sections and paragraphs of this Agreement are for convenience of reference only and shall not be construed in interpreting the provisions hereof. (m) Successive Actions. A separate right of action hereunder shall arise each time the Beneficiaries acquire knowledge of any matter indemnified by Indemnitors under this Agreement. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No legal proceeding hereunder shall preclude any subsequent legal proceeding, and Indemnitors hereby waive and covenant not to assert any defense in the nature of splitting of causes of action or merger of judgments. (n) Reliance. The Co-Lenders would not make the Loans to Borrower without this Agreement. Accordingly, Indemnitors intentionally and unconditionally enter into the covenants and agreements as set forth above and understand that, in reliance upon and in consideration of such covenants and agreements, the Loans shall be made and, as part and parcel thereof, specific monetary and other obligations have been, are being and shall be entered into which would not be made or entered into but for such reliance. (o) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages. (p)
SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(1) INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING FROM OR RELATING TO THIS AGREEMENT, (B) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE COURT OR ANY UNITED STATES FEDERAL COURT SITTING IN THE STATE OF NEW YORK, WITH VENUE IN ALL EVENTS IN A STATE COURT OR UNITED STATES FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK, NEW YORK, (C) SUBMIT TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREE THAT NONE OF THEM WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BENEFICIARIES TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). INDEMNITORS FURTHER CONSENT AND AGREE TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR
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CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE INDEMNITORS AT THE ADDRESS FOR NOTICES DESCRIBED IN PARAGRAPH 8(J) HEREOF, AND CONSENT AND AGREE THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW). (2) THE BENEFICIARIES AND INDEMNITORS, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FOREGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF THE BENEFICIARIES OR INDEMNITORS, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH THE BENEFICIARIES OR INDEMNITORS, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. (q) Waiver by Indemnitors. The Indemnitors covenant and agree that upon the commencement of a voluntary or involuntary bankruptcy proceeding by or against any Indemnitor, no Indemnitor shall seek a supplemental stay or otherwise pursuant to 11 U.S.C. ยง105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of the Beneficiaries to enforce any rights of the Beneficiaries against the Indemnitors by virtue of this Agreement or otherwise. (r) Further Assurances. Indemnitors shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to the Beneficiaries all documents, and take all actions, reasonably required by the Beneficiaries from time to time to confirm the rights created or now or hereafter intended to be created under this Agreement, to protect and further the validity and enforceability of this Agreement or otherwise carry out the purposes of this Agreement. [SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Environmental Indemnity Agreement as of the day and year first above written. INDEMNITORS: WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana not-for-profit corporation By: Name: Title:
ORLEANS PARISH SCHOOL BOARD, a political subdivision of the State of Louisiana By: Name: Title:
RECOVERY SCHOOL DISTRICT, a pubic body and instrumentality of the State of Louisiana By: Name: Title:
Signature page to Environmental Indemnity (GS – Wheatley) 200908592.3
CO-LENDERS: GSNMF SUB-CDE 9 LLC, a Delaware limited liability company By:
GS New Markets Fund, LLC, a Delaware limited liability company, its Manager
By: Name: Carrie Van Syckel Title: Vice President
MBS-UI SUB-CDE XXIV, LLC, a Missouri limited liability company By:
MBS Urban Initiatives CDE, LLC, a Missouri limited liability company, its Manager By: MUDCO 6, Inc., a Missouri corporation, its Managing Member
By: Name: Laurel J. Tinsley Title: Vice President
Signature page – Environmental Indemnity (GS – Wheatley) 200908592.3
Manatt draft 1/31/13 OPTION AGREEMENT THIS OPTION AGREEMENT (this “Agreement”) is made and entered into as of February [ ], 2013, by and between [ ]1, a [ ] (and together with any successor or assign thereto, the “Purchaser”), and GSGroup NMTC INVESTOR LLC (together with any successor or assign thereto, the “Investor”). RECITALS WHEREAS, on December 26, 2012, the Investor made certain equity contributions to and acquired a 100% interest in the capital, profits, losses, cash flow, deductions and credits of Wheatley NMTC Investment Fund LLC, a Delaware limited liability company (the “Fund”) pursuant to that certain Operating Agreement of the Fund dated December 26, 2012, as amended by that certain Amended and Restated Operating Agreement dated as of the date hereof (the “Fund Agreement”); and WHEREAS, on December 26, 2012, the Fund made certain capital contributions intended to qualify as “qualified equity investments” (the “QEIs”), eligible for New Markets Tax Credits under Section 45D of the Code, in GSNMF SUB-CDE 9 LLC, a Delaware limited liability company (the “GS CDE”) and MBS-UI SUB-CDE XXIV, LLC, a Missouri limited liability company (the “MBS CDE”; together with the GS CDE, the “CDEs”; each, individually, a “CDE”); and WHEREAS, on the date hereof, the CDEs are using substantially all of the proceeds of their respective QEIs to make certain loans (collectively, the “QLICIs”) to Wheatley Schools Facility Foundation, Inc., a Louisiana nonprofit corporation (the “QALICB”); and WHEREAS, the QALICB will utilize the QLICIs in connection with the financing of the renovation of the building located at 2300 Dumaine Street, New Orleans, Louisiana 70119; and WHEREAS, the QALICB is [
]2 of the Purchaser; and
WHEREAS, as a result of: (i) the admission of the Investor to the Fund, (ii) the admission of the Fund to each of the CDEs, and (iii) the respective QLICIs being made by the respective CDEs to the QALICB, the QALICB and Purchaser expect to receive substantial benefits; and WHEREAS, Purchaser desires to grant to the Investor the right to sell, and the Investor desires to grant to Purchaser the right to buy, the Investor Interest (as defined below) to the Purchaser on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: _________________________ 1 2
Who will be the counterparty? Describe QALICB’s relationship to Purchaser.
200901456.3
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1. Defined Terms. Capitalized terms used herein but not otherwise defined shall have the respective meanings attributed thereto in the Fund Agreement. “Approved Investment Documents” shall mean any documents or instruments evidencing or securing the Initial Approved Investment. “Approved Loan Documents” shall mean any documents or instruments evidencing or securing any Approved Loan. “Investor Interest” shall mean all the interests of the Investor in cash distributions, capital, profits, losses, Tax Credits and otherwise in the Fund and all rights under the Fund Agreement. 2.
Put Option.
(a) The Investor shall have an option (the “Put Option”) to sell the Investor Interest to the Purchaser upon the terms and conditions hereinafter set forth. (b) The Put Option may be exercised by the Investor, at any time during the six-month period (the “Put Option Period”) beginning upon the end of the Tax Credit Investment Period. If, at any time during the Put Option Period, the Investor elects to sell its Investor Interest pursuant to the provisions of this Section 2, it shall give the Purchaser written notice of such election (an “Election Notice”). (c) Within 30 days after delivery to the Purchaser of an Election Notice from the Investor, the Purchaser or its assignee shall pay to the Investor a purchase price (the “Put Price”) in an amount equal to the sum of (i) $1,000, (ii) any transfer taxes or other closing costs paid or payable by Investor attributable to the exercise of the Put Option and/or the sale of the Investor Interest and (iii) any amounts then due and owing from Purchaser or QALICB to Investor. 3.
Call Option.
