Release and Substitution of Collateral. (a) The Bank agrees that subject to the execution and delivery of the Williamsburg Security Documents as hereinafter described, the Bank shall release all of its liens, rights and security interest in and to the Winchester Property under or pursuant to the Winchester Security Documents by executing and delivering to Borrower one or more instruments of release and satisfaction, in form reasonably acceptable to Borrower and suitable for filing in the real property records of Lake County, Ohio (the "Winchester Releases"). The Winchester Releases may be filed for record (at no expense to the Bank) upon the completion of the transactions described in this Amendment. (b) Concurrently with the execution and delivery of this Amendment, and for the purpose of inducing the Bank to release the Winchester Security Documents as described above and to continue to provide the loans and other financial accommodations to Borrower contemplated by the Third Restatement, Williamsburg shall execute a mortgage (the "Williamsburg Mortgage") substantially similar to the form attached hereto as Exhibit D and made a part hereof by this reference; Borrower shall cause the Williamsburg Mortgage to be delivered to the Bank by filing such instrument (at no cost to the Bank) in the real property records of Cuyahoga County, Ohio. (c) Borrower and the Bank acknowledge that from and after the completion of the actions set forth in the two preceding paragraphs: (i) the Winchester Property shall no longer be a "Mortgaged Property" under the Third Restatement; (ii) the Williamsburg Property shall be a "Mortgaged Property" for all purposes relevant to the Third Restatement; and (iii) the Williamsburg Mortgage shall be a "Mortgage" for all purposes relevant to the Third Restatement. (d) Williamsburg warrants and represents to the Bank that: (i) Williamsburg is duly formed, validly existing and in good standing as a corporation under the laws of the State of Delaware, and is duly qualified and in good standing as a foreign corporation in Ohio; (ii) Williamsburg has the requisite power and authority to execute and deliver this Amendment and the Williamsburg Mortgage and to perform its obligations hereunder and thereunder; (iii) Williamsburg is familiar with and has approved the terms of the Third Restatement and the other Loan Documents; and (iv) Williamsburg has received or shall receive reasonably equivalent value in consideration of its execution and delivery of this Amendment and the Williamsburg Mortgage.
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Release and Substitution of Collateral. Subject to the terms of this Section, Borrower may obtain a release of the Lien of a Security Instrument (and the related Loan Documents) encumbering a Property (a "Release Property") by substituting therefor another hotel property acquired by Borrower (individually, a "Substitute Property" and collectively, the "Substitute Properties"), provided that the following conditions precedent are satisfied:
(a) The Bank agrees that Borrower shall not have the right to release and substitute more than three (3) Properties in accordance with this Section unless such the Release Property is an Excluded Property, in which case the limitations contained in this sentence shall not apply. Any Substitute Property shall, among other things, require approval by Lender's internal credit committee(s) prior to being encumbered by a Security Instrument pursuant to the terms hereof.
(b) Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Release Property.
(c) If the Borrower continues to own a Property subject to the execution and delivery Lien of the Williamsburg a Security Documents as hereinafter describedInstrument, the Bank Lender shall release have received (i) a copy of a deed conveying all of its liensBorrower's right, rights title and security interest in and to the Winchester Release Property under to a Person other than Borrower or Principal pursuant to the Winchester Security Documents an arms length transaction and (ii) a letter from Borrower countersigned by executing a title insurance company acknowledging receipt of such deed and delivering agreeing to Borrower one or more instruments of release and satisfaction, in form reasonably acceptable to Borrower and suitable for filing record such deed in the real property estate records of Lake County, Ohio (the "Winchester Releases"). The Winchester Releases may be filed for record (at no expense to the Bank) upon the completion of the transactions described in this Amendment.
(b) Concurrently with the execution and delivery of this Amendment, and for the purpose of inducing county in which the Bank to release the Winchester Security Documents as described above and to continue to provide the loans and other financial accommodations to Borrower contemplated by the Third Restatement, Williamsburg shall execute a mortgage (the "Williamsburg Mortgage") substantially similar to the form attached hereto as Exhibit D and made a part hereof by this reference; Borrower shall cause the Williamsburg Mortgage to be delivered to the Bank by filing such instrument (at no cost to the Bank) in the real property records of Cuyahoga County, Ohio.