(a) In the event that the Investor does not deliver an Election Notice to the Purchaser during the Put Option Period, the Purchaser or its assignee shall have the right and option, at any time during the six-month period following the Put Option Period (the “Call Option Period”) to purchase the Investor Interest for an amount (the “Call Price”) equal to the fair market value of the Investor Interest (the “Call Option”), as determined by mutual agreement among the parties, or if there is no such agreement, then by a qualified independent MAI certified appraiser with experience in valuation of the interests described herein selected by the parties and pursuant to the standards set forth in Section 3(d) below. The appraiser will be instructed to value the Investor Interest as the fair market value that a willing buyer would pay to a willing seller, neither being under any compulsion to buy or sell, and without giving any effect to the illiquid nature of the investment. (b) If, at any time during the Call Option Period, the Purchaser elects to purchase the Investor Interest pursuant to the provisions of this Section 3, the Purchaser shall give the Investor written notice of such election (a “Call Notice”). (c) Within (i) 30 days after the delivery to the Investor of a Call Notice, or (ii) 5 days after the date on which the parties receive the appraisal described in Section 3(d) below, whichever occurs later, the Purchaser shall pay the Call Price to the Investor in immediately available funds (with interest thereon at the Prime Rate commencing on the earlier 200901456.3
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of the (x) 30th day following the date of delivery of such Call Notice or (y) the 5th day following the receipt of such appraisal, as the case may be). (d) If the parties cannot mutually agree upon the Call Price, then the fair market value of the Investor Interest shall be determined by a qualified independent MAI certified appraiser with experience in valuation of the interests described herein selected by the Purchaser. The appraiser shall take into account all facts and circumstances concerning the Investor Interest as it shall determine relevant in making its determination, including in any event discounts related to transferability restrictions, any lack of control and any legal provisions affecting the Investor Interest, including those set forth in the Fund Agreement and the Sub-CDE Agreements, to the extent applicable. The Purchaser shall pay the cost of any appraiser(s) selected pursuant to this Section 3. The Purchaser shall pay any transfer taxes and other closing costs attributable to the exercise of the Put Option or Call Option, and any legal, accounting, and tax preparation and audit costs incurred by the Fund or by the Investor in connection with the QEIs and the QLICIs, in the year immediately following the end of the end of the Tax Credit Investment Period. 4. Documents and Actions. Upon receipt of the Put Price or the Call Price, as the case may be, the Investor shall execute and deliver such documents, assignments, instruments and other items, and shall take such other action, as shall be necessary to transfer and assign the Investor Interest to the Purchaser. 5. Certain Rights and Obligations. Upon the earlier of the giving of an Election Notice or the receipt of a Call Notice, the Investor shall have no further obligations under the Fund Agreement, and the Purchaser shall indemnify and defend the Investor and hold the Investor harmless against any such obligations. The Purchaser shall take all action and shall pay all costs necessary to enable the Investor to receive and retain the Put Price or the Call Price, as the case may be, as against any creditor of the Purchaser or of the Investor. Notwithstanding the purchase by the Purchaser of the Investor Interest pursuant to Section 2 or Section 3 above, to the extent permitted under the applicable provisions of the Code, the Investor shall be allocated any profits, losses or Tax Credits in respect of the Investor Interest for the period prior to the date of the receipt by the Investor of the Put Price or the Call Price, as the case may be. Anything herein to the contrary notwithstanding, title to the Investor Interest shall not vest in the Purchaser until payment in full of the Put Price or Call Price therefor. Upon such payment, the Purchaser shall forthwith cause any necessary papers to be filed, recorded and published wherever required showing such substitution. 6. Impact of Other Agreements and Documents. The obligations of the Purchaser hereunder shall remain in full force and effect without regard to, and shall not be affected or impaired by, (a) any amendment or modification of or addition or supplement to the Fund Agreement, any of the Sub-CDE Agreements, or any Approved Investment Documents or Approved Loan Documents, (b) any extension, indulgence or other action or inaction in respect of the Fund Agreement, any of the Sub-CDE Agreements, Approved Investment Documents or Approved Loan Documents, or any exercise or non-exercise of any right, remedy, power or privilege in respect of such documents or this Agreement, (c) any default by the Purchaser, the Investor, the Fund or any CDE under, or any illegality or unenforceability of, or any irregularity or defect in, any of the Approved Investment Documents or Approved Loan Documents to which
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the Investor and Purchaser are a party, or any provision of this Agreement, (d) any Bankruptcy, insolvency, reorganization or similar proceeding involving or affecting the Investor, the Purchaser, the Fund or any CDE, or (e) any other circumstances whether or not the Purchaser, the Investor, the Fund or any CDE shall have actual or constructive notice or knowledge thereof. If the Purchaser purchases the Investor Interest in accordance with the applicable provisions of this Agreement, it shall have no further liabilities or obligations hereunder. Notwithstanding the foregoing, the failure to pay the Put Price as and when provided for hereunder shall terminate the Call Option. Further, notwithstanding anything in this agreement to the contrary, if a default or Event of Default shall occur under that certain Loan Agreement of even date herewith by and among QALICB as Borrower, the CDEs as Lender, and [ ], as [Administrative Agent/Servicer], then, upon such Event of Default (unless waived or otherwise cured, which waiver or cure (if applicable) shall be subject to acceptance by Administrative Agent in its sole discretion), the Call Option shall cease to be exercisable and all rights under this Agreement associated with the Call Option shall be null and void. Furthermore, (A) in the event that, at the time that the Call Option would otherwise be exercisable hereunder or at the time at which the sale and purchase of the Investor Interest would otherwise be required to close hereunder pursuant to the exercise of the Call Option, a NMTC Recapture Event (as defined in that certain Guaranty of New Markets Tax Credits by QALICB and Purchaser for the benefit of Investor (the “QALICB Indemnity�)) described in Section 2(b) of the QALICB Indemnity shall have occurred, the Call Option shall not be exercisable, and the Investor shall have no obligation to close the sale and purchase of the Investor Interest pursuant to any exercise thereof, unless and until all amounts payable to the Investor under the QALICB Indemnity shall have been paid in full (and if such amounts are not satisfied in full during the Call Option Period, then the Call Option shall cease to be exercisable and all rights under this Agreement associated with the Call Option shall be null and void), and (B) in the event that, at the time the Put Option would be exercisable hereunder or at the time at which the sale and purchase of the Investor Interest would otherwise be required to close hereunder pursuant to the exercise of the Put Option, a NMTC Recapture Event described in Section 2(b) of the QALICB Indemnity shall have occurred and there are amounts due and owing to the Investor pursuant to the QALICB Indemnity, (x) the obligations of the Investor to close under the Put shall be conditioned on the payment in full of all such outstanding amounts, and (y) at the option of the Investor, (1) the period for exercise of the Put Option and/or the closing thereunder shall be extended until such time as full payment thereunder has been made, or (2) if the Put Option shall have been exercised, the Investor Member may revoke such election by written notice to Purchaser. 7. Notices and Demands. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been given when the same are (a) sent by U.S. registered or certified mail, return receipt requested, with postage prepaid (except in the event of a postal disruption, by strike or otherwise, in the United States), (b) sent by telex or facsimile promptly confirmed in writing, or (c) sent by personal delivery by a nationally recognized courier service for next day delivery, to the parties at the addresses set forth below or at such other addresses as such parties may designate by notice to the other parties: If to the Investor: GSGroup NMTC Investor LLC
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c/o The Goldman Sachs Group, Inc. 200 West Street New York, NY 10282-2198 Attention: Carrie Van Syckel Facsimile: (212) 357-5505 with a copy to: GSGroup NMTC Investor LLC c/o The Goldman Sachs Group, Inc. 200 West Street New York, NY 10282-2198 Attention: Andrea Gift Facsimile: (212) 357-5505 and a copy sent by email to: gs-uig-docs@gs.com and another copy to: Manatt, Phelps & Phillips, LLP 7 Times Square New York, NY 10036 Attention: Peter F. Olberg Facsimile: (212) 790-4545 If to Purchaser: [ ] Attention: [
]
with a copy to: [ ] Attention: [
]
and another copy to: [ ] Attention: [
]
Notices delivered personally or by facsimile will be effective upon delivery to an authorized representative of the party at the designated address; notices sent by mail in accordance with the above paragraph will be effective upon execution by the addressee of the return receipt requested.
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8. General. This Agreement (a) shall be construed in accordance with the internal law of the State of New York, (b) shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, personal representatives, successors and assigns of the parties hereto, and (c) may not be modified, amended or terminated, except by a written agreement between the Purchaser and the Investor. The Purchaser shall be entitled to have its assignee(s) purchase the Investor Interest pursuant to the Put Option or the Call Option provided for in this Agreement, with the consent of the Investor, which consent will not be unreasonably withheld, but the Purchaser shall remain fully liable to the Investor for the payment of the Put Price or the Call Price, as the case may be, hereunder. The Investor shall be entitled to assign its rights under this Agreement without the consent of the Purchaser; provided, however, that any such assignment shall require the express assumption of the obligations of the Investor hereunder and that Investor shall provide written notice to Purchaser either prior to or within a reasonable time after any such assignment. 9. Sole Benefit. The obligations of each party hereunder are imposed solely and exclusively for the benefit of the other party and no other Persons shall have any standing to enforce such obligations or be deemed to be beneficiaries of such obligations. 10. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart. Faxed, scanned or photocopied signatures shall be deemed equivalent to original signatures. 11. Severability. If any provisions of this Option Agreement shall be held invalid or unenforceable, the remainder of the Option Agreement shall not be affected thereby, and there shall be deemed substituted for the affected provision a valid and enforceable provision as similar as possible to the unenforceable provision.
[SIGNATURES TO FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Option Agreement to be duly executed as of the date first written above. PURCHASER: [ ] a[ ]
By: [
Signature page – Option Agreement (GS – Wheatley) 200901456.3
]
INVESTOR: GSGROUP NMTC INVESTOR LLC, a Delaware limited liability company
By: Carrie Van Syckel Vice President
200901456.3
STATE OF LOUISIANA DEPARTMENT OF EDUCATION COOPERATIVE ENDEAVOR AGREEMENT
In accordance with Article VII, Section 14(c) of the Constitution of the State of Louisiana of 1974 ("Constitution"), the ORLEANS PARISH SCHOOL BOARD, PARISH OF ORLEANS, STATE OF LOUISIANA (the "School Board" or “OPSB”) and the RECOVERY SCHOOL DISTRICT, a pubic body and instrumentality of the State of Louisiana (“RSD”) administered by the Louisiana State Department of Education, subject to the approval of the State Board of Elementary and Secondary Education (“BESE”) are entering into this Cooperative Endeavor Agreement (the “Leveraged Financing CEA”). WHEREAS, the Public School Facilities Financing Act contained in La. R.S. 17:100.10 (the “PSFFA”) authorizes the School Board and the RSD to create one or more public benefit corporations (a “PBC”) and to enter into financing arrangements with such PBCs and certain other private parties to leverage additional funds (a “Leveraged Financing”) not otherwise available to the School Board or the RSD for the purpose of planning, renovating, constructing, leasing, subleasing, managing, and improving schools and school properties within the Parish of Orleans; and WHEREAS, the School Board is the owner of that certain parcel of land located in the City of New Orleans, Parish of Orleans, with a municipal address of 2300 Dumaine Street, New Orleans, Louisiana 70119, as more particularly described in Exhibit A attached hereto and incorporated herein by reference (“Land”); and WHEREAS, the purpose of this Leveraged Financing CEA is: (i) to provide for the transfer of the Land by the School Board and of the Phillis S. Wheatley School (the “Wheatley School”) by the School Board and RSD initially to the Orleans Schools Facilities Foundation (the “Facilities Foundation” or “PBC Lessee”), a wholly owned public benefit corporation of the School Board pursuant to a Master Lease in substantially the same form as that attached hereto as Exhibit B-1 (the “Master Lease”) to be entered into by and among the School Board, RSD and the Facilities Foundation, (ii) to provide in the Master Lease that the Facilities Foundation shall transfer the Wheatley School to the Wheatley School Facility Foundation, Inc. (the “Wheatley QALICB”) through the execution of a Ground Lease in substantially the same form as that attached hereto as Exhibit B-2 (the “Ground Lease”) by and between the Facilities Foundation and the Wheatley QALICB and to further provide in the Ground Lease that the Wheatley QALICB obtain financing to complete the construction of the Wheatley School, (iii) to provide for the capitalization of the Facilities Foundation by the School CEArev3
Board in order to implement the Leveraged Financing of the Wheatley School through the Wheatley QALICB, (iv) to memorialize the agreement of the School Board and the RSD with respect to the use of Federal Emergency Management Agency funds (“FEMA Funds”), insurance proceeds (“Insurance Funds”), proceeds of the School Board’s $79,055,000 Revenue Bonds (Taxable QSCB), Series 2011B (the “QSCB Bond Funds”) and other funds available to the School Board and/or the RSD to finance the Wheatley School in accordance with the School Facilities Master Plan as revised in October 2011 (the “Master Plan”) and (v) to memorialize the agreement of the School Board and the RSD as to (A) the calculation of the per pupil amount to be provided to a charter school operator (the “Charter School Operator”) of the Wheatley School pursuant to a sublease agreement in substantially the same form as that attached hereto as Exhibit B-3 (the “Charter Lease”) between the Wheatley QALICB and the Charter School Operator, (B) the statutory obligation of the School Board to provide for the types of repairs to the Wheatley School that would be considered a capital expense in accordance with the provisions of La. R.S. 17:19990B.(4)(a) and (C) the insurance of the Wheatley School to be provided by either the School Board or RSD during the term of the Sub-Lease; and. WHEREAS, the PSFFA authorizes the School Board to make loans and/or guarantees to a PBC or to other third parties in a Leveraged Financing in order to facilitate the construction of new schools or the renovation of existing schools, or both, in accordance the Master Plan; and WHEREAS, the Facilities Foundation has been established as the initial PBC to facilitate Leveraged Financings by the School Board; and WHEREAS, the School Board proposes to provide sufficient funds to the Facilities Foundation through loans or grants solely for the purpose of constructing the Wheatley School and other new schools and/or renovating existing schools in accordance with the Master Plan; and WHEREAS, pursuant to OPSB Resolution No. 23-12, the School Board (i) authorized a cooperative endeavor agreement with the RSD to implement a leveraged financing transaction for the Phillis Wheatley Elementary School in accordance with the Master Plan, (ii) authorized and directed the transfer the Wheatley School to a PBC through a long term ground lease of the Land in accordance with the provisions of the PSFFA in order to complete the construction of Wheatley School through a Leveraged Financing in accordance with the Master Plan, (iii) provided that any loans and/or guarantees in a Leveraged Financing for the Wheatley School must be determined to be CEArev3
safe and sound by the Interim Superintendent and necessary to implement the Leveraged Financing, and (iv) required that the Interim Superintendent arrange to make loans to and/or guarantees by the School Board on behalf of one or more PBCs and/or to such other third parties in order to facilitate a Leverage Financing for the Wheatley School in connection with the construction of the Wheatley School under the Master Plan; and WHEREAS, the Wheatley School has been transferred to RSD pursuant to the provisions of R.S. 17:10.7 of the Louisiana Revised Statutes; and WHEREAS, pursuant to action taken by BESE on June 19, 2012, RSD was authorized to transfer properties such as the Wheatley School to one or more PBCs in order to pursue Federal historic tax credits (“HTCs”) or new market tax credits (“NMTCs”) for the purpose of generating additional revenue to complete the Master Plan; and WHEREAS, the Ground Lease provides that the Wheatley QALICB will complete the construction of the Wheatley School in accordance with a Development Agreement between the Wheatley QALICB and RSD, in substantially the same form as that attached hereto as Exhibit C, and any amendments thereof and/or supplements thereto (the “Wheatley Development Agreement”); and WHEREAS, pursuant to this Leveraged Financing CEA, the School Board and the RSD agree that the operation of Wheatley School following its transfer to the Wheatley QALICB will be through a Charter School Operator approved either by the School Board or RSD, initially FirstLine Schools (“FirstLine”), pursuant to the Charter Lease; and WHEREAS, the School Board and the RSD each agree to invest monies with the Facilities Foundation and to enter into such additional agreements as may be necessary to facilitate a Leveraged Financing for the development and construction of the Wheatley School, including the Master Lease and/or such other agreements as may be required in connection with a Leveraged Financing previously approved by the Louisiana State Bond Commission (the “SBC”) in an application submitted to the SBC as required by the PSFFA for the Leveraged Financing of the Wheatley School; and WHEREAS, the School Board agrees to direct the Facilities Foundation to grant, loan, guaranty and/or invest monies made available by the School Board and/or the RSD as may be required (i) in the Leveraged Financing to complete the construction of the Wheatley School in accordance with the Master Plan; provided, however, that any loan from the Facilities Foundation will be payable at an interest rate per annum not in excess of four percent (4.0%) and will mature in not more than forty (40) years from the date of such loan; and provided further that the construction and financing of the Wheatley School is not contingent upon the receipt of any FEMA Funds and (ii) to fulfill the obligations of the School Board to provide for any repair to the Wheatley School that would be considered a capital expense; and WHEREAS, the School Board and the RSD do hereby enter into this Leveraged Financing CEA for the development and construction of school facilities, initially the CEArev3
Wheatley School, in accordance with the Master Plan and to serve a public purpose as hereinafter described;
NOW, THEREFORE, IT IS HEREBY AGREED by and between the School Board and RSD that: SECTION 1: Purpose as Funding Agreement: The recitals cited above are hereby incorporated into this Leveraged Financing CEA to serve as a funding agreement between the School Board and the RSD. SECTION 2: Financing Structure Summary of the Leveraged Financing for the Wheatley School:
The School Board and the RSD hereby approve the Financing
Structure Summary substantially as described in Exhibit D for the Leveraged Financing of the Wheatley School (the “Wheatley Financing Structure”).