(c) Borrower and the Bank acknowledge that from and after the completion of the actions set forth in the two preceding paragraphs: (i) the Winchester Release Property shall no longer be a "Mortgaged Property" under the Third Restatement; (ii) the Williamsburg Property shall be a "Mortgaged Property" for all purposes relevant to the Third Restatement; and (iii) the Williamsburg Mortgage shall be a "Mortgage" for all purposes relevant to the Third Restatementis located.
(d) Williamsburg warrants Unless Lender shall have consented in writing to a lower appraised value, Lender shall have received a current Appraisal (which Appraisal shall be ordered by Lender and represents to the Bank that: paid for by Borrower) of (i) Williamsburg the Substitute Property and (ii) the Release Property, each prepared within sixty (60) days prior to the release and substitution, showing an appraised value of the Substitute Property equal to or greater than one hundred percent (100%) of (A) the appraised value of the Release Property as of the Closing Date and (B) the appraised value of the Release Property immediately prior to the date of the proposed substitution.
(e) Unless Lender shall have consented in writing to a lower Underwritten Cash Flow, Lender shall have received a certificate of Borrower certifying, together with other evidence satisfactory to Lender that, the Underwritten Cash Flow for the twelve (12) months immediately preceding the substitution with respect to the Substitute Property is duly formedequal to or greater than the Underwritten Cash Flow for the twelve (12) full calendar months immediately preceding the date of the proposed substitution with respect to the Release Property.
(f) Lender shall have consented in writing to such release and substitution, validly existing which consent shall be given in Lender's reasonable discretion, and shall be based upon, among other things, (i) revenue per available room, (ii) occupancy rates, (iii) the revenue per available room penetration index, (iv) operating cash flow, (v) quality of the Franchisor and Manager and (vi) general trends of the Release Property and the Substitute Property with respect to (i), (ii), (iii), (iv) and (v) above, all as determined by Lender in its reasonable discretion.
(g) Unless such event or condition relates solely to the Release Property and will be fully cured by the release and substitution, no Event of Default shall have occurred and be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and warranties contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the release and substitution with respect to Borrower, the Properties and the Substitute Property and containing any other representations and warranties with respect to Borrower, the Properties, the Substitute Property or the Loan as Lender may require, unless such certificate would be inaccurate, such certificate to be in form and substance satisfactory to Lender.
(h) Borrower shall (A) have executed, acknowledged and delivered to Lender (I) a Security Instrument, an Assignment of Leases and two UCC-1 Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Security Instrument, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Security Instrument, Assignment of Leases and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statements in the office of the Secretary of State (or other central filing office) of the State in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable first priority Liens upon the Substitute Property, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (II) an Environmental Indemnity with respect to the Substitute Property from Indemnitor and (B) have caused Guarantor to acknowledge and confirm its obligations under the Loan Documents. The Security Instrument, Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Release Property subject to modifications reflecting only the Substitute Property as the Property and such modifications reflecting the laws of the State in which the Substitute Property is located. The Security Instrument encumbering the Substitute Property shall secure all amounts then outstanding under the Note, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such Security Instrument shall be equal to one hundred twenty-five percent (125%) of the applicable CMBS Loan Amount for the Substitute Property.
(i) Lender shall have received (A) to the extent available, any "tie-in" or similar endorsement, together with a "first loss" endorsement, to each Title Insurance Policy insuring the Lien of the existing Security Instruments as of the date of the substitution with respect to the Title Insurance Policy insuring the Lien of the Security Instrument with respect to the Substitute Property and (B) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the Lien of the Security Instrument encumbering the Substitute Property, issued by the title company that issued the Title Insurance Policies insuring the Lien of the existing Security Instruments and dated as of the date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Security Instrument encumbering the Release Property. The Title Insurance Policy issued with respect to the Substitute Property shall (1) provide coverage in the amount of the CMBS Loan Amount if the "tie-in" or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the CMBS Loan Amount, together, if available, with "last dollar endorsement," (2) insure Lender that the relevant Security Instrument creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are then available and are contained in the Title Insurance Policies insuring the Liens of the existing Security Instruments, and such other endorsements or affirmative coverage that Lender shall require, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(j) Lender shall have received a current Survey for each Substitute Property, certified to the title company and Lender and its successors and assigns, in the same form and having the same content as the certification of the Survey of the Release Property prepared by a professional land surveyor licensed in the State in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such Survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property (unless such real property has been satisfactorily designated by lot number on a recorded plat). The surveyor's seal shall be affixed to each Survey and each Survey shall certify whether or not the surveyed property is located in a "one-hundred-year flood hazard area."