Pursuant to the
Wheatley Financing Structure, the School Board hereby commits through its Facilities Foundation (i) to advance [$23,897,112], of which [$6,947,088] will be loaned (“Leveraged Loan”) to the RSD Wheatley NMTC Investment Fund LLC (the “Investment Fund”) so that the Facilities Foundation will serve as the leveraged lender (the “Leveraged Lender”) in the Wheatley Financing Structure and [$16,897,112] will be provided as a grant (“Wheatley Grant”) to be used solely and exclusively by the Wheatley QALICB to pay for the construction costs of the Wheatley School and (ii) to provide for the repairs to the Wheatley School that would be considered to be a capital expense in accordance with the School Board’s statutory obligation pursuant to La. R.S. 17:1990B.(4)(a). SECTION 3: Master Lease, Ground Lease and Charter Lease: The parties hereto (i) agree to execute the Master Lease in substantially the same form as that attached hereto as Exhibit B-1 individually and jointly with the Facilities Foundation Lessee; (ii) approve the form and execution of the Ground Lease in substantially the same form as that attached hereto as Exhibit B-2 by and between the Facilities Foundation and the Wheatley QALICB in order to complete the construction of the Wheatley School in accordance with the Master Plan; and (iii) approve the form of the Charter Lease in substantially the same form as that attached hereto as Exhibit B-3 which provides for a lease payment by the Charter Operator to the Wheatley QALICB of [$____] (the CEArev3
“Charter Lease Payment”) commencing in calendar year 2014. The School Board and the RSD further agree that the funds distributed to Type 1, 1B, 2, 3, 4 and 5 charter schools pursuant to La. R.S. 17:3995(A)(1)(c) on a per pupil basis for each calendar year following 2013 (the “Debt Service Offset”) shall be at least equal to the amount distributed to such schools for the State’s fiscal year starting July 1, 2013 (“Fiscal Year”) with an inflation increase of 1.5% per Fiscal Year thereafter, notwithstanding the exclusion of Type 5 charter schools in La. R.S. 17:3995(A)(1)(c); provided, however, that no inflation increase shall result in payments by the Charter Operator under the Charter Lease exceeding the actual lease payments due to the Wheatley QLICB.. SECTION 4: Loans and Grants by the Facilities Foundation in accordance with the Wheatley Financing Structure: The School Board agrees to require the Facilities Foundation to acknowledge the initial receipt of [$23,897,112] from the School Board and to perform such other actions necessary to facilitate the Leveraged Financing of the construction costs of the Wheatley School in accordance with the leveraged loan documents (the “Wheatley Leverage Loan Documents”) in substantially the same form as that attached hereto as Exhibit E including making the Leveraged Loan and the Wheatley Grant. The School Board agrees to direct the Facilities Foundation to approve the disbursement of funds to construct the Wheatley School in accordance with the Construction Monitoring and Disbursement Agreement in substantially the same form as that attached hereto as Exhibit F. The School Board agrees to require the Facilities Foundation to advance as a grant such additional monies received by the Facilities Foundation to the Wheatley QALICB as may be required to fulfill the obligations of the School Board to provide for any repair to the Wheatley School that would be considered to be a capital expense. SECTION 5: Developer Fee: RSD agrees to deposit with the Facilities Foundation all Developer Fees received in connection with the development and construction of the Wheatley School and the School Board agrees to direct the Facilities Foundation to use such Developer Fees for the construction or renovation of other school facilities under the Master Plan. SECTION 6: Term: This Leveraged Financing CEA shall be effective from the date of execution hereof and shall remain in effect until the later of December 31, 2080 or CEArev3
such time there is no recapture risk for any investment by third party investors in a Leveraged Financing of a school facility identified in the Master Plan. SECTION 7: Amendment of this Leveraged Financing CEA: The parties agree that this Leveraged Financing CEA may be amended only by the written instrument and mutual consent of the parties hereto. Following the closing of a Leveraged Financing, this Leveraged Financing CEA shall not be amended without the consent of the third party investor or lender beneficiaries of a Leveraged Financing. (Signatures follow on next page)
SIGNATURE PAGE COOPERATIVE ENDEAVOR AGREEMENT THUS DONE AND SIGNED, this ______ day, of January, 2013, at CEArev3
__________, Louisiana
WITNESSES: ORLEANS PARISH SCHOOL BOARD By: __________________________________ Name: Title:
RECOVERY SCHOOL DISTRICT By: __________________________________ Name: Title: LOUISIANA DEPARTMENT OF EDUCATION By: __________________________________ Name: Title:
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EXHIBIT A Land
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EXHIBIT B-1 Master Lease
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EXHIBIT B-2 Ground Lease
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EXHIBIT B-3 Facility Lease
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EXHIBIT C Development Agreement
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EXHIBIT D Financing Structure Summary
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EXHIBIT E Wheatley Leveraged Loan Documents
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EXHIBIT F Construction Monitoring and Disbursement Agreement
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MPP Comments 2/3/13 _________________________________
MASTER LEASE _________________________________
among
THE STATE OF LOUISIANA, DEPARTMENT OF EDUCATION, RECOVERY SCHOOL DISTRICT (“RSD”) and THE ORLEANS PARISH SCHOOL BOARD (“OPSB”) RSD and OPSB together, as Master Lessor and ORLEANS SCHOOLS FACILITIES FOUNDATION, INC. as Master Lessee
Dated as of February ___, 2013
Wheatley Master PBC Lease 200912541.2
Master Lease This Master Lease (this “Master Lease”), made and entered into as of the ___ day of February, 2013 (the “Effective Date”), is by and among the ORLEANS PARISH SCHOOL BOARD, a political subdivision of the State of Louisiana (“School Board”) and the STATE OF LOUISIANA, DEPARTMENT OF EDUCATION, RECOVERY SCHOOL DISTRICT, a pubic body and instrumentality of the State of Louisiana (“RSD”) (together referred to hereinafter as the “Master Lessor”), and the ORLEANS SCHOOLS FACILITIES FOUNDATION, INC., a Louisiana nonprofit and public benefit corporation of the School Board (referred to hereinafter as the “Master Lessee”) (Master Lessor and Master Lessee are each referred to herein singularly as a “Party”, and Master Lessor and Master Lessee are referred to hereinafter collectively as the “Parties”). Recitals: WHEREAS, the School Board is the record title owner of that approximately 2.2063 acre parcel of property located in the City of New Orleans, Parish of Orleans, with a municipal address of 2300 Dumaine Street, New Orleans, Louisiana 70119, as more particularly described in Exhibit “A” attached hereto and incorporated herein by reference (“Property”); WHEREAS, pursuant to Louisiana Revised Statute §17:10.7, the RSD was given certain control over the operations and management of certain schools in Orleans Parish, including the authority to determine which schools under its jurisdiction should be rebuilt; WHEREAS, the Phillis S. Wheatley School (the “Wheatley School”), formerly located on the Property, was determined by the Board of Elementary and Secondary Education (“BESE”) to be an academically failing school and was transferred to the jurisdiction of the RSD as mandated by Louisiana Revised Statute § 17:10.7; WHEREAS, pursuant to Louisiana Revised Statute § 1900B.(4)(b), the RSD acquires with the transfer of schools transferred to its jurisdiction pursuant to Louisiana Revised Statute § 17:10.7 all the rights and responsibility of ownership regarding all land, buildings, facilities, and other property that is part of the school being transferred, including the right to lease the land, rebuild school buildings, and to dispose of property other than the land as is necessary to properly manage the operation of the schools, but is prohibited from disposing of land through sale, the title to the land remaining vested in the School Board; WHEREAS, the RSD has made the determination that new school facilities should be built on the Property (the “Wheatley School Facility”) and that the Wheatley School should be operated by a charter school operator (a “Charter School Operator”) licensed either by the RSD or by the School Board; WHEREAS, the RSD and the School Board have entered into a Cooperative Endeavor Agreement setting forth the terms and conditions of rebuilding the Wheatley School Facility on the Property (“CEA”), and both the RSD and the School Board desire to transfer all of their respective right, title and interest in the Property initially to the Master Lessee as a wholly owned public benefit corporation of the School Board and to provide that the Master Lessee shall sublease the Property to the Wheatley School Facility Foundation, Inc. (the “Sub-Lessee” or “Wheatley QALICB”) pursuant to a Ground Lease (the “Ground Lease”) made and entered into as of the ___ day of February, 2013, between the Master Lessee and Wheatley QALICB;
WHEREAS, the Master Lessor and the Master Lessee desire to enter into this Master Lease in compliance with the provisions of the Public School Facilities Financing Act (Louisiana Revised Statutes 17:100.10) (“Financing Act”) and to further provide for the ground leasing of the Property by the Master Lessee to the Wheatley QALICB pursuant to the Ground Lease; WHEREAS, the Parties to this Master Lease desire to approve the form and content of the Ground Lease attached hereto as Exhibit “B” and the Master Lessor further desires to authorize and direct the Master Lessee to enter into and execute the Ground Lease with the Wheatley QALICB as SubLessee; WHEREAS, the Ground Lease directs the Sub-Lessee, subject to the terms and conditions of the Ground Lease, to arrange equity and debt financing for the purpose of financing the costs of ground leasing the Property pursuant to the Ground Lease and to develop, construct, furnish, equip and operate the Wheatley School Facility on the Property. Master Lease: NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein set forth by each Party to be kept and performed, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby expressly acknowledged by each Party hereto, the Master Lessor and Master Lessee, intending to be legally bound, do hereby mutually covenant and agree as follows: The Master Lessor does hereby lease, demise and let the Property unto the Master Lessee, subject only to the “Permitted Encumbrances” (as defined in the Ground Lease), and the Master Lessee does hereby take and hire the Property from the Master Lessor, subject only to the Permitted Encumbrances and the obligations of the Master Lessee hereunder and under the Ground Lease. TOGETHER WITH all appurtenances, rights, privileges, and easements benefiting, belonging, or pertaining thereto, and together with the buildings, structures, and improvements erected or to be erected thereon (which shall be deemed to be included in the term “Property”). TO HAVE AND TO HOLD the Property for a term of years set forth herein unless this Master Lease shall be sooner terminated as hereinafter provided. This Master Lease and all rights of the Parties hereunder are expressly subject to the provisions as hereinafter set forth, all of which the Parties hereto respectively agree to keep, abide by, and perform during the Term (as defined herein) hereof. Section 1. Definitions. The following terms as used in this Master Lease shall have the meanings set forth below, unless the context indicates otherwise. Capitalized terms not otherwise defined in this Master Lease shall have the meaning ascribed to such terms in the Ground Lease. “Event of Default” means any material breach or intentional violation of the terms and conditions set forth in this Master Lease by either party, which remains uncured one-hundred twenty (120) days following written notice of such event by the non-defaulting party. No Event of Default may be initiated by Master Lessor unless both the OPSB and the RSD agree in writing. “Financing Act” means the Public School Facilities Financing Act contained at Louisiana Revised Statutes 17:100.10. Wheatley Master PBC Lease
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“Ground Lease” means the Ground Lease attached hereto as Exhibit B as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof. “Master Lessor Representative” means the Person or Persons designated by the Master Lessor to serve as the Master Lessor's representatives hereunder. “Master Lease Payment” shall have the meaning given in Section 3 hereof. “Master Lease” shall have the meaning given in Section 2. “Master Lessee” means the Orleans Schools Facilities Foundation, Inc., a wholly owned Louisiana nonprofit public benefit corporation of the School Board, and its successors and assigns. “Memorandum of Master Lease” means the agreement of even date herewith executed by the Parties which sets forth certain of the basic terms of this Master Lease, and is in recordable form. “Notice of Termination” means notice to be given by the Master Lessor to any permitted Leasehold Mortgagee upon an Event of Default under the Ground Lease. “Premises” means collectively the Wheatley School Facility and the Property. “Property” shall have the meaning given in the recitals of this Master Lease. “Rent” means the Master Lease Payment payable under this Master Lease, as defined and described in Section 3 hereof. “SNDA” means the subordination, non-disturbance and attornment agreement dated as of February __, 2013, by and among the Master Lessee, the Master Lesser, the Sub-Lessee and the Leasehold Mortgagee. “State” means the State of Louisiana. “Sub-Lessee” means the Wheatley School Facility Foundation, Inc. “Term” shall have the meaning given in Section 2. “Termination Date” means the date on which the Term hereof ends by termination or expiration of this Master Lease. “Wheatley School Facility” means (i) the approximately 95,881 square foot elementary school and related facilities that will be Designed, Developed, Constructed, furnished and equipped on the Property with the proceeds of the Debt Financing and the Grant Financing, (ii) the leasehold interest in the Property on which the same will be located, and (iii) any Personalty that is or will be located therein or thereon or used in connection therewith. Section 2.
Term.
(a) The term of the leasehold estate of the Master Lessee in the Property created hereunder shall begin on the Effective Date, and shall expire at 12:00 midnight on the ninety-ninth (99th) annual anniversary of the Effective Date, unless otherwise extended by a written agreement of the Parties or sooner terminated in accordance with this Master Lease or by operation of law (the “Term”). Wheatley Master PBC Lease
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(b) The Master Lessor and Master Lessee, within thirty (30) days after request of the other, shall confirm the then current Termination Date in writing, and if so requested, by an instrument in recordable form. Section 3. Master Lease Payment. Master Lessee shall pay as rent for the Property the sum of ONE AND 00/100 DOLLAR ($1.00) per year of the Term (the “Master Lease Payment”). Master Lessor acknowledges the receipt of $99.00 in hand paid as of the Effective Date as full capitalized payment of the Master Lease Payment due hereunder. Section 4. Execution and Enforceability of the Ground Lease with the Wheatley School Facility. As of the Effective Date, (i) the Master Lessee acknowledges and agrees that the Master Lessee has executed and entered into the Ground Lease with the Wheatley QALICB and that the Ground Lease is binding and enforceable on and against the Master Lessee and the Wheatley QALICB and (ii) the Master Lessor acknowledges and consents to the Ground Lease. Section 5. Quiet Enjoyment/Police Service. The School Board represents that, as of the Effective Date, the School Board owns the Property subject to no restrictions, liens, or other encumbrances other than Permitted Encumbrances. The RSD represents that it has received the authority to control the lease of the Property to the Master Lessee, and to authorize the construction and development of the School Facilities pursuant to Louisiana law and the Ground Lease. Collectively, Master Lessor and Master Lessee further covenant and agree that, throughout the term of the Ground Lease, the Sub-Lessee may peaceably and quietly enjoy the Premises without interference from any party claiming by or through Master Lessor or Master Lessee, subject, however, to Permitted Encumbrances under the Ground Lease and the Sub-Lessee's fulfillment of the covenants and agreements contained in the Ground Lease. Notwithstanding anything to the contrary contained in this Master Lease or the Ground Lease, the Premises shall be subject, at all times during the term of the Ground Lease, to the jurisdiction of the City of New Orleans police and fire departments, and Sub-Lessee shall accept a sub-leasehold interest to the Premises "AS IS". Section 6. Application of the Public School Facilities Financing Act. The Master Lessor and Master Lessee acknowledge and agree that the development and construction of the Wheatley School Facility is being facilitated by the provisions of the Financing Act. The Financing Act requires that any arrangement, such as this Master Lease, providing for the construction of new schools or the renovation of existing schools through a public benefit corporation created under the Financing Act must specifically provide that title and control of such schools and school facilities, such as the Wheatley School Facility, shall automatically and immediately, by operation of law, revert to the School Board if the property is used for purposes other than school purposes. The Master Lessee acknowledges and agrees that all documents related to the financing of the Wheatley School Facility shall contain a specific acknowledgement that the provisions of the Financing Act apply, including the automatic reversion of the Wheatley School Facility to the School Board if the Wheatley School Facility is used for a purpose other than school purposes. The Master Lessor confirms that (i) prior to completion of construction and (ii) in the event that a sub-sublease between the Wheatley QALICB and a Charter School Operator terminates other than as a result of a breach or default thereunder by the Wheatley QALICB (provided that the Wheatley QALICB is exercising reasonably diligent efforts to enter into a replacement sub-sublease with a qualified Charter School Operator), the Wheatley School Facility shall not be deemed to be used for a purpose other than school purposes for purposes of this Section 6. Section 7. Master Lessor’s Obligation for Extensive Repairs. Notwithstanding anything in this Master Lease to the contrary, pursuant to Louisiana Revised Statute 17:1900(B)(4)(a), the School Board shall provide for the type of extensive repair to buildings or facilities that would be considered to Wheatley Master PBC Lease
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be a capital expense. Therefore, Master Lessor and Master Lessee agree that upon damage or destruction to the Wheatley School Facility after Construction, the cost of any repairs shall be paid: first, from any available insurance proceeds obtained for such purpose; second, from any reserve funds held by SubLessee for capital expenditures; and third, from funds made available by the School Board pursuant to applicable law.