(k) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for a Property have been satisfied with respect to the Substitute Property and evidence of the payment of all Insurance Premiums payable for the existing policy period.
(l) Lender shall have received a Phase I environmental report dated not more than one hundred eighty (180) days prior to the proposed date of substitution and otherwise acceptable to Lender (which Phase I environmental report shall be ordered by Lender and paid for by Borrower) and, if recommended under the Phase I environmental report, a Phase II environmental report acceptable to Lender, which conclude that the Substitute Property does not contain any Hazardous Materials and is not subject to any significant risk of contamination from any off site Hazardous Materials.
(m) Borrower shall deliver or cause to be delivered to Lender (A) updates or, if the Substitute Property is to be owned by an Affiliate of Borrower, originals, in either case certified by Borrower or such Affiliate, as applicable, of all organizational documentation related to Borrower or such Affiliate, as applicable, and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction); and (C) resolutions of Borrower or such Affiliate, as a corporation applicable, authorizing the substitution and any actions taken in connection with such substitution.
(n) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the State of Delawarein which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (i) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is duly qualified to do business and in good standing as under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by Applicable Law to qualify to do business in such jurisdiction; (B) an opinion of counsel acceptable to Lender stating that the Loan Documents delivered with respect to the Substitute Property pursuant to this Section, among other things, have been duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a foreign corporation in Ohiobreach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; and (C) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein.
(o) Borrower shall (i) have paid, (ii) Williamsburg has the requisite power and authority to execute and deliver this Amendment and the Williamsburg Mortgage and to perform its obligations hereunder and thereunder; have escrowed with Lender or (iii) Williamsburg be contesting in accordance with the terms hereof, all Transaction Costs relating to each of the Properties and the Substitute Property, including without limitation, (x) accrued but unpaid Insurance Premiums relating to each of the Properties and the Substitute Property, and (y) currently due and payable Taxes (including any in arrears) relating to each of the Properties and the Substitute Property and (z) currently due and payable Other Charges relating to each of the Properties and Substitute Property.
(p) Borrower shall have paid or reimbursed Lender for all reasonable costs and expenses incurred by Lender (including, without limitation, reasonable attorneys' fees and disbursements) in connection with the release and substitution and Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution.
(q) Lender shall have received annual operating statements and occupancy statements for the Substitute Property for the most current completed fiscal year and a current operating statement for the Release Property, each certified by Borrower to Lender as being true and correct in all material respects and a certificate from Borrower certifying that there has been no material adverse change in the financial condition of the Substitute Property since the date of such operating statements.
(r) Upon the request of Lender, Borrower shall have delivered to Lender estoppel certificates from all tenants under Major Leases at the Substitute Property. All such estoppel certificates shall be substantially in the form approved by Lender in connection with the origination of the Loan and shall indicate that (1) the subject Lease is familiar a valid and binding obligation of the tenant thereunder, (2) to the best of the tenant's knowledge, there are no defaults under such Lease on the part of the landlord or tenant thereunder, (3) the tenant thereunder has no knowledge of any defense or offset to the payment of rent under such Lease, (4) no rent under such Lease has been paid more than one (1) month in advance, (5) the tenant thereunder has no option under such Lease to purchase all or any portion of the Substitute Property, and (6) all tenant improvement work required under such Lease has been substantially completed and the tenant under such Lease is in actual occupancy of its leased premises. If an estoppel certificate indicates that all tenant improvement work required under the subject Lease has not yet been completed, Borrower shall deliver to Lender financial statements indicating that Borrower has adequate funds to pay all costs related to such tenant improvement work as required under such Lease.
(s) Lender shall have received copies of all Leases affecting the Substitute Property (of which the Major Leases shall be satisfactory to Lender in its reasonable discretion) certified by Borrower as being true and correct.
(t) Upon the request of Lender, Lender shall have received subordination agreements in the form approved by Lender in connection with the origination of the Loan (or such other form approved by Lender, which approval shall not be unreasonably withheld) with respect to tenants under all Leases at the Substitute Property to the extent such Leases for such tenants are not automatically subordinate (in lien and has approved in terms) pursuant to the terms of the Third Restatement and applicable Leases.
(u) Lender shall have received (A) an endorsement to the other Loan Documents; and (iv) Williamsburg has received or shall receive reasonably equivalent value in consideration of its execution and delivery of this Amendment and the Williamsburg Mortgage.Title Insurance
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