Section 8. Notices. (a) All notices, certificates, demands, requests, or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by certified mail, postage prepaid, return receipt requested, or given when dispatched by facsimile transmission, or by personal delivery addressed as follows: If to the Master Lessee:
Orleans Schools Facilities Foundation, Inc. Attention: Address City, State, Zip Telephone: Facsimile:
With a copy to:
Edward Morris OPSB General Counsel Address City, State, Zip Telephone: Facsimile:
And to:
GSNMF Sub-CDE 9 LLC, Collateral Agent c/o The Goldman Sachs Group, Inc. 200 West Street New York, New York 10282 Attn: Carrie Van Syckel
And with a copy by electronic mail to: gs-uig-docs@gs.com
If to the Master Lessor:
Orleans Parish School Board Attention: Address City, State, Zip Telephone: Facsimile: Recovery School District Attention: 1615 Poydras Street, Suite 1400 New Orleans, Louisiana 7011 Telephone: Facsimile:
With a copy to:
Amanda S. Wells Jones Walker
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8555 United Plaza Blvd., 5th Floor Baton Rouge, LA 70809 Telephone: (225) 248-2018 Facsimile: (225) 248-3118 And a copy to:
Wayne Neveu One Canal Place, Suite 2600 365 Canal Street New Orleans, LA 701130 Telephone: (504) 658-1249 Facsimile: (504) 565-3900
And to:
GSNMF Sub-CDE 9 LLC, Collateral Agent c/o The Goldman Sachs Group, Inc. 200 West Street New York, New York 10282 Attn: Carrie Van Syckel
And with a copy by electronic mail to: gs-uig-docs@gs.com (b) Either party hereto may, by notice given to each of the other, designate any additional or different addresses to which subsequent notices, certificates, demands, requests, or other communications shall be sent. (c) Notwithstanding anything contained herein to the contrary, any notice required to be given by the Master Lessor or the Master Lessee shall be deemed to have been given and shall be effective as of the date such notice is received or refused reflected on said notice. All notices, certificates, demands, requests, or other communications made by either party to the other which are required or permitted by the provisions of this Master Lease shall be in writing.
Section 9.
Representations.
(a) Each Master Lessor makes the following representations on behalf of itself only as the basis for the undertakings on its part herein contained: (i) Organization and Power. The School Board is a political subdivision of the State of Louisiana and has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as it is now being conducted and as it is currently proposed to be conducted. The RSD is a public body and instrumentality of the State of Louisiana and is duly organized, validly existing, and in good standing under the laws of the State of Louisiana, is authorized to do business in the State, and has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as it is now being conducted and as it is currently proposed to be conducted. (ii) Pending Litigation and Taxes. There are no actions, suits, proceedings, inquiries, or investigations pending or, to the knowledge of the Master Lessor, threatened against or affecting the Master Lessor in any court or by or before any governmental authority or arbitration board or tribunal that involve the likelihood of materially and adversely affecting the properties, business, prospects, profits, operations, or condition Wheatley Master PBC Lease
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(financial or otherwise) of the Master Lessor, or the ability of the Master Lessor to perform its obligations under this Master Lease, or the transactions contemplated by this Master Lease or that, in any way, would adversely affect the validity or enforceability of this Master Lease or any agreement or instrument to which the Master Lessor is a party and that is used or contemplated for use in the consummation of the transactions contemplated hereby, nor is the Master Lessor aware of any facts or circumstances currently existing that would form the basis for any such action, suit, or proceeding. The Master Lessor is not in default with respect to any judgment, order, writ, injunction, decree, demand, or rule issued in favor of or against it, by any court, governmental authority, or arbitration board or tribunal. All tax returns (federal, state, and local) required to be filed by or on behalf of the Master Lessor have been duly filed, and all taxes, assessments, and other governmental charges shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Master Lessor in good faith, have been paid or adequate reserves have been made for the payment thereof. (iii) Agreements Are Legal and Authorized. The execution and delivery by the Master Lessor of this Master Lease, the consummation of the transactions herein contemplated, and the fulfillment of or the compliance with all of the provisions hereof (1) are within the power, legal right, and authority of the Master Lessor, (2) are legal and will not conflict with or constitute on the part of the Master Lessor a violation of or a breach of or a default under, or result in the creation or imposition of any lien, charge, restriction, or encumbrance (other than Permitted Encumbrances) upon any property of the Master Lessor (other than the Property) under the provisions of, any charter instrument, bylaw, indenture, mortgage, deed of trust, pledge, note, lease, or loan, or installment sale agreement, contract, or other agreement or instrument to which the Master Lessor is a party or by which the Master Lessor or its properties are otherwise subject or bound, or, to its knowledge, any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree, or demand of any court or governmental agency or body having jurisdiction over the Master Lessor or any of its activities or properties, and (3) have been duly authorized by all necessary and appropriate corporate action on the part of the Master Lessor and all necessary and appropriate governmental action. This Master Lease is the valid, legal, binding, and enforceable obligations of the Master Lessor. The officer or officers of the Master Lessor executing this Master Lease are duly and properly in office and are fully authorized and empowered to execute the same for and on behalf of the Master Lessor. (iv) Governmental Consents. Neither the Master Lessor nor any of its business or properties, nor any relationship between the Master Lessor and any other person or entity, nor any circumstance in connection with the execution, delivery, and performance by the Master Lessor of its obligations under this Master Lease, is such as to require the consent, approval, permission, order, license, or authorization of, or the filing, registration, or qualification with, any governmental authority on the part of the Master Lessor in connection with the execution, delivery, and performance of this Master Lease or the consummation of any transaction herein contemplated, except as shall have been obtained or made and as are in full force and effect. (v) Fee Title. The Master Lessor owns good and marketable fee simple absolute title to the Property free and clear of all liens, claims, and encumbrances other than Permitted Encumbrances. Wheatley Master PBC Lease
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(c) The Master Lessee makes the following representations as the basis for the undertakings on its part herein contained: (i) Organization/Power/SPE. The Master Lessee is a nonprofit public benefit corporation of the School Board duly organized, validly existing, and in good standing under the laws of the State of Louisiana, is authorized to do business in the State, and has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as it is now being conducted and as it is currently proposed to be conducted. The sole purpose and business of Master Lessee shall be to engage exclusively in educational and charitable activities under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future revenue act) which are exempt from Federal income tax, and to act as a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986 (or corresponding provision of any future revenue act) and related activities associated therewith. (ii) Pending Litigation and Taxes. There are no actions, suits, proceedings, inquiries, or investigations pending or, to the knowledge of the Master Lessee, threatened against or affecting the Master Lessee in any court or by or before any governmental authority or arbitration board or tribunal that involve the likelihood of materially and adversely affecting the properties, business, prospects, profits, operations, or condition (financial or otherwise) of the Master Lessee, or the ability of the Master Lessee to perform its obligations under this Master Lease, or the transactions contemplated by this Master Lease or that, in any way, would adversely affect the validity or enforceability of this Master Lease or any agreement or instrument to which the Master Lessee is a party and that is used or contemplated for use in the consummation of the transactions contemplated hereby or thereby, nor is the Master Lessee aware of any facts or circumstances currently existing that would form the basis for any such action, suit, or proceeding. The Master Lessee is not in default with respect to any judgment, order, writ, injunction, decree, demand, rule, or regulation of any court, governmental authority, or arbitration board or tribunal. All tax returns (federal, state, and local) required to be filed by or on behalf of the Master Lessee have been duly filed, and all taxes, assessments, and other governmental charges shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Master Lessee in good faith, have been paid or adequate reserves have been made for the payment thereof. (iii) Agreements Are Legal and Authorized. The execution and delivery by the Master Lessee of this Master Lease, the consummation of the transactions herein contemplated, and the fulfillment of or the compliance with all of the provisions hereof (1) are within the power, legal right, and authority of the Master Lessee, (2) are legal and will not conflict with or constitute on the part of the Master Lessee a violation of or a breach of or a default under, or result in the creation or imposition of any lien, charge, restriction, or encumbrance (other than Permitted Encumbrances) upon any property of the Master Lessee under the provisions of, any charter instrument, bylaw, indenture, mortgage, deed of trust, pledge, note, lease, or loan, or installment sale agreement, contract, or other agreement or instrument to which the Master Lessee is a party or by which the Master Lessee or its properties are otherwise subject or bound, or, to its knowledge, any license, law, statute, rule, regulation, judgment, order, writ, injunction, decree, or demand of any court or governmental agency or body having jurisdiction over the Master Lessee or any of its activities or properties, and (3) have been duly authorized by all necessary and appropriate corporate action on the part of the Master Lessee and all Wheatley Master PBC Lease
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necessary and appropriate governmental action. This Master Lease is the valid, legal, binding, and enforceable obligations of the Master Lessee. The officer or officers of the Master Lessee executing this Master Lease are duly and properly in office and are fully authorized and empowered to execute the same for and on behalf of the Master Lessee. (iv) Governmental Consents. Neither the Master Lessee nor any of its business or properties, nor any relationship between the Master Lessee and any other person or entity, nor any circumstance in connection with the execution, delivery, and performance by the Master Lessee of its obligations under this Master Lease, is such as to require the consent, approval, permission, order, license, or authorization of, or the filing, registration, or qualification with, any governmental authority on the part of the Master Lessee in connection with the execution, delivery, and performance of this Master Lease or the consummation of any transaction herein contemplated, except as shall have been obtained or made and as are in full force and effect. (v) Compliance with Law. To the knowledge of the Master Lessee, the Master Lessee is not in violation of any laws, ordinances, or governmental rules or regulations to which it is subject and has not failed to obtain any licenses, permits, franchises, or other governmental authorizations (that are currently obtainable) necessary to the ownership of its or their properties or to the conduct of its business, which violation or failure to obtain might materially and adversely affect the properties, business, prospects, profits, or condition (financial or otherwise) of the Master Lessee. Section 10. Event of Default. If either Master Lessor or Master Lessee believes that the other has breached or defaulted in respect of any provision hereof, the party claiming such breach or default shall give the other party notice of such breach or default and shall afford such other party thirty days to cure such breach or default (provided that if such breach or default cannot reasonably be cured within such thirty day period, then such thirty day period shall be extended so long as such other party is exercising reasonably diligent efforts to cure such breach or default, but not beyond a period for cure that equals one hundred eighty days in the aggregate (including the initial thirty-day cure period)). If such breach or default has not been caused within such permitted cure period, then the non-breaching party may, subject to the terms and conditions of the SNDA, terminate this Master Lease by notice to the breaching party. Section 11. Master Lease. Section 12.
SNDA to Govern. The SNDA shall govern any inconsistent provisions of this
Miscellaneous.
(a) Rights are Cumulative. All rights, powers, and privileges conferred herein upon both parties hereto shall be cumulative. (b) Applicable Law. This Master Lease shall be governed, construed, performed and enforced in accordance with the laws of the State without regard to conflicts of law principle. (c) Genders and Numbers Included. Whenever the singular or plural number, or masculine, feminine, or neuter gender is used in this Master Lease, it shall equally apply to, extend to, and include the other.
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(d) Invalidity of Provision or Part Thereof. In the event any provision, or any portion of any provision of this Master Lease is held invalid, the other provisions of this Master Lease and the remaining portion of said provision, shall not be affected thereby and shall continue in full force and effect. (e) Time is of the Essence. All time limits stated in this Master Lease are of the essence of this Master Lease. (f) Section Captions are to be Disregarded. The captions of the numbered sections of this Master Lease are for purposes of identification and convenience only and are to be completely disregarded in construing this Master Lease. (g) Recordation of Memorandum of Lease. The Master Lessor and Master Lessee agree that the parties shall execute, seal, acknowledge and deliver simultaneously with the execution of this Master Lease, the Memorandum of Master Lease. (h) Counterparts. This Master Lease may be executed simultaneously in two or more counterparts, each of which shall be deemed original and all of which, when taken together, shall constitute one in the same document. The signature of any party to any counterpart shall be deemed a signature too, and may be appended to, any other counterpart. (i) Non-Waiver. No waiver by either party of any violation or breach of any of the terms, provisions and covenants contained in this Master Lease shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants contained in this Master Lease. Forbearance by either party in enforcing one or more of the remedies provided in this Master Lease upon an Event of Default shall not be deemed or construed to constitute a waiver of such Event of Default or of such party’s right to enforce any such remedies with respect to such Event of Default or any subsequent Event of Default.
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IN WITNESS WHEREOF, the Master Lessor and the Master Lessee have caused this Master Lease to be duly executed in duplicate counterparts each of which shall be deemed to be an original, the day and year first above written. Master Lessor: ORLEANS PARISH SCHOOL BOARD
By Its TWO WITNESSES:
Name:
Name:
Notary Public My commission expires:
RECOVERY SCHOOL DISTRICT By Its TWO WITNESSES:
Name:
Name:
Notary Public My commission expires:
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Master Lessee: ORLEANS SCHOOLS FACILITIES FOUNDATION, INC.
By Its TWO WITNESSES:
Name:
Name:
Notary Public My commission expires:
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EXHIBIT “A” DESCRIPTION OF PROPERTY
Wheatley Master PBC Lease 200912541.2
EXHIBIT “B” FORM OF GROUND LEASE
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RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
Space Above This Line for Recorder's Use
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT THIS AGREEMENT, is made this day of __________, 2013, by WHEATLEY SCHOOL FACILITY FOUNDATION, INC., a Louisiana nonprofit corporation, and having its principal office and place of business located at 1615 Poydras Street, Suite 1400, New Orleans, Louisiana 70112 ("Tenant"); GSNMF SUB-CDE 9 LLC, a Delaware limited liability company, with a mailing address of c/o The Goldman Sachs Group, Inc., 200 West Street New York, NY 10282-2198, and MBS-UI SUB-CDE XXIV, LLC, a Missouri limited liability company, with a mailing address of c/o McCormack Baron Salazar, Inc., 720 Olive Street, Suite 2500, St. Louis, MO 63101, and their successor and assigns (collectively, "Lender"); and, with regard to the provisions expressly set forth below, THE ORLEANS PARISH SCHOOL BOARD (“School Board”) and THE STATE OF LOUISIANA, DEPARTMENT OF EDUCATION, RECOVERY SCHOOL DISTRICT (“RSD”), both public bodies and instrumentalities of the State of Louisiana, and THE ORLEANS SCHOOLS FACILITIES FOUNDATION, INC., a Louisiana nonprofit public benefit corporation (“OSFF”) (School Board, RSD and OSFF collectively referred to herein as “Landlord”), School Board having an office at 3520 General De Gaulle Drive, Suite 5084, New Orleans, LA 70114 and RSD having an office at 1615 Poydras Street, Suite 1400, New Orleans, Louisiana 70112, with reference to the following facts: RECITALS: A. The School Board and the RSD (either itself or as successor-in-interest to a previous landlord) and OSFF entered into a certain master ground lease agreement dated _______________, 2013 ("Master Lease") covering certain property located at 2300 Dumaine Street, New Orleans, Louisiana, which property is more particularly described in the Mortgage (as hereinafter defined) ("Property"); B. OSFF and Tenant entered into a certain ground lease agreement dated _______________, 2013 ("Lease") covering the Property; B. Lender has agreed to make a loan ("Loan") to Tenant for the construction of an elementary school facility on the Property (“School Facility”), which Loan is to be evidenced by a note and secured, inter alia, by a first leasehold lien instrument in favor of Lender covering the School Facility and Tenant’s leasehold interest in the Property and upon the terms and conditions described therein, which shall be recorded in the Official Records of Orleans Parish, Louisiana (said instrument and all amendments, modifications, renewals, substitutions, extensions, consolidations and replacements thereto and thereof, as applicable, are hereinafter collectively referred to as "Mortgage");
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C. It is a condition precedent to obtaining the Loan that (i) the Mortgage be and remain at all times a first leasehold lien or charge upon the Property and a first lien or charge upon the School Facility (collectively, “Premises”) prior and superior to the Lease; (ii) Tenant specifically subordinate the Lease to the lien or charge of the Mortgage; and (iii) Tenant attorn to Lender and its successors and assigns in the event of the foreclosure or other proceeding to enforce the Mortgage; NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Tenant hereby agree as follows: 1. Subordination. Subject to the terms of this Agreement, the Lease and any extensions, renewals, replacements, consolidations or modifications thereof, and all the right, title and interest of the Tenant in and to the Premises, are and shall be subject and subordinate to the Mortgage and the lien and terms thereof and any and all advances made thereunder. Landlord and Tenant agree that any amendment to the Lease shall require Lender’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Additionally, Landlord agrees not to amend the Master Lease without receiving the written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed. 2. Consent to Leasehold Mortgage. Landlord has been provided a copy of and does hereby consent to the existence and recordation of the Mortgage subject to the terms and conditions contained herein. 3. Lender's Exercise of Remedies. In the event of (a) the institution of any foreclosure, trustee's sale or other like proceeding, (b) the appointment of a receiver for the Tenant or the School Facility, (c) the exercise of rights to collect rents under the Mortgage or an assignment of rents, (d) the recording by Lender or its successor or assignee of a deed in lieu of foreclosure for the School Facility, or (e) any transfer or abandonment of possession of the School Facility to Lender or its successor or assigns in connection with any proceedings affecting Tenant under the Bankruptcy Code, 11 U.S.C. § 101 et seq., (any such foreclosure, recording of a deed in lieu of foreclosure, or transfer or abandonment of the School Facility referred to in the preceding clauses (a) through (e) is hereinafter called a "Transfer", and Lender or any successor or assignee of Lender taking title (or leasehold title) to the Premises in connection with a Transfer is hereinafter called the "Transferee"), such Transferee shall not: (a)
be liable for any prior act (including Tenant’s performance of any construction related obligations) or omission of the Tenant or any prior tenant or consequential damages arising therefrom, unless Transferee benefits from such prior act or omission of Tenant or any prior tenant; or
(b)
be subject to any defenses which Landlord might have as to the Tenant or any prior tenant, except for defenses arising out of Tenant’s or any prior tenant’s default under the Lease, which was not cured within any applicable grace or cure period; or
(c)
be bound by any amendments, modifications or terminations of the Lease which increase the Rent (as such term is defined in the Lease), or modify the term of the Lease, without Lender’s consent; or
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The foregoing shall not, however: (i) relieve Transferee or any other party succeeding to the interests of the Tenant as a result of any foreclosure of the obligation to remedy or cure any repair or maintenance obligations at the Premises which constitute a Tenant default under the Lease and which continue at the time of such succession or acquisition, or (ii) constitute a waiver by Landlord of any claims or causes of action it may have against the Tenant or any prior tenant as a result of conditions or events which occurred prior to the succession by Transferee to the interests of the Tenant. 4. Attornment and Non-Disturbance. Provided Tenant is not in default under the terms of the Lease beyond any applicable cure period set forth in the Lease: (i) Landlord will not disturb Tenant's possession, use or quiet enjoyment of the Premises under the Lease, or the operation of Tenant’s business from the Premises; and (ii) Tenant’s rights and privileges under the Lease during its term and any extension or renewal of the term thereunder, which extension or renewal is exercised in accordance with the terms and conditions of the Lease, shall not be diminished or interfered with and the Lease will not be affected or cut off thereby. Subject to the terms of this Agreement, Landlord shall attorn to Transferee, including Lender if Lender becomes a Transferee, as the tenant under the Lease and Landlord does hereby affirm its obligations under the Lease to Transferee, so long as Transferee agrees to assume the obligations of Tenant under the Lease from and after the date of Transfer. Said attornment is subject to the limitation of Transferee's obligations set forth in Paragraph 2 above and Paragraph 6(d) below and shall be effective and self-operative without the execution of any further instruments upon Transferee’s succeeding to the interest of the Tenant under the Lease; provided that Transferee shall have no liability to Landlord except to the extent that Transferee expressly assumes Tenant’s obligations under the Lease, and such liability arises from or after the date of such assumption. Landlord and Lender shall, however, confirm the provisions of this paragraph in writing upon request by either of them, in form and content reasonably acceptable to both parties. 5. Lender’s Right to Cure. Notwithstanding anything to the contrary in the Lease or this Agreement, Landlord shall provide Lender with written notice of any default of Tenant under the Lease (which can be a copy of the notice provided to the Tenant). If such default is of such a nature as to give the Landlord a right to terminate the Lease, to increase rent thereunder or to otherwise materially affect Tenant’s rights thereunder, Lender shall have thirty (30) days from receiving such notice from Landlord, calculated from the sending of such notice, in which to cure such default; provided however, that if such default is incapable of being cured within such thirty (30) day period, so long as Lender is working diligently to pursue a cure of such default, Lender shall have such reasonable additional time (but not to exceed 180 days in total) as may be necessary to affect a cure. 6. Miscellaneous. (a) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns; provided, however, following any initial Transfer to Lender or a Transferee, in the event of a subsequent assignment or transfer of the interest of Lender (or Transferee), Lender (or Transferee) shall be responsible for all obligations and liabilities under this Agreement arising prior to the date of the subsequent assignment or transfer, while the party, to whom Lender’s (or Transferee's) interest is assigned or transferred to, shall be responsible for all obligations and liabilities under this Agreement, from and after the date of the subsequent assignment or transfer; and provided further that the interest of Tenant under this Agreement may not be assigned or transferred except as permitted under the Lease. {B0844706.2}3
(c) Tenant and Lender covenant and acknowledge that Tenant has no right or option of any nature whatsoever, whether pursuant to the Lease or otherwise, to purchase the Premises or the Property, or any portion thereof or any interest therein, nor shall Tenant or Lender have any right to acquire fee simple title to the Property, Tenant’s and Lender’s remedies being limited solely to the leasehold interest acquired by Tenant under the Lease. Additionally, no such right or option shall apply to any Transfer of the Premises or the Property. (d) This Agreement is the whole and only agreement between the parties hereto with regard to the subordination of the Lease to the lien or charge of the Mortgage. This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto. (f) This Agreement shall be deemed to have been made in the state where the Property is located and the validity, interpretation and enforcement of this Agreement shall be determined in accordance with the laws of such state. (g) In the event any legal action or proceeding is commenced to interpret or enforce the terms of, or obligations arising out of, this Agreement, or to recover damages for the breach thereof, the party prevailing in any such action or proceeding shall be entitled to recover from the non-prevailing party all reasonable attorneys' fees, costs and expenses incurred by the prevailing party. (h) Any notices or communications required or permitted to be given or made hereunder shall be deemed to be so given or made when in writing and delivered in person or sent by United States registered or certified mail, postage prepaid, or by nationally recognized overnight courier service, directed to the parties at the following addresses or such other addresses as they may from time to time designate in writing: Lender:
GSNMF SUB-CDE 9 LLC, c/o GS New Markets Fund, LLC 200 West Street New York, New York 10282 and
Tenant:
MBS-UI SUB-CDE XXIV, LLC, c/o MBS Urban Initiatives CDE, LLC 720 Olive Street, Suite 2500 St. Louis, Missouri 63101
Wheatley School Facility Foundation, Inc. 1615 Poydras Street, Suite 1400 New Orleans, LA 70112 Attention: with a copy to:
Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Attention: Amanda Wells
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Landlord:
Orleans Schools Facilities Foundation, Inc. 3520 General De Gaulle Drive, Suite 5084 New Orleans, LA 70114 Attention: Stanley Smith
with a copy to:
Foley Judell, LLP 365 Canal Street One Canal Place, Suite 2600 New Orleans, LA 701130 Attention: Wayne Neveu
and:
Orleans Parish School Board 3520 General De Gaulle Drive, Suite 5084 New Orleans, LA 70114 Attention: Stanley Smith
with a copy to:
Foley Judell, LLP 365 Canal Street One Canal Place, Suite 2600 New Orleans, LA 701130 Attention: Wayne Neveu
and:
Recovery School District 1615 Poydras Street, Suite 1400 New Orleans, Louisiana 70112 Attention: Annie Cambria
with a copy to:
Jones Walker, LLP 8555 United Plaza Blvd Ste 500 Baton Rouge, LA 70809 Attention: Amanda Wells
Notices or communications mailed in the U.S. mail shall be deemed to be served on the third business day following mailing, notices or communication served by hand or by overnight courier shall be deemed served upon receipt. (i) This document may be signed in counterparts which together shall be deemed to be one and the same document. The signature pages from any such counterpart may be attached to another such counterpart to form one complete set of signatures for this document. (j) The parties hereto represent and warrant that their respective signatories to this Agreement have been duly authorized by the Tenant, Landlord and Lender, as applicable.
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IN WITNESS WHEREOF, this Agreement has been signed and delivered as of the date and year first above set forth. TENANT: WHEATLEY SCHOOL FACILITY FOUNDATION, INC. By:
___________________________
Name: ______________________ Title:
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LENDER:
By: Name: Title: duly authorized
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LANDLORD: ORLEANS PARISH SCHOOL BOARD
By: Name: Title:
RECOVERY SCHOOL DISTRICT
By: Name: Title:
ORLEANS SCHOOLS FACILITIES FOUNDATION, INC.
By: Name: Title:
